Royal Bank of Scotland bows to shareholder pressure
In a humiliating U-turn, Royal Bank of Scotland chairman Philip Hampton will be forced to admit that the company's executive pay scheme needs to be reviewed. It is believed that the U-turn will be announced on 28 April at the company's annual general meeting although we may not see details of the revisions until after the company's trading statement which is expected on 7 May. However, the company has already privately admitted that the share price target which would qualify various directors for significant bonuses has been set too low.
The suggestion that the executive pay scheme will be reviewed and amended in the short to medium term comes just days after Lloyds Bank felt the wrath of the ABI regarding bonus recommendations. There is no doubt that shareholders are no playing a more active role with regards to remuneration packages and bonuses and we can expect more friction and more conflicts in this particular area in the weeks and months ahead.
Shareholders, especially taxpayers, are now demanded more value for money which could put some companies such as Lloyds Bank, Royal Bank of Scotland's and even Northern Rock in very difficult positions regarding remuneration and attracting the best staff. There is certainly a need to find a balance between acceptable remuneration and value for money.
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