RBS investors urged to reject chief executive’s £3.6m pay deal

Royal Bank of Scotland investors have been urged to vote down chief executive Ross McEwan’s £3.6 million pay packet, which has been branded “excessive”.

Shareholder advisory firm PIRC said elements of Mr McEwan’s pay award are “inappropriate”, and pointed to the fact he is paid 46 times more than the average bank employee.

“The ratio of CEO to average employee has been estimated and is found unacceptable at 46:1,” PIRC said in a report issued ahead of the bank’s annual general meeting next week.

PIRC also took issue with Mr McEwan’s total variable pay, which it calculated at 211.1% of salary, describing it as “excessive” as it is over the recommended limit of 200%.

As a result, PIRC is recommending shareholders reject the 62.4% taxpayer-owned bank’s remuneration report when votes are cast next week.

The New Zealander’s pay packet last year consisted of a £1 million basic salary, a £1 million fixed share allowance and another £1.1 million as part of a long-term incentive award.

Pay awards for top bosses at several companies are expected to come under close scrutiny over the coming months, with Lloyds and Barclays also set to hold their AGMs.

Investor advisory groups Glass Lewis and ISS are recommending shareholders vote in favour of RBS’s remuneration report.

Mr McEwan has presided over a return to profit at RBS, which in February reported its second successive year in the black and announced a £1.6 billion final dividend, resulting in a near £1 billion windfall for the taxpayer.

The lender saw bottom-line profits more than double from £752 million last year to £1.62 billion, a 116% increase.

Full year pre-tax operating profit rose 50% to £3.4 billion.

It marked the bank’s second year in the black following a decade-long run of stinging losses, during a period marred by crisis-era legacy and conduct charges.