RBS and Lloyds bosses set to be grilled by investors

RBS under shareholder pressure
RBS under shareholder pressure

Investors are set to grill bosses at Royal Bank of Scotland (RBS) and Lloyds Banking Group this week, with executive pay and branch closures expected to be high on the agenda at AGMs in Edinburgh.

The banks will see little reprieve from shareholders on May 11, despite a return to form in the first quarter which saw Lloyds double profits and RBS swing back into the black.

RBS shareholders are being urged to vote against a new remuneration policy, which will face a binding investor vote at its annual meeting at Gogarburn.

Under the new pay plan, chief executive Ross McEwan would be eligible for a long-term award of 175% of his salary and finance chief Ewen Stevenson 200%.

Although the awards are a decrease on the previous 400%, investor advisory group Institutional Shareholder Services (ISS) said this was not “sufficient”, and recommended shareholders oppose the remuneration policy.

In addition, ISS expressed concern over proposals that would see executives remain in line for pay awards even after they leave the bank.

Pensions & Investment Research Consultants (PIRC) is also calling on shareholders to vote against the new pay scheme, stating: “The executives should be rewarded for the period they served the company and nothing more.”

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

PIRC is also advising shareholders to oppose the re-election of chairman Sir Howard Davies over the lack of female representation on the board.

In a report, the group hit out at the fact there is “no clear commitment to increase overall gender diversity at board level”.

While there are no signs that Lloyds will be hit with a shareholder rebellion, the bank could still face tough questions over plans to slash its high street branch network and efforts to redress fraud victims who suffered at the hands of former HBOS staff.

Lloyds also said last month that it would be making compensation offers to HBOS fraud victims in May, while payments are expected to begin in June.

It comes after a group of corrupt financiers were jailed for carrying out a £245m loans scam and squandering the profits on high-end prostitutes and luxury holidays.