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RBS gives staff stock awards to comply with EU bonus cap – but CEO pledges shares to charity
3 min read
14 August 2015
Despite the UK’s biggest banks are sidestepping EU rules limiting bonuses to twice fixed salaries by paying allowances in shares, RBS boss Ross McEwan has chosen instead to give his to charity.
In April, the Treasury – which has a 81 per cent stake in the bank – told RBS it would veto plans for a 2:1 bonus ratio as new EU rules declare that banks need to ask shareholders for approval of annual bonuses above 100 per cent of base salaries.
“The new team at RBS have done a huge amount to repair what went so badly wrong in that bank, but there’s still a long way to go,” chancellor George Osborne said. “We made it clear that in the circumstances it was not right to increase the bonus cap. I’m glad that RBS have agreed with that.”
Instead, the state-supported bank plans to pay staff with role-based awards. Its first act has seen RBS award ten executives with more than 971,000 shares, worth £3.35m.
The biggest award, worth £500,000, was made to CEO Ross McEwan. However, McEwan said at the beginning of 2015 that he did not intend to benefit from the scheme and would give the shares to charity.
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He added that he did not want controversy about remuneration “to be a distraction from the task of building a great bank”.
His decision to hand his shares to unnamed charities is a move that has recently been adopted by more CEOs.
In June, a filing with the Securities and Exchange Commission suggested that Apple CEO Tim Cook had donated 50,000 of Apple’s stock shares to charity. The donation is worth around $6.5m.
One month later, Prince Alwaleed bin Talal, CEO of the Kingdom Holding Company, announced his intentions to give his entire £28bn fortune to charity. His company had a market cap of over $18bn in 2013. He’s believed to be the world’s 20th richest, but said he hoped the donation would help establish a “better world of tolerance, acceptance, equality and opportunity for all”.
Furthermore, Leonard Bosack and Sandy Lerner – the founder of Cisco – donated 70 per cent of what they received from the company when they left.