Royal Bank's top two executives pocket £14m

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Royal Bank of Scotland's two most highly paid executives received pay packages worth almost £14m combined last year, according to the bank's annual report. The report, published yesterday, shows chief executive Sir Fred Goodwin and US-based director Larry Fish received pay, share options and pension contributions worth a total of £13.8m in 2005.

Sir Fred's basic pay for 2005 was £1.09m, but he also received a performance bonus of £1.76m, plus other benefits worth £43,000, which took his total package to £2.89m, a 15 per cent increase on 2004.

However, in common with several other large UK banks, the biggest pay packet at RBS was reserved for its US chief.

Mr Fish was paid a basic salary of £824,000 last year, plus bonuses and benefits worth an additional £1.69m. He also received benefits worth $8.8m (£5.0m) from share option schemes at RBS's US subsidiary, Citizens Bank, where he is chairman and chief executive officer.

Additional pension payments to the two men, including a £1.53m contribution to Sir Fred's fund, and an additional £1.88m for Mr Fish, swelled the two men's combined total remuneration package to £13.81m.

Two other directors - retail bank chief Gordon Pell and former finance director Fred Watt - also received more than £1m in pay and bonuses last year. Mr Pell and Mr Watt were paid £1.59m and £1.4m respectively.

RBS also revealed that Guy Whittaker, who replaced Mr Watt as finance director in February, is to receive shares worth more than £3.4m over the next four years. In addition, he was paid an immediate cash bonus of £1.2m on joining RBS, as compensation for the bonuses he would have received had he stayed at Citigroup, his previous employer.

Mr Whittaker is to receive £963,000 worth of RBS shares this year, plus stock worth £2.45m that will be awarded in three tranches between now and 2009.

The size of the pay packages will surprise some in the City. One analyst said: "RBS's latest results were fine, but the shares have underperformed for the past three years and even this year, total returns have been middle of the table."

Brian Gallagher, the campaigns officer at the trade union Amicus, which represents many banking staff, criticised the pay awards. He said: "It is scandalous that these directors are paid so much when so many banking staff are on such low wages."