Stephen Hester decides not to take his shares-only bonus of nearly £1m, but is it fair to single him out? Detonating his persona will do nothing to stop another financial crisis, writes Jon Snow.
Stephen Hester has bowed to intense political and media pressure to waive his bonus worth almost £1m.
Royal Bank of Scotland confirmed late on Sunday that the chief executive would forgo the 3.6 million shares package worth £963,000.
Chancellor George Osborne called his decision “sensible and welcome”.
Labour had planned to force a Commons vote calling for Mr Hester to be stripped of his bonus and claiming the prime minister’s “failure of leadership” could not be allowed to stand. Ed Miliband said Mr Hester “has done the right thing”.
Feeling sorry for Hester?
Does one feel sorry for Stephen Hester? You may see this as a useless and irrelevant question, writes Jon Snow.
But when Labour got into the business of bust banks, ministers found that if they were to save the accounts, savings, mortgages, and investments of millions of taxpayers, they had to adopt the mechanisms and practices that in public, they said they most abhorred.
By all accounts, Hester has fulfilled his side of the bargain - shed vast elements of RBS's balance sheet that should never have been there in the first place. He is reportedly making progress in getting the bank into some kind of long-term shape.
Read more from Snowblog
Stephen Hester is entitled to both short-term bonuses and long-term incentive bonuses based on factors such as performance and meeting targets.
The £963,000 he was awarded last week was a short-term bonus equalling 3.6 million shares, relating to the 2011 calendar year. Short-term bonuses are capped at 200 per cent of his annual salary, so his last payout was not as large as it could have been.
The long-term scheme is based on the previous three years, so Mr Hester is approaching the point at which it can come into effect. It is thought the long-term bonus could reach £8m, but it is unlikely that maximum target will be met.
Read more: Are bankers worth their weight in gold?
Prime Minister David Cameron had on Saturday sidestepped calls to personally block Mr Hester’s award, saying: “It is a matter for him.”
Work and Pensions Secretary Iain Duncan Smith, speaking on the BBC on Sunday morning, took the same line, saying it was for Mr Hester “individually to make a decision” about whether to accept his bonus.
He continued: “Nobody would be happy with the government if, of course, he took such decisions, but it’s up to him.”
And he blamed the previous government for a pay structure entitling the RBS chief executive to his present level of remuneration.
“The reality is, the contract we inherited from Labour meant that very clearly the board takes the decision on this, you can’t interfere and tell them what to do,” Mr Duncan Smith said.
But Labour leader Ed Miliband led calls for the prime minister to take action, insisting he had “another chance” to change his mind at the RBS annual general meeting.
He said: “Freezing the pay of a nurse or hospital porter, while allowing a publicly owned bank to pay million-pound bonuses is the last nail in the coffin of this prime minister’s claim that we’re all in it together.