The Royal Bank of Scotland has defended pay plans for its top bosses, saying it had been a sector leader when it comes to “showing restraint” over executive pay.
The lender hit back after facing criticism from investor advisory groups, including Institutional Shareholder Services (ISS), which urged investors to oppose a new RBS remuneration policy on the grounds that its efforts to reduce pay awards were not “sufficient”.
Under the new pay plan, chief executive Ross McEwan would be eligible for a long-term award of 175 per cent of his salary and finance chief Ewen Stevenson 200 per cent, both a decrease from the previous 400 per cent.
Speaking at the bank’s annual general meeting in Edinburgh yesterday, Sir Sandy Crombie, chairman of the remuneration committee, said: “You may be aware of the press commentary following the publication of proxy advisor reports, in particular the recommendations against the new remuneration policy by ISS and PIRC.
“We disagree with the conclusions reached in these reports and strongly challenged the view from ISS that the level of discount was insufficient under the new construct.
“We subsequently re-engaged with a number of our major shareholders, and I am pleased to say that the vast majority indicated their continued support for our proposals.
“In addition, Norges Bank, one of our major shareholders, has recently issued a public statement confirming support for the new policy highlighting the simplified structure and reduced maximum award levels. They also commended the board’s ‘willingness to challenge conventional thinking on remuneration’.
“RBS has, since the financial crisis, been a market leader in showing restraint in executive pay and in seeking to move away from the unintended consequences of highly geared financial incentives.”
The comments came as the bank also moved to address concerns about the lack of female representation on the board by announcing that Yasmin Jetha had joined as a non-executive director. It means 27 per cent of the board is now made up of women, bringing it back above the Davies recommendation for at least 25 per cent after it slipped below the target in April.
The Pensions & Investment Research Consultants had called on shareholders to vote against the reappointment of chairman Sir Howard Davies, saying he had failed to draw up targets for boosting the number of women executives.