The chief executive of Royal Bank of Scotland is set to pocket another multimillion-pound bonus for a year's work that has seen the share price more than halve.
Details of Stephen Hester's award are still being worked on, but it is clear that the state-owned business intends to see he gets another controversial payment. The Government stepped in to save the collapsing bank in 2008, taking an 84 per cent stake at 50p a share, or £45bn.
The share price has tumbledfrom 49p last February to 20p today, leaving taxpayers heavily underwater. That is likely to prompt fresh questions about why executives are rewarded for their performance long before actual results are delivered.
Mr Hester, brought in to clear up the mess left by the previous chief executive, Sir Fred Goodwin, got a package of £7.7m last year. That prompted anger from small investors at the RBS annual meeting. One accused the directors of having "an inflated sense of their own importance".
Another said bonuses should not be paid until the bank is again handing a dividend to investors, which looks a long way off.
Mr Hester's pay has been defended by his chairman, Sir Philip Hampton, on the basis he was "working like stink" to turn around the bank.
Mr Hester has admitted that even his parents think he is overpaid.
The bank's remuneration committee is due to meet soon to discuss the issue. An RBS spokesman said: "No decision has been made. It is too early to speculate."
The fall in the share price means this year's pay package is likely to be lower than last, but it is still likely to prove politically awkward. David Cameron yesterday announced plans for a clamp-down on executive pay, saying investors should take greater responsibility over the issue. He is open to charges of hypocrisy if the Government allows high levels of pay at companies in which it is the largest shareholder. UKFI, the body that manages the taxpayer's holding on behalf of the Treasury, last year voted in favour of the RBS pay deals.
Meanwhile, there is growing concern in the City at how far the Government may be willing to go in imposing rules on pay. Until now, neither political party has wanted to do so, fearing it would send the wrong message to international companies about Britain's appreciation of entrepreneurs. But with the public anger at banker pay showing no sign of abating, it is possible that genuine reform could come.
Paul Randall, a partner at the law firm Ashurst, said: "It is increasingly clear that the Government is going to legislate further on executive pay, in particular as to disclosure of pay, the composition of remuneration committees and to give shareholders more specific votes on bonuses and termination payments than they have at present."