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LONDON (AP) — The chief executive of the part-nationalized Royal Bank of Scotland PLC will get a bonus worth about 963,000 pounds ($1.51 million), the bank announced Thursday, drawing the ire of many Britons and reviving questions over whether top finance figures are rewarded for failure.Bonuses at RBS are particularly sensitive because British taxpayers took an 83 per cent stake in the bank following a disastrous acquisition binge which saddled the company with billions’ worth of rotten debt. Stephen Hester wasn’t in charge when the bank nearly went bust, but he’s been lavishly compensated by the taxpayer at a time when the bank is still struggling to reverse its fortunes.
RBS made a net profit of 1.2 billion pounds in the third quarter of last year but its share price has slumped and it has shed thousands of jobs.
The mass-market Daily Mail described the bonus as a million-pound “REWARD FOR FAILURE” on the front page of the paper’s Friday edition, made available to journalists late Thursday.
Britain’s opposition Labour Party agreed, saying in a statement that “anyone who thinks it is acceptable to award a bonus of almost 1 million pounds on top of a basic salary of 1.2 million pounds in these tough times is desperately out of touch with millions of people who are struggling to make ends meet.”
Britain’s Unite union said the bonus was “disgusting and offensive.”
The massive awards executives give themselves — even when their companies do badly — has long been an embarrassment for both political parties, particularly when it happens at banks which had to be bailed out to the tune of several tens of billions of pounds in the wake of the credit crunch.
Last year Hester accepted a roughly 2 million pound bonus after his company reported a 1.1 billion pound loss for 2010, although that figure was an improvement on the catastrophic losses suffered by the bank in previous years.
Hester’s bonus may have fallen by just over half, but it is still more than 36 times a Briton’s average annual wage.