Investor backlash

NatWest under attack over pay deal for new CEO

Paul Thwaite: ‘limited experience’

NatWest, the parent of Royal Bank of Scotland, is the latest financial institution to face a backlash from an investor group over pay.

The bank is in the firing line for awarding its new chief executive Paul Thwaite a salary of £1.2m despite his “limited experience” as a chief executive.

The criticism comes amid growing opposition to big pay packages for executives, particularly at a time when some firms have managed, at best, only moderate performance levels and the country at large continues to cope with a cost of living crisis.

Mr Thwaite is receiving the same salary as his predecessor Alison Rose, despite lacking her experience as a lead executive.

Institutional Shareholder Services (ISS) says his starting salary should be set lower and it could only offer “qualified support” for the bank’s remuneration report.

“As this is his first lead executive role, there may be a preference among shareholders for his intended salary level to be introduced on a phased basis, subject to performance, both individual and corporate,” it said.

Mr Thwaite became permanent CEO in February after initially replacing Dame Alison on an interim basis last July when she resigned amid a row over the disclosure of Brexiteer Nigel Farage’s banking details.

A NatWest spokesperson told The Guardian: “We benchmark our executive pay policy against our peers, and market data helps to inform annual pay decisions.”

Other top firms facing potential backlashes include Abrdn which is under attack over the salary being paid to its new chief financial officer.

Glass Lewis, the shareholder adviser, has recommended that investors vote against Abrdn’s remuneration report for 2023 at its annual general meeting this month over the pay package for Jason Windsor, who took on his new post last October.

His £675,000 remuneration is significantly higher than the the £538,125 paid to his predecessor Stephanie Bruce which Glass Lewis also opposed in 2019. Her salary was about 17% higher than Bill Rattray whom she replaced.

CEO Stephen Bird’s £800,000 bonus has also been criticised as it followed a disappointing financial year.

The pay package for David Schwimmer, CEO of the London Stock Exchange Group (LSEG), has also been criticised. LSEG said it was “focused on securing and retaining the calibre of talent required in a highly competitive global market whilst ensuring delivery of strong performance is rewarded”.

Company boards have told researchers that it is essential for Britain’s competitiveness that salaries match global benchmarks and that the gap with the US is closed to avoid seeing senior executives leave the UK.

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