In a statement to the stock exchange, the board of RBS said it will not seek shareholder approval to pay a 2:1 ratio of bonuses to fixed pay.
This comes after UKFI, the investment company through which the government supports RBS, said it would vote against such a move.
As such, RBS expects such a resolution would fail and will not bring it at the company’s AGM.
Instead, the board will ask shareholders to approve bonuses for its executives equivalent to their salaries, using a 1:1 ratio.
The bank said in a statement: “All of our major competitors in the UK and Europe have indicated that they will seek approval from their shareholders to award variable remuneration up to 200% of fixed pay i.e. a 2:1 ratio.
“The board believes the best commercial solution for RBS is to have the flexibility on variable to fixed pay ratios that is now emerging as the sector norm. This would also allow RBS to maintain the maximum amount of compensation that could be subject to performance conditions including claw back for conduct issues that may emerge in future.
“UKFI has informed the board that it will vote against any resolution which proposes a 2:1 ratio. In these circumstances, the board expects such a resolution would fail and will therefore not be brought to the AGM. The board acknowledges that this outcome creates a commercial and prudential risk which it must try to mitigate within the framework of a 1:1 fixed to variable compensation ratio.”
The row over bank bonuses intensified yesterday during Barclays’ AGM, when angry investors jeered senior executives and key shareholder SLI publicly criticised Barclays’ remuneration policy.
Barclays proposed to increase its bonus pool by 10% to £2.4bn for 2013 despite pre-tax profits falling 32% to £5.2bn, sparking investor fury, although the resolution was eventually passed.
