NatWest has paid its new boss a £1.2m salary despite his “limited experience” as chief executive amid a shareholder backlash in the City of London over high corporate pay. has been criticized as
As the government prepares to sell its stake in the bank ahead of the general election, Institutional Shareholder Services (ISS) has announced that Paul Thwaites, the bank’s former chief executive, has no prior experience as a senior executive. He warned that he would be paid the same salary as director Alison Rose.
Citi’s influential shareholder advisory firm has suggested Mr Thwaites could receive a lower starting salary before being given a performance-based pay rise, offering only “qualified support” to the bank’s remuneration report. He said he couldn’t do it.
“The new CEO’s salary was set at the same level as his predecessor, despite his limited experience as a key executive,” ISS said in the report.
“As this is his first lead management role, shareholders may prefer that his planned salary level be phased in based on both personal and corporate performance.”
NatWest initially offered Mr Thwaites a salary of £1m, which was later increased by 10%. He was appointed chief executive in February, replacing Mr Rose on an interim basis in July last year after Mr Rose was forced to resign over the bank’s abolition dispute with Nigel Farage. Mr Thwaites previously led NatWest’s business banking division.
The bank, which is still 28.9% owned by the UK government more than a decade after its £46bn bailout in 2008, remains in permanent positions as the government prepares to sell some of its remaining stake from the UK to the public. There was pressure to appoint a boss. As early as summer.
A NatWest spokesperson defended Mr Thwaites’ pay, saying: “We compare our executive remuneration policy to that of our peers and market data helps us determine our annual salary.”
Amid concerns over high pay deals for some companies, even as some of the city’s leading figures are encouraging pay rises as a way to protect London’s position as a global financial hub post-Brexit , a potentially controversial spring shareholder meeting is coming up.
Among the companies facing a potential backlash, the chief executive of London Stock Exchange Group (LSEG) publicly highlighted the UK’s lack of competitive wages compared to the US. Others who have expressed their grief include fund manager Abdoun.
LSEG’s investors are from Glass Lewis, another influential advisory firm, led by American chief executive David Schwimmer, a former Goldman Sachs banker who has run the stock market operator since 2018. CEOs have been warned to reject plans to double their pay.
Glass-Lewis said: “We do not believe the company has sufficiently rationalized an increase of this size in a lump sum scheme, particularly given the CEO’s remuneration compared to UK peers.”
LSEG said: “We are focused on attracting and retaining the talent needed in a highly competitive global market, while ensuring that high performance is rewarded.”
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ISS said it was also concerned about Abdon’s pay decision, which saw him pay chief executive Stephen Bird an £800,000 bonus despite disappointing financial results.
The bonus was partly related to his role in a cost-cutting plan that led to the loss of 500 jobs. “Determining bonuses based on this factor may not be entirely palatable to all observers,” ISS said, noting that it only provides qualified support for the company’s salary reports. .
A spokesperson for Abdon said: “We welcome ISS’s recognition that it is appropriately aligned with the interests of our shareholders and recommend that we vote in favor of our remuneration report.”
An analysis by financial data provider Reuters found that 29 UK-listed companies, including Unilever and education publisher Pearson, received significant votes against their pay reports and pay policies last year.
Amanda Cantwell, senior editor at Thomson Reuters Practice Law, said: ‘The debate over executive pay has long been one of the most contentious issues for UK companies, but this year we are looking to close the pay gap. Lobbying activities for this purpose have become more active and are showing new developments.” with American directors.
“We expect this level of scrutiny of director remuneration to continue, especially in the midst of today’s cost-of-living crisis.”
