‘Goodwin man’ John Hourican faces fight for £4m bonus

JOHN Hourican – a senior executive from Sir Fred Goodwin’s era at Royal Bank of Scotland – is under growing pressure to forgo a windfall of up to £4.4 million, amid mounting calls for the UK government to introduce a “bonus tax” on payouts handed to financial workers.

The latest demands come after chief executive Stephen Hester caved in to calls to waive his near-£1m windfall from the taxpayer-controlled bank, following in the footsteps of the bank’s chairman, Sir Philip Hampton, who made a similar move last week.

RBS is due to announce details of other executive bonus payouts within a month – including an expected £4.4m share hand-out to Mr Hourican, the investment banking chief who has overseen a restructuring that will include about 3,500 job losses, and a £600,500 share reward for group finance director Bruce van Saun.

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Mr Hourican was appointed chief executive of RBS’s investment arm, GBM, where he was previously chief operating officer, in October 2008 as Sir Fred was being forced to leave the institution.

Reports yesterday claimed that Mr Hourican believed he had met all the targets associated with the bonus scheme and would find any attempt by the board to claw back his payout “pretty offensive”.His total pay packet for 2010 was £6.3m, including a share bonus of £2.5m.

Mr Hester’s decision late on Sunday to waive his award of £963,000 in shares came just hours after Labour announced its plans for an Opposition Day debate to force a vote on his payout.

But, despite government insistence that it will not “micro-manage” the government-controlled banks, the opposition will instead ask coalition MPs to support them in imposing a bonus tax that would apply to all banking executives – and which would raise £2 billion.

“This is not about individuals now, it’s about getting a bonus tax supported,” said a spokesman for Labour leader Ed Miliband.

But Ian Murray, Edinburgh South MP and shadow minister for business, said the party was looking to target executive bonuses at RBS and other banks.

He said: “When MPs are, as I was last weekend, dealing with constituents who can’t even pay their tax bill, it is shocking that individuals such as John Hourican are in line to receive awards of more than £4 million..”

A Downing Street spokeswoman said: “What we are not going to be doing is micro-managing. This government has taken action to ensure that bonuses are responsible, they are much lower.”

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It was “a matter for individuals” whether they chose to accept any bonus they were offered, she added.

Mr Hester’s bonus was less than half the amount he was paid last year under the bank’s remuneration scheme following government reforms of the bank’s bonus system, including a cap on cash bonuses of £2,000.

However, campaigners yesterday called on Mr Hourican and Mr van Saun to give up their own payouts from the Edinburgh-based institution, which is 83 per cent owned by the taxpayer.

“There remains a long way for RBS to go in proving its credentials as a responsible organisation, to its customers and also to its thousands of staff,” said David Fleming, national officer for union Unite.

He added: “All the banking bosses should take a long hard look in the mirror before they tap themselves on the back and accept the massive rewards. Many of their employees continue to be overworked and low-paid.”

Simon Chouffet, spokesman for the Robin Hood Tax campaign – a group of charities, trade unions and economists opposed to large bonus payouts in the financial sector, said: “Hester’s bonus is just the tip of the iceberg, if you think that last year at RBS alone, there were 323 people who received more than £1m in total salary payouts.”

Liberal Democrat peer Lord Oakeshott took to Twitter to call for further action against a wider range of RBS high-earners.

“Now we must crack down on bonuses for 323 RBS fat-cats who collected 1.1m each on average last year – the biggest supporting cast since Ben Hur,” he wrote.

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The exact number of RBS staff who are “code staff” – ie have to have their salaries disclosed under Financial Services Authority regulations governing those who are “a material impact on the risk profile of the institution” – for 2011 will not be revealed until the time of the bank’s results at the end of next month, although it is thought likely that it will be lower than the 323 figure of last year.

The bank is believed to have brought the announcement about Mr Hester’s bonus forward due to media speculation.

“Hester’s bonus came out early because of speculation,” said a senior source. “It was considered prudent to just get the figure out there ahead of the official announcement.”

Mr Hester, who took on the top role at RBS three years ago, was given a brief to restructure the bank and restore its fortunes – resulting in 30,000 fewer jobs.

“It would have been fascinating to have been a fly on the wall in the planning of the original RBS bonus news, and I guess there were some interesting conversations between the management and the comms team about the timing and content of the announcement,” added Jim Donaldson, executive vice-president, of corporate communications at public relations firm Weber Shandwick.

The bank will disclose the exact payouts to be handed to Mr van Soun and Mr Hourican – and whether they will take them – before the company’s results are published on 23 February.