RBS chief Stephen Hester set for £9.6m incentive package

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The Independent Online

Royal Bank of Scotland is set to reveal a £9.6 million pay package for its chief executive, it was reported today.

The taxpayer-backed bank has won the support of shareholders for its long-term incentive plan for boss Stephen Hester, according to the Financial Times.

It is understood that RBS persuaded UK Financial Investments (UKFI), which controls the Government's more than 70 per cent stake, as well as other large shareholders at a meeting last week.

The RBS chief is understood to be in line for £1.2 million in salary, around £2 million in annual non-cash bonus payments and close to £6.4 million of long term share and stock option awards.

People briefed on the deal said the long-term plan is based on a number of targets, including share price performance, the FT said.

It is understood he would only receive the full share pay-out if the share price passed above 70p.

The stock is currently trading at around 37p after hefty share falls earlier this year in the wake of the Government bailout.

The report said free shares and options would be paid for 2009 but would only be able to be redeemed after three years.

Lloyds Banking Group chief executive Eric Daniels, whose bank is 43.4 per cent owned by the taxpayer, is thought to earn an annual £1 million in basic salary plus a maximum of £2 million as a long-term incentive.

Mr Hester's pay package - thought by some to need the sizeable long-term portion because the job of getting the bank back on to its feet is so challenging - was agreed just a day after his predecessor agreed to a voluntary cut to his controversial pension payments.

Sir Fred Goodwin, vilified as being the man at the helm of RBS when it crashed into public ownership last year, was the centre of public outrage over the size of his retirement fund.

Last week the ex-chief executive offered to hand back more than £210,000 a year of his pension payout, reducing his payout from £555,000 to £342,500 a year.

Public fury was fanned earlier this year when it was revealed his agreement to step down from the bank as the state came to its rescue effectively doubled his pension pot, leaving him with a £703,000-a-year package - including a £2.7 million lump sum.

Under his leadership RBS was heavily exposed to toxic assets and bad debts, and disastrously bought Dutch bank ABN Amro at the top of the market in 2007 before the credit crunch struck.

The new chief executive pay deal comes as reports revealed the RBS corporate hospitality package for Wimbledon is costing up to £300,000.

An email leaked to the Mail on Sunday describes the bank's booking of an "entertainment suite" for more than 42 guests for each of the tournament's 13 days, at a cost of at least £19,500 a day.

The bank will also pay up to £100 for each Centre Court seat and £75 a head for lunch, according to the paper.

RBS said it was tied into the Wimbledon contract but stressed it had slashed corporate spending by 90 per cent.