Royal Bank of Scotland saw its pay report overwhelmingly backed today as the taxpayer-backed bank reassured its investors it wanted to become “a bank that is built to last”.
Some 99.3% of shareholder votes went in favour of the remuneration report, although this includes UK Financial Investments (UKFI), which manages the state’s 82% stake.
Shareholder group Pensions and Investment Research Consultants (Pirc) had urged its members to vote against the “excessive pay” at the bank, despite chief executive Stephen Hester waiving his £963,000 annual bonus for 2011.
But the board faced tough questions from shareholders on share price, dividends, bonuses for senior staff and morale at its annual meeting in Edinburgh.
RBS chairman Sir Philip Hampton also revealed the group had taken a £1.3 billion write down on its Greek sovereign debt, to which it is no longer exposed.
In a heated question and answer session, Marie Kearnan, a member of staff and shareholder, said morale had been impacted by a pay freeze for more than 28,000 on-the-ground staff this year, while executives received bumper pay rises.
She said: “It feels to me and my colleagues that RBS has little respect for us. This is no way for a respectable organisation to conduct itself.”
Sir Philip said: “I have a lot of sympathy with some of the criticisms that are made about excessive top levels of executive pay, in the City particularly. But I can only tell you that our own pay levels tend to be at the lowest end of that particular spectrum.”
Discussing Mr Hester’s bonus award, Sir Philip added: “I have made clear that it is a matter of personal regret that we failed to anticipate the scale of the public reaction to the issue.”
RBS paid £785 million in bonuses last year, including £390 million for its 17,000 investment bankers.
While the total pot is 43% lower than the previous year, it follows a period in which the bank announced thousands of job cuts and its share price tumbled 50%.
But Sir Philip said: “The role of the board is to recruit, retain and, as appropriate, incentivise the top quality team we need for the world-class challenges we face.”
Quizzed on share price, which at 20p is less than half the 50p price tag paid for by the Government when it put up £45 billion to bail out the lender, Sir Philip said: “All we can do is run the business as effectively as we can.
“I don’t believe that shareholders’ wealth is likely to be restored any time in my lifetime.”
Shareholders also voted 99.6% in favour of a resolution to reduce the number of RBS shares in circulation.
Sir Philip said: “While the value of each individual or institution’s total share holding is not expected to change as a direct result of the consolidation, the board believe that the reduction in the number of shares in issue could help reduce volatility and dealing costs.”