NatWest Group is to give its CEO a potential multi-million pound raise as it becomes fully privately owned again after almost 17 years in state hands.
Sky News has learned that the chair of the bank’s remuneration committee, Lena Wilson, is consulting with major institutional shareholders over an overhaul of its board remuneration policy.
Details will be put to a vote at NatWest’s annual meeting next spring, under rules requiring investors to vote on remuneration policies every three years.
Under the plans, Paul Thwaite, who took over as interim CEO of the bank in July 2023 before being given the role on a permanent basis in February, would be in line for an increase in his maximum annual bonus of 100% of his salary. basic at 150%.
NatWest also intends to replace its Restricted Share Plan (RSP) for Mr Thwaite, which awarded him shares worth up to 150% of his salary, with a Performance Share Plan (PSP) which could pay him up to three times his base salary each. year.
Assuming his salary of just under £1.2m remains unchanged, this would mean he could claim a maximum remuneration – excluding pension contributions and other items – of around £6.6m sterling, compared to around £4.2 million today.
Last year he received a total amount of just over £2.4 million.
The planned increase would bring Mr Thwaite’s pay closer to that of his peers, including Lloyds Banking Group’s Charlie Nunn and Barclays’ CS Venkatakrishnan.
“Target CEO pay will continue to remain below that of its peers in the UK banking sector and is around the mid-tier of the FTSE-50,” Ms Wilson wrote in her letter to shareholders.
Mr Thwaite replaced Dame Alison Rose after she was forced to step down unbanking dispute involving Nigel Farage, the leader of the Reform Party.
Major City investors who took part in the consultation process are said to be overwhelmingly in favor of the pay overhaul, particularly following NatWest’s performance this year, which has seen its shares jump 90% in 2024.
Regulators have also begun to relax rules imposed on bankers’ salaries after the 2008 crisis, with the Bank of England recently announcing plans to reduce the period during which share awards vest and must be held.
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A NatWest Group spokesperson said: “Our remuneration policy is subject to shareholder approval at our AGM and we will not comment on the detail of the proposed changes.
“Our objective with our remuneration policy is to ensure alignment between executive remuneration, performance and the long-term value created for our shareholders.”
Executive pay has been a sensitive issue for NatWest, previously called the Royal Bank of Scotland Group, since it was bailed out with £45.5 billion of taxpayers’ money during the 2008 financial crisis.
The pension program of Fred Goodwin, the former boss of RBS, and the bonuses granted to Stephen Hester, parachuted in to replace him and stabilize the bank, became enormous political problems for the governments of Gordon Brown and David Cameron.
Since the sale of the majority taxpayer stake in RBS began in 2015, bonuses have become a less controversial issue for the bank.
On Friday, NatWest announced that the Treasury’s stake had fallen below 10% for the first time since the bailout.
“We are pleased with the continued momentum in reducing HM Treasury’s stake in NatWest Group,” he said.
“Returning the bank to fully private ownership is a shared ambition and one that is in the interests of all our stakeholders. »
Sky News revealed in October that the government on track to fully exit its stake in NatWest by mid-2025 – or sooner if it launches an institutional placement of part of its remaining stake.
Even after a partial recovery in its valuation, taxpayers will see a loss of billions of pounds following the emergency bailout.
NatWest shares closed at 405.5p on Friday, giving it a market capitalization of £32.6 billion.