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| RBS boss set for £9.6m pay deal | RBS boss set for £9.6m pay deal |
| (20 minutes later) | |
| Royal Bank of Scotland is this week expected to approve a pay package worth up to £9.6m for its chief executive Stephen Hester. | Royal Bank of Scotland is this week expected to approve a pay package worth up to £9.6m for its chief executive Stephen Hester. |
| The remuneration deal was agreed on Friday by RBS chairman Sir Philip Hampton and its leading shareholders. | The remuneration deal was agreed on Friday by RBS chairman Sir Philip Hampton and its leading shareholders. |
| One of the groups represented was UK Financial Investments, which manages the 70% stake in RBS held by taxpayers. | One of the groups represented was UK Financial Investments, which manages the 70% stake in RBS held by taxpayers. |
| The package is made up of £1.2m in pay, up to £2m in non-cash bonuses and up to £6.4m in long-term incentives. | The package is made up of £1.2m in pay, up to £2m in non-cash bonuses and up to £6.4m in long-term incentives. |
| The long-term incentives will only be payable if share price targets are hit over the next three years. | The long-term incentives will only be payable if share price targets are hit over the next three years. |
| It is important that the incentives are linked to the share price because the government is keen to sell its shareholding, which was bought at a price of about 50 pence a share. | |
| In early trading on Monday, the shares were trading at 37p a share. | |
| Mr Hester would only get the maximum remuneration if the share price were to hit 70p, which would give the taxpayer a profit of £8bn. | |
| Risky lending | |
| Mr Hester took over as RBS chief executive late last year following the departure of Sir Fred Goodwin. | |
| In April, RBS announced 9,000 job cuts, having made a loss of £24.1bn in 2008 - the largest loss in UK corporate history. | |
| The problem, according to BBC business editor Robert Peston is that Bank of England governor Mervyn King has said that banks still are not lending enough money to fuel a recovery. | |
| Lending more money would be risky and might not be compatible with big growth in the RBS share price. |