The chair of Royal Bank of Scotland's remuneration committee has defended the bonus awarded to chief executive Stephen Hester, saying economic conditions "really can't concern our decision-making at RBS".
Penny Hughes joined the board two years ago and leads the committee which granted Hester's controversial £963,000 bonus for 2011. Hester has waived the payout after a storm of protest from the public and politicians.
Coca-Cola's former UK chief, Hughes is now a full-time company director and earns £130,000 a year from her role at the taxpayer-owned bank.
"Obviously the economic conditions are less good – but that really can't concern our decision-making at RBS," she said in an interview with the Financial Times, her first since joining the bank.
Hughes confirmed suggestions from the RBS chairman Sir Philip Hampton that the board will take a fresh look at pay guidelines, but her comments suggest that reforms will be limited.
"Of course we don't wish to have a repeat event and we will pause to reflect what, if any, changes we should make, but please remember that a CEO has a contract."
She pointed out that 99.2% of shareholders had approved the current pay structure when it was voted through, which by listed company standards is a high level of endorsement for a remuneration proposal.
The taxpayer owns 83% of RBS after the government spent £45bn to stop it collapsing during the 2008 financial crisis. Hughes described the task faced by Hester and his management team as "the world's biggest corporate turnaround" and said they should be rewarded accordingly.
"It's very clear what the market rates for various different jobs are … We can't be in a position where we penalise people because RBS is, to an extent, supported by the taxpayer as a consequence of actions from prior management."
Hughes is also a non-executive director at Wm Morrison Supermarkets and Cable & Wireless Worldwide, where she was appointed senior independent director in June last year during another high-profile dispute over executive pay.
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