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RBS chief Stephen Hester to receive £600,000 share windfall

Weeks after waiving £1m bonus, head of struggling bank is among top executives to be given a combined £11m

Stephen Hester, chief executive of the Royal Bank of Scotland, is on course to be handed £600,000 in shares next month – just weeks after a political outcry forced him to waive a bonus of nearly £1m.

Hester is among a number of top RBS bankers who are poised receive a combined £11m in the coming months when bonuses awarded up to three years ago pay out.

The bank has attempted to defuse the row over the £1m payout for Hester, who admitted that he had considered resigning at the height of the row over his bonus at the end of January but concluded that it would be “indulgent” to do so.

Earlier this month, Hester admitted that he could not win “the societal argument” about the size of his pay. He is scheduled to face City analysts next Thursday, when he announces the struggling bank’s results for 2011.

The bank is not expected to discuss payments to Hester or other individuals when the results are released, but it will disclose the total size of the bonus pool for 2011. Analysts have speculated that it will stand at around £500m.

Due to the complexities of City pay deals, the latest shares being handed to Hester relate to his work for 2010. The £600,000 is based on an award of 4.5m shares he received last March, half of which are due to be handed to him on 7 March, although he has agreed not to sell them for another 12 months.

On the same date next month, eight of his most senior management team – including the head of the investment bank, John Hourican – are also scheduled to receive their share awards from 2010, worth around £1.2m in total, which they cannot sell for six months.

Awards of shares made three years ago are also due to be paid out to other senior staff in coming months, with a total value at current prices of around £3m.

Hourican stands to reap the greatest rewards – up to £6.2m by April, when as many as 21.3m shares could be released to him on top of the March payout if he has met the performance conditions set three years ago. He could receive even more if the bank’s share price creeps above 28.2p, as he has an options scheme that allows him to buy shares at that price. On Friday the shares closed at 27.6p, some 22p lower than the taxpayer paid for them – the equivalent to a paper loss for the Treasury of more than £22bn.

The share price was 44p when Hester and his colleagues were awarded the shares, so they have lost almost half their original value.

A spokesman said: “These were announced last year and endorsed by 99.2% of our shareholders”.

The bank’s chairman, Sir Philip Hampton, defended the chief executive after the bonus row. “He is doing one of the hardest jobs in the world. He is being paid at the low end of the range,” Hampton said. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds