RBS shares fall on FTSE 100 as bank offers bonuses for risk handling - not just profit

Mr Hester’s decision to forgo his bonus came in response to public anger at banker’s pay and bonus. Fellow banking CEO’s Eric Daniels (Lloyds Banking Group), John Varley (Barclays) and Michael Geoghegan (HSBC) also said they would either be forgoing their bonuses or donating them to charity.

Under RBS’ new long-term incentive plan, unveiled in its annual report for 2009, up to 400 per cent of directors annual pay could be given to top executives in shares, should they fulfil a set of stringent criteria.

Mr Hester, who earns a basic salary of £1.2 million, could potentially receive an extra £4.8 million in shares under the scheme. The scheme still needs to be approved at RBS’ annual meeting on 28 April.

In its annual report RBS said that rewards for performance would be assessed based on the achievement of financial results “without excessive risk”, rather than on profit alone.

By 11:02 shares in RBS were down 2.38 per cent to 42.51 pence per share.