LONDON (Reuters) - Royal Bank of Scotland’s (RBS.L) Chairman Philip Hampton will not pick up a 1.4 million pound ($2.2 million) stock bonus, the bailed-out bank said, following public anger and political squabbling over a 1 million pound bonus for its chief executive.
Anger over bankers’ earnings has shown few signs of abating, with many still set for million pound salaries while elsewhere thousands lose their jobs as the global economy stutters in the face of Europe’s debt crisis.
In Britain, the salaries of top staff at RBS and Lloyds (LLOY.L) are particularly controversial because both banks were bailed out to the tune of 66 billion pounds during the credit crisis, with Britain ending up with an 83 percent stake in RBS along with a 40 percent holding in Lloyds.
“Sir Philip Hampton will not receive the 5.17 million shares he was awarded in 2009 when he joined RBS,” said a spokesman for the bank.
Based on RBS’s closing share price of 27.74 pence Friday, Hampton’s share-based award would have been worth 1.4 million pounds. In 2010, Hampton received a basic salary of 750,000 pounds, with no extra performance bonus or benefits.
The decision not to proceed with Hampton’s stock award comes after politicians from across the spectrum criticised the company’s decision to give its chief executive Stephen Hester a stock bonus worth roughly 1 million pounds.
Earlier this week, RBS halved CEO Hester’s stock bonus for 2011 to just under 1 million pounds from 2 million pounds in 2010, but resisted calls to axe the bonus altogether. Hester has a basic salary of 1.2 million pounds.
The decision by Lloyds chief executive Antonio Horta-Osorio to waive his bonus after he spent time off work on sick leave, had put further pressure on Hester to make a similar gesture.
RBS shares fell sharply over the course of 2011, losing approximately half their value, and the stock remains well below the average price of 49.90 pence at which the British taxpayer acquired its stake in the bank.
Hester has also had to cut more than 30,000 jobs since taking up his post in 2008, as part of a large-scale restructuring to sell off assets and businesses.
Britain’s Conservative-led coalition government has also been criticised for not doing more to curb Hester’s pay, facing attacks from not only the opposition Labor party but also from its own members.
Saturday, Prime Minister David Cameron sought to deflect criticism over his handling of the issue, arguing it would be worse for the taxpayer if RBS had to find a new management team.
“Let me get the facts straight, the fact is Stephen Hester was brought in by the last government, a contract signed by the last government, to turn round RBS, a bank that had got itself into a complete mess,” Cameron told television reporters.
“The government has made its views known, and that is why his bonus was cut in half compared to last year. But we do have to bear in mind that the alternatives to what is happening now could be even more expensive if you had a whole new team coming into RBS,” he added.
Hester joined RBS in October 2008 from property company British Land (BLND.L) as RBS was reeling from its disastrous acquisition of Dutch bank ABN AMRO.
Britain used some 45 billion pounds of taxpayers’ money to rescue RBS, leading to the eventual resignation of former head Sir Fred Goodwin, who was replaced by Hester.
Hester, who had previously worked at rival banks Abbey National and Credit Suisse CSGN.VX, was given a brief to restructure RBS and return it to health, and RBS said he deserved his stock bonus for making the bank “safer.”
Britain aims to eventually sell its state holdings in RBS and Lloyds back to the private sector, although volatile financial markets have meant the timing of any disposal is uncertain.
Reporting by Sudip Kar-Gupta; Editing by Tim Castle and Toby Chopra