RBS chief executive Stephen Hester 'won't be the last' to refuse big bonuses

Comms professionals have suggested that more CEOs will bow to political pressure and waive their bonuses, following the move by RBS chief Stephen Hester.

Stephen Hester: refused his near £1m bonus
Stephen Hester: refused his near £1m bonus

The Royal Bank of Scotland chief executive is thought to have made his decision to refuse his £963,000 shares-only payment last night while on holiday in Switzerland.

Hester’s move comes after a weekend of intense political scrutiny around his bonus, and Labour’s attempt to force a Commons vote on the payment.

Jim Donaldson, executive vice-president, corporate comms EMEA, Weber Shandwick, said: ‘The Stephen Hester decision to turn down the bonus was almost inevitable given the pressure cooker environment and the political storm that had been kicked up.

‘It would have been fascinating to have been a fly on the wall in the planning of the original RBS bonus news and I guess there were some interesting conversations between the management and the comms team about the timing and content of the announcement.’

RBS have not issued a formal statement but did tell PRWeek: ‘It is accurate that he is refusing his bonus but we don't have any further comment to add.’

Donaldson suggested the handling of the announcement had damaged the RBS brand further: ‘Unfortunately, the outcome of all of this is further damage to the RBS brand at a time when it can least afford it. It also raises a number of governance issues that will be interesting to watch – it was a board decision after all – and of course, there has been little discussion about what appears to be the decent job Hester has been doing at RBS for the taxpayer.’

He also said stories like this would keep running and running, something echoed by Chris Rumfitt, public affairs MD at Edelman.   

Rumfitt said: ‘Stephen Hester has bowed to the inevitable under intolerable political pressure. But he's not the first CEO to give up a bonus in such circumstances, and won't be the last.’

Rumfitt added that this stance could see an end to big corporate bonuses: ‘The climate on remuneration has changed utterly since Peter Mandelson said he was "intensely relaxed" about high pay.

‘Every boardroom in the country will be reflecting on this today – under what circumstances will big bonuses ever be acceptable again?’

Hester replaced Sir Fred Goodwin as chief executive in 2008 when the bank had to be bailed out by the Government, which now owns 82% of it.

Despite the Government's share, it is a public company run by an independent board of directors. Ministers said they were unable to block the bonus but called for Hester to refuse the payment.

Labour leader Ed Miliband, Chancellor George Osborne and shadow business secretary Chuka Umunna have publicly welcomed the move by Hester.

Scotland's first minister Alex Salmond also welcomed the move, although he argued bonus decisions should not be left to individuals: ‘It should never have come to this stage as these circumstances cannot be left to individual decisions. They must be a matter of public policy.’

Lexis corporate head James Thellusson was quick to dismiss any talk of this being a PR stunt.

‘I think this is a genuine change of tack caused by the risks of a vote in Parliament. If it was as a PR stunt, one would have announced the refusal earlier to win plaudits for proactivity and to take the wind out of the attack from Labour.’

He added that this decision ‘further politicises pay’.  ‘It has given Labour a rare taste of success, which they will try to exploit further. I think it is the first tangible victory in Milband’s ‘predatory capitalism’ strategy.’

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Already registered?
Sign in