RBS reveals boss's secret pay deal

By This Is Money
Updated: 11:39 EDT, 17 March 2006

ROYAL Bank of Scotland paid out $7.7m (£4.4m) to the head of its US operations in 2005 under a 'secret' pay scheme set up six years ago.

The award to Lawrence Fish from the Phantom 2000 share-option plan meant the 61-year-old earned £20,630 a day - or nearly three times as much as RBS chief executive Sir Fred Goodwin last year.

Shareholders lobbied RBS to reveal the size of the payouts at its 2004 annual meeting, but had to wait until the publication of the annual report today for the full details.

Among groups pressing RBS to improve transparency included the Local Authority Pension Fund Forum (LAPFF) and the National Association of Pension Funds (NAPF).

The accounts reveal that Mr Fish, who heads RBS subsidiary Citizens, received the £4.4m sum for one million phantom units and he retains a similar amount of options due to vest next year.

The payment was part of a total package of £7.53m that Mr Fish took home last year, which also included a £824,000 base salary and £1.65m performance bonus as well as $1.3m (£741,000) from a long-term incentive plan.

In contrast, Sir Fred earned £2.89m in pay and bonuses or 15% more than he banked for 2004.

RBS said the value of the options granted to Mr Fish under Phantom 2000 was linked to profits generated by Citizens and market trends in the US banking sector. But it promised that no more grants would be made under the plan.

The UK's second-largest bank last month beat expectations with a 21% rise in annual pre-tax profits to £7.94bn and posted an even higher surplus of £8.25bn for last year after stripping out one-off items.

The bumper earnings meant 113,000 employees based around the UK who participate in the company profits share scheme split a bonus of £232m - equivalent to £2,100 per person.

Citizens contributed £1.71bn to profits last year against £1.19bn a year earlier, forming part of an overseas business that now deliver 42% of annual earnings.