The board of Royal Bank of Scotland survived a potential shareholder revolt over executive pay packages yesterday, but warned of continued difficult times ahead as the loss-making bank continues to look to slash costs.
Although chief executive Ross McEwan said “significant challenges still lie ahead”, he also predicted that the heaviest restructuring “will be behind us” by the end of 2016.
Mr McEwan told the annual general meeting in Edinburgh that RBS will be able to focus on targeting “attractive, balanced and sustainable financial returns” in 2017.
But he said the bank – which last week reported a first-quarter pre-tax loss of £968 million, more than double last year’s £446m – will need to find £800m worth of cost savings this year, as it looks to adapt to an environment where “the macroeconomic outlook remains uncertain”.
Although there had been some expectation of a sizeable vote against the bank’s remuneration policy, in the event only 0.4 per cent of votes cast went against it.
But a number of shareholders did speak out over boardroom pay at the company, whose chief executive saw his total annual pay package double to £3.8m last year although that included long-term incentive payouts for the first time. For the third year running, Mr McEwan is giving give part of his package to charity.
Lynn McMillan, a customer and shareholder, criticised pay levels at the bank and said that now it was a simpler and smaller organisation that pay packages should be lower.
“These are salaries that ordinary people see as being obscene,” she said, being applauded by other investors.
Chairman Howard Davies stressed that the bank had done much to tackle excessive pay, with the bonus pool at the investment bank down by 90 per cent since 2010.
Another investor, Kenneth Cramond, said the board was “morally bankrupt” and called for the remuneration committee to resign.
But Sandy Crombie, the former Standard Life chief executive who now heads RBS’s remuneration committee, said that challenges faced by the bank were “far from ordinary” and that the pay packages for executive directors reflected this.