Senior RBS executives to pocket £5m shares bonus

Published on Sunday 24 May 2009 22:27

THE Royal Bank of Scotland has risked courting fresh controversy over excessive pay at bailed-out banks after it emerged four senior staff were set for share windfalls worth nearly £5 million.

The details emerged as it was reported RBS and Lloyds Banking Group have told the government they may miss lending targets set as a condition for receiving more state support.

RBS declined to comment on the claims, while Lloyds could not immediately be reached for comment.

RBS, 70 per cent owned by the government, had been told to lend an extra 25 billion this year and next, in an effort to re-inject credit into the economy.

Lloyds, 43 per cent owned by the government, had been instructed to lend 14m.

The banks expected to meet their targets for mortgage and small business lending, but the large business targets – thought to be 6bn for RBS and 4bn for Lloyds – were proving very difficult to meet.

RBS is to offer incentive-based awards of nearly 12 million shares to staff under a bonus scheme, including a reward worth 2.4m on paper for Ellen Alemany, the head of the bank's United States business.

She is in line for 5.9 million shares, although the bonus is based on performance targets being met over the next three years, and is subject to clawback.

Three other RBS executives are also due to pick up hefty rewards, according to the details contained in a Stock Exchange announcement made on Friday.

Corporate banking bosses Alan Dickinson and Chris Sullivan have been promised 1.9 million and 1.8 million shares respectively, while 1.9 million shares have been earmarked for RBS chief administration officer Ron Teerlink.

The news follows severe criticism levelled at RBS over the high levels of pay given to bosses after near collapse saw it turn to the government for billions of pounds in rescue cash.

The bank was attacked by Business Secretary Lord Mandelson earlier this year for preparing to offer "exorbitant" bonuses to its traders and senior bankers just weeks after being bailed out. The group has also been the subject of public fury for paying out a pension worth 700,000 a year to former chief executive Sir Fred Goodwin.

But RBS stressed the share bonuses revealed yesterday were subject to stringent targets, which have been so strict in recent years that the medium-term performance plan has not paid out since 2004.

It added those directors offered the shares were not responsible for the bank's record 28bn losses seen last year.

A spokesman said: "There will be no reward for failure. Nothing will be paid until and unless performance criteria are achieved; awards are subject to clawback."

The bank plans to reveal the performance criteria for business targets after a strategic review this summer.

RBS announced in February it would cut this year's staff cash bonus by over 90 per cent to 175m. The bank also confirmed there would be no discretionary cash bonuses made for last year.