RBS shareholders reject executives’ payout at AGM

04 Apr 2009

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Investor activism came to the fore as Royal Bank of Scotland's shareholders emphatically rejected the £700,003 annual pension awarded to former chief Sir Fred Goodwin at a tense meeting in Edinburgh. About 90 per cent of the beleaguered bank's shareholders voted against its remuneration report, including UK Financial Investments, which manages the taxpayers' majority stake.

The shareholders also rejected executive directors' pay totaling £7.35 million ($10.9 million), and voted against the pension proposed for Johnny Cameron, the departed head of investment banking activities that produced the lion's share of the group's losses in 2008. (See: RBS splits assets after record $34 billion net loss)

Upon leaving the group, Goodwin received a pension payout of £16.63 million and Cameron received £1.36 million. Goodwin's pension, especially, has stirred up strong feelings among elected officials and the public. Most recently, his house in Edinburgh was vandalized by people who later claimed responsibility in an e-mail to newspapers, saying, "Bank bosses should be jailed. This is just the beginning." Government officials and RBS's new management have asked Goodwin to return the pension, which he has rejected.

The decision to reject pension and remuneration deals had been widely expected since UK Financial Investments - which controls the government's 57.9 per cent stake in the bank - said on Tuesday that it would vote against the proposals.

Such no votes are rare but have led to changes in the past. For example, United Business Media boss Lord Hollick waived a £250,000 bonus after just 13 per cent of the media group's shareholders supported its remuneration report in 2005.

RBS shareholders did however give the thumbs up to the appointment of new CEO Stephen Hester and chairman Philip Hampton, as well as the bank's 2008 annual report.  The appointments received 99 per cent of the votes cast.
 
Speaking at the bank's Annual General Meeting, private investors poured scorn on directors who they hold responsible for the collapse in the value of their investments in the bank. Some of the focus was on chief financial officer Guy Whittaker, as well as Gordon Pell, the two last surviving board members yet to be replaced in the wake of the semi-nationalisation of the bank. (See: British government becomes majority shareholder in RBS as investors reject stock offering)

The bank's purchase of Dutch rival ABN Amro in 2007 proved calamitous for RBS, weighing it down with billions of pounds of sub-prime assets. Sir Fred and the bank have been the focus of public anger as the banking crisis sends the British economy into deeper recession. (See: RBS consortium trumps Barclays' bid for ABN Amro with $98 billion offer)

RBS admitted today that it would add to the 2,700 jobs it has already cut in the UK. Its cost-cutting plan is targeting savings of £2.5 billion over the next three years.

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