How RBS pay deal breaks down

Published on Monday 22 June 2009 22:52

ROYAL Bank of Scotland chief executive Stephen Hester's total package over three years is worth £12 million. The components are:

Basic salary: 1.2m. As each year of the three-year long-term incentive plan (LTIP) goes by, Mr Hester's basic salary would be expected to remain at least at the same level. This would mean a basic payout over the three years of probably nearer 3.6m. However, for calculating the current three-year package on offer, only this year's salary is included.

Annual non-cash bonus payments: totalling 2m over three years. Paid in RBS bonds or loans (essentially corporate debt that Mr Hester can cash in as they are paid in tranches – or slices – over three years). They can be clawed back if the performance on which the awards are made is found later to have been faulty.

Long-term incentive plans: 6.4m. Paid in a mixture of free RBS shares (one-third) and share options (two-thirds) at the end of the three-year performance period. The potential profit from the share options depends on the difference between the price at which the option is granted and the market price of the shares when triggered.