The all-stock award of 3.6 million shares, whose value was based on the closing price on Jan. 25, will be deferred until 2014, Edinburgh-based RBS (RBS) said in a statement yesterday. Hester, 51, took a 2 million-pound bonus for 2010, his first in three years since he replacedFred Goodwin. He made 1.22 million pounds in salary last year.

“His pay is strongly geared to the recovery of RBS, which he was recruited to turn around, having played no part in its collapse,” RBS said in the statement.

Executives at RBS, Britain’s biggest government-controlled lender, have been urged by Prime Minister David Cameron to show restraint on pay at a time when real household incomes are falling and public spending is being squeezed. Cameron this month said Hester’s bonus should not exceed 1 million pounds this year.

Chris Leslie, the opposition Labour party’s spokesman for finance, said Hester’s award showed that Cameron’s promises to rein in excessive bonuses at state-owned banks “have proved to be utterly worthless.”

“Anyone who thinks it is acceptable to award a bonus of almost 1 million pounds on top of a basic salary of 1.2 million pounds in these tough times is desperately out of touch with millions of people who are struggling to make ends meet,” Leslie said.

Conservative Party

A spokeswoman for Cameron’s office declined to comment on Hester’s compensation. Cameron’s Conservative Party said that Labour failed to curb bonuses when it was in power.

“It would clearly have been unacceptable for Stephen Hester’s bonus to have been the same as last year,” the Conservative Party said in an e-mailed statement. “We have been very clear that at RBS and in other banks the bonus pool has got to be considerably lower than it was last year.”

Lloyds Banking Group Plc (LLOY) CEO Antonio Horta-Osorio said on Jan. 13 he won’t take a 2011 bonus following his nine-week absence for exhaustion at the 41 percent government-owned lender. The payment could have been as much as 2.39 million pounds, according to company filings.

Britain has an 82 percent stake in RBS after bailing out the bank with 45.5 billion pounds of capital during the banking crisis in 2008 and 2009.

To contact the reporter on this story: Gavin Finch in London at gfinch@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net

http://www.bloomberg.com/news/2012-01-26/rbs-s-hester-will-get-bonus-of-3-6-million-shares-valued-at-1-51-million.html

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