Royal Bank of Scotland executives are likely to face a grilling from shareholders at its annual general meeting (AGM) Thursday over pension payments for top bosses, including its outgoing CEO Ross McEwan.
McEwan, who announced Thursday that he will step down as CEO next year after five-and-a-half years at the helm, receives an annual pension entitlement of £350,000 ($451,053.75), amounting to 35% of his £1 million base salary.
His pay packet also included a £1 million fixed share allowance and a £1.1 million long-term incentive award.
RBS branch staff typically receive a pension allowance of around 10%, as does newly-appointed Chief Financial Officer Katie Murray.
The bank, which is still 62% owned by the taxpayer, has faced resistance from the Investment Association (IA), which has 200 members collectively managing over £7.7 trillion ($9.92 trillion) in assets, along with shareholder society ShareSoc and shareholder advisory body PIRC.
Earlier this month, ShareSoc director and RBS shareholder committee campaign co-ordinator Cliff Weight advised members holding RBS shares to vote against the bank’s remuneration report.
Weight cited the discrepancy between McEwan’s pension allowance and the rest of the company, while also highlighting the low shareholding of RBS Chairman Howard Davies, who reportedly owns 80,000 shares worth £200,000 while taking an annual salary of £761,000.
“He has very little downside risk if the share price decreases,” Weight’s notice to shareholders stated.
“He should not be over-incentivized, but he should have much greater alignment with shareholders.”
On April 16, PIRC also recommended shareholders block the remuneration report, arguing that the 2018 ratio of CEO to average employee pay at 46:1 was “unacceptable.”
However, rival investor advisors Glass Lewis and ISS (Institutional Shareholder Services) have recommended shareholders back the report.
Scrutiny on RBS is sure to intensify after fellow banking giant HSBC bowed to investor pressure before its annual meeting on April 12, and cut payments given in lieu of pensions to top executives down to 10%.
A spokesperson for RBS was not immediately available when contacted by CNBC.