• Bank faces protests at today's AGM in Edinburgh• Hampton appeals for end to 'public flogging' of RBS bankers• Warning that job cuts cannot be avoided
Sir Fred Goodwin will today experience the greatest moral pressure he has yet faced to reduce his £703,000-a-year pension from Royal Bank of Scotland when shareholders vote down the bank's remuneration report at today's annual meeting.
While Sir Philip Hampton, the new chairman of RBS, is calling for an end to the "public flogging" of its bankers to give the loss-making bank a chance to return to financial health, he is continuing to exert pressure on the former chief executive to reduce his £16.9m pension pot.
"I've asked Sir Fred if he would consider a voluntary reduction and he's told me he's thinking about that," Hampton told Sky News ahead of the AGM.
The pay policy will be defeated because UK Financial Investments, the body set up to look after the taxpayer stakes in banks, has warned it must vote against the remuneration report because of its disapproval over the way Goodwin's pension was doubled during the weekend of the October bank bailout.
As the resolution is not binding, it will not allow the bank to stop the payments. But it could send a message to Goodwin about the level of anger about the pension. Such no votes are rare but in the past have led to changes. For instance United Business Media boss Lord Hollick waived a £250,000 bonus after just 13% of the media group's shareholders supported its remuneration report in 2005.
Hampton will use today's annual meeting to say: "Legal advice is being taken about whether the decision that was reached can be revisited. Whatever the outcome of that advice, it is in no-one's interest, least of all RBS Group's, for this issue to go on and on. The current board are doing all that we can to bring this subject to a conclusion."
He will say RBS would have made an operating profit without the acquisition of Dutch bank ABN Amro and admit that jobs cuts cannot be avoided while he and new chief executive Stephen Hester scale back the group.
After one of the bank's branches was attacked during G20 protests in the City this week, Hampton will also make a plea for calm while acknowledging the public's anger. Protesters are expected to demonstrate outside today's AGM in Edinburgh as well as the bank's City office in Bishopsgate.
"I believe we should bring an end to the public flogging and focus on the good and enduring people and businesses of RBS and allow them to earn our way back to success," he will say.
Only a "tiny minority" of the bank's staff were responsible for the record-breaking losses and they have now left. Those who remained are not "fat cats or City slickers" but working in branches on less than £21,000 a year, he will say.
"They deserve better from their top management, and they do not deserve to share the worst of the criticisms being laid at the door of their employer and their industry," he will say.
On Goodwin's pension pot, which was doubled to £16.9m on the weekend the bank was bailed out by the taxpayer in October, Hampton will say: "Legal advice is being taken about whether the decision that was reached can be revisited. Whatever the outcome of that advice, it is in no-one's interest, least of all RBS Group's, for this issue to go on and on. The current board are doing all that we can to bring this subject to a conclusion."
Damning Goodwin's legacy
Hampton's remarks were released ahead of the AGM in Edinburgh today. In a brutal assessment of the way Goodwin and former chairman Sir Tom McKillop ran the bank, he will say: "Would we choose Formula 1 sponsorship if we were starting from here? No. Should we retain a corporate jet? Of course not and Stephen Hester put it up for sale immediately on taking up his post."
He will blame the acquisition of ABN Amro for the bank's woes and said without the deal RBS would have been profitable in 2008. "With the benefit of hindsight it can now be seen as the wrong price, the wrong way to pay, at the wrong time and the wrong deal," Hampton will say.
At last year's annual meeting Goodwin and McKillop faced shareholders angered by the record-breaking rights issue it had just announced to shore up its balance sheet.
At the time, its shares had halved from their peak to 345p. Last night they closed at 28.2p, reflecting the drama of the intervening 12 months. The government has been forced to inject more than £20bn of taxpayers' money into the bank and promise to insure £325bn of its most troublesome assets.
The price remains below the 31.75p at which the government is converting £5bn of the preference shares it bought into ordinary shares, suggesting it will end up owning all of the ordinary shares. The share issue will also be voted on today.
Goodwin and McKillop have both lost their seats on the board where Hester was a non-executive director until being elevated to chief executive following the £20bn taxpayer bailout in October.
Hester, who is using crutches after a sports injury, has received 10.4m shares in the bank to buy him out of deals with his previous employer British Land in a move that caused controversy with some City investors.
- Royal Bank of Scotland
- Sir Fred Goodwin
- Banking
- Financial crisis
- G20
- Banks and building societies
- Economic policy
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