Royal Bank of Scotland is poised to release millions of pounds worth of shares to its top executive team through bonus schemes put in place by the loss-making bank over the last three years.
The scale of the bonuses scheduled to be handed out could be known on Friday – the usual date for the release of RBS bonus shares – as the bank will need to announce to the stock market how many it is releasing to executives.
The release of the shares share award will put a fresh focus on the pay policies of the 81% taxpayer-owned bank – where losses since the financial crisis have now surpassed the £45bn of taxpayer money used to prop up the bank.
It also comes days after Barclays boss Antony Jenkins admitted he had to pay multimillion pound bonuses to investment bankers to avoid a mass exodus of staff sending the division into a "death spiral".
Last week RBS announced that Rory Cullinan – recently promoted to run its newly created mini-bad bank – had sold shares and exercised options worth £1.1m.
RBS's disclosures about Cullinan were the first since he was promoted to the executive team assembled by new boss Ross McEwan, who took the helm of the bailed out bank on 1 October.
Cullinan previously ran the non-core division of the bank but was not part of the executive committee, made up of the most senior executives outside the boardroom. This meant previous awards of shares to Cullinan did not have to be disclosed, but his promotion to run the new so-called capital resolution group required the bank to release details of any share payments to him.
McEwan has reorganised his executive committee in a series of moves since he took the helm, culminating last week in the promotion of Alison Rose to run the commercial and private bank and Donald Workman to run the Asian businesses.
In January McEwan ordered that members of the committee waive their bonuses for 2013 before he announced £8.2bn of losses last week, but that move would not affect those recently promoted – Rose, Cullinan and Workman – who are still in line for share bonuses for last year.
Last week McEwan defended the need to pay bonuses and refused to reveal how the bank intended to handle the EU's cap on bonuses, which has led other banks to hand "allowances" of shares to top staff.
RBS is yet to publish its annual report which will provide more detail about its pay policies, including how many staff were paid over £1m. It has been reported that up to 80 staff – compared with 95 last year – will have been paid over £1m. The bank has several bonus schemes many of which pay out between March 7 and 9 and date back a number of years. As a result of the complexity of the schemes and the changes to senior management, the value of the series of bonuses due to be released is difficult to calculate before the bank's announcement as they are subject to performance conditions.
Former boss Stephen Hester and former head of the US operation Ellen Alemany are among those in line for payments, though the bank is under no obligation to confirm payments to past directors.
A few remain, notably, Bruce van Saun, former finance director, who has relocated to the US to prepare the operation for a stock market flotation; his successor as finance director Nathan Bostock, who was promoted internally but is in the process of leaving for Spanish bank Santander; and long-serving employee Chris Sullivan, who was last week named deputy group executive. As Bostock is leaving, it is thought unlikely he will get the shares.
Any shares being handed to Hester – now boss of the insurer RSA – are under the terms of the package agreed at the time of his resignation in June when the bank said the maximum value of any share plan would be £4m in coming years. It is thought unlikely be will receive that amount.
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