Grilling over new pay policy looms at RBS investor AGM

L Boss Ross Mcewan and finance chief Ewen Stevenson in the spotlight

Bank of Scotland’s top brass face a grilling at this week’s shareholder annual general meeting about its remuneration policies and branch closure plans.

At least two corporate governance groups have urged RBS investors to reject a new pay policy, which will face a bindingvoteatthebank’sagm at Gogarburn this Thursday.

Under the new plan, chief executive Ross Mcewan would be eligible for a longterm award of 175 per cent of his salary and chief financial officer Ewen Stevenson 200 per cent.

The awards – RBS does not pay annual cash bonuses to its senior executives – are a sharp decrease on the previous planned level of 400 per cent, but investor advisory group Institutional Shareholder Services (ISS) said this was not considered “sufficient”.

It has urged shareholders to vote against the new levformance, els. In addition, ISS expressed concern over proposals that would see the removal of socalled “pro-rating” of incentive plans – meaning executives might qualify for full long-term awards even if they leave the bank before the end of the scheme.

ISS has said that the reduction in bonuses to RBS’S top duo does not offset “uncertainty around how performance will be assessed”.

Pensions & Investment Research Consultants (Pirc) welcomed the cut in bonus levelsformcewanandstevenson, but has called on shareholders to vote against the new remuneration scheme, saying: “The executives should be rewarded for the period they served the company and nothing more.”

Another shareholder advisory firm, Glass Lewis, has advised shareholders to approve the new remuneration levels while saying it “harbours reservations” about the pro-rating removal policy.

RBS said that the aim of the new policy is to “encourage sustainable long-term perroyal with executive directors having significant alignment in shares both during and after employment”.

Pirc is also advising shareholders to oppose the reelection of RBS chairman Sir Howard Davies over the lack of female representation on the board of the bank, which is still 72 per cent owned by the taxpayer.

Pirc said that there is “no clear commitment to increase overall gender diversity at board level”. RBS, like rival Lloyds Banking Group, which is also holding its AGM in Scotland this Thursday – at the Edinburgh International Conference Centre – may also face shareholder criticism at significant proposed branch closures.

Both Mcewan and Lloyds counterpart Antonio Hortaosorio have said repeatedly that this is due to far more customers doing their banking via mobile phone and other electronic devices.

RBS recently announced a first-quarter profit of £259 million in 2017, its first quarterly profit since Q3 2015, while Lloyds doubled its Q1 profit to £1.3bn .RBS