Top CEO Considered Resigning Amid Bonus Row

Stephen Hester

Stephen Hester, chief executive of Royal Bank of Scotland, considered resigning during the furore over his near £1m bonus but decided it would be too "indulgent" to do so.

Speaking for the first time since he waived his bonus a week ago, the boss of the bailed-out bank admitted he was concerned about the impact the public attention was having on the bank, which he described as "the biggest time bomb in history".

He also insisted that he did not set his own pay and could not become embroiled in the politics over pay differentials, saying he needed to be a "commercial animal" committed to defusing the timebomb that he inherited when he was appointed to replace Fred Goodwin, who was stripped of his knighthood last week.

In an interview on BBC Radio 4 Today programme he also challenged the interviewer James Naughtie about his own pay and whether it would withstand comparisons with nurses or doctors.

"I'm certainly not a robot and there have been some deeply depressing moments. In the end I came to the conclusion it would be indulgent for me to resign and what I ought to do was draw on the reserves of strength I have ," Hester said when asked if he had considered resigning from the role, which has a £1.2m salary before bonuses.

He stressed he was not a banker during the banking crisis and admitted that the banking industry had become "over confident" and that there been "over rewards" in the good times before the near collapse of the bank. As chairman Sir Philip Hampton had said last week, Hester also admitted he had underestimated the scale of the "furore" that his bonus award of 3.6m of shares would cause.

But he insisted that he could not tackle the issue of high pay and differentials through his own pay.

" Of course these issue of what different people get paid are as old as the hills ... I don't have the luxury of that debate. I'm not a politican. What I want to be is a commercial animal," Hester added.

"I think we make a mistake as a society if we forget how wealth is generated and how successful people are motivated and in the case of RBS it's more complicated. .. we're defusing, delicately, a big timebomb" Hetser said.

He insisted that he believed in paying taxes but said: "I don't think cutting down success is the way to go about fairness".

He said he decided not to the take bonus he had awarded by the bank because "I took the judgement that it was going to be damaging for RBS to stay in the intensity of that spotlight that we had got into" and stressed he wanted to "accomplish" the task he had been set – to turn around RBS.

Shortly after he was appointed in October 2008, the bank reported the biggest loss in UK corporate history of £24bn. In an email to staff on Tuesday, he admitted the bank had incurred £38bn of costs trying to clean up the mess but also generated £33bn of profits, before impairment charges.

He was speaking publicly after spending an email to staff, in which he called on workers at the bailed-out bank to be "strong", "purposeful", and "calm", in the wake of the publicity surrounding his decision on the bonus and the stripping of the knighthood from his predecessor, Fred Goodwin.

On Tuesday night the chancellor George Osborne also tried to defuse the row over politics and business that has raged since Hester waived his bonus — followed by the bosses of Network Rail. Osborne said that he believed in the free market" to fight against rewards for failure in the financial system. He added: "There are those who are trying to create an anti-business culture in Britain – and we have to stop them. At stake are not pay packages for a few but jobs and prosperity for the many."

Powered by article was written by Jill Treanor, for on Wednesday 8th February 2012 09.16 Europe/London © Guardian News and Media Limited 2010


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