Sir Fred's bonus scuppered by RBS fall
December 22nd, 2007 by kimberlySource: Telegraph.co.uk ()
Sir Fred’s bonus scuppered by RBS fall
By Iain Dey
Last Updated: 11:29pm GMT 22/12/2007
Sir Fred Goodwin, the chief executive of Royal Bank of Scotland, looks set to miss out on a bonus worth almost £1m, as a result of the bank’s diving share price.
Details buried in the bank’s last annual report reveal that Goodwin is in line for a £1.7m bonus from his medium-term bonus plan - in addition to his salary and other bonuses.
But RBS’s dismal returns to shareholders over the past three years will ensure most of the bonus does not pay out.
The lost bonus comes in a year that saw Goodwin lead the consortium that secured the £50bn acquisition of ABN Amro in the teeth of the credit crunch - a deal which has seen him earn the title Banker of the Year from some industry bodies.
RBS has generated a total shareholder return of minus 11 per cent over the three-year period linked to the bonus, according to analysts. The European banking sector has generated total returns of 54 per cent over the same period, leaving RBS’ performance well below many peers.
The same bonus scheme paid nothing to any RBS executives last year. But a change in the performance terms could see up to half the projected total payout.
Johnny Cameron, the head of RBS’s investment banking business, was in line for up to £800,000 from the same scheme. Gordon Pell, the bank’s head of retail operations, was in line for up to £700,000. Mark Fisher, the most senior former NatWest executive on the RBS board, could have made as much as £600,000 from the scheme.
Even Larry Fish, head of the Bank’s US division, was in line for a payout from the scheme - even though he has a separate scheme of his own.
The scheme operates on a three-year rolling performance basis. Cash allocated as a bonus for the bank’s performance in a given is set aside in an escrow account and only pays out to the executives in question …