The CEO of Royal Bank of Scotland Group has decided to waive his bonus of 963,000 pounds ($1.5 million), but it wasn’t an entirely altruistic gesture. He reached that decision after the Labour Party said it would ask Parliament to vote on the matter.
Stephen Hester made the announcement late Sunday, according to a Monday Bloomberg report, but that may not be enough to satisfy politicians. There has been considerable political turmoil over the announcement, made Jan. 27, of the bonus, which comes on top of Hester’s salary of 1.2 million pounds. The bank’s chairman, Philip Hampton, has also decided to waive his own 1.4 million-pound bonus.
Labour leader Ed Miliband was quoted saying in Glasgow, Scotland, on Monday that Hester’s decision should not be “just a one-off episode. If we don’t deal with this systematically, if we don’t deal with the issue of bankers’ bonuses in a proper way, then this sort of thing is going to reoccur.” Prime Minister David Cameron has come in for considerable criticism from all sides for allowing the bonus only a week after he had prompted shareholders to rein in executive compensation.
RBS is Britain’s biggest taxpayer-controlled bank, and its stock has dropped 35% over the past year, to stand at only about half of what the government paid for its stake. At the zenith of the financial crisis, the British government pumped 45.5 billion pounds of public money into RBS; that stands as the most expensive bailout of any bank in the world.
Hester got a bonus of 2 million pounds in 2010, after the bailout, and according to a source familiar with Cameron’s office, the prime minister was concerned that Hester would not stay on without a bonus for 2011.