Get all your news in one place.
100’s of premium titles.
One app.
Start reading
The Guardian - UK
The Guardian - UK
Kalyeena Makortoff Banking correspondent

NatWest criticised over £1.2m pay for boss with ‘limited experience’

Wearing a suit
Paul Thwaite, CEO of NatWest, appearing before the Commons Treasury committee. Photograph: House of Commons/UK Parliament/PA

NatWest has been criticised for paying its new boss a salary of £1.2m despite his “limited experience” as a chief executive, amid a wider shareholder backlash in the City of London over bumper corporate pay.

As the government prepares to sell shares in the bank before the general election, Institutional Shareholder Services (ISS) warned that Paul Thwaite would be paid the same salary as the bank’s former chief executive, Alison Rose, despite lacking her experience as a lead executive.

The influential City shareholder advisory firm suggested Thwaite could be paid a lower starting salary before any increases based on performance, and said it could only offer “qualified support” for the bank’s remuneration report.

“The new CEO’s salary has been set at the same level as his predecessor, despite limited experience as a lead executive,” ISS said in its 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.”

NatWest had initially offered Thwaite a £1m salary, but then raised it by 10%. He was appointed CEO in February, having replaced Rose on an interim basis last July after she was forced to quit amid a debanking row with Nigel Farage. Thwaite previously led NatWest’s business banking division.

The bank, which is still 28.9% owned by the UK government more than a decade on from its £46bn bailout in 2008, had been under pressure to appoint a permanent boss as the government prepares to sell some of its remaining stake to the public from as early as the summer.

A NatWest spokesperson defended Thwaite’s salary, saying: “We benchmark our executive pay policy against our peers, and market data helps to inform annual pay decisions.”

A potentially contentious annual round of spring shareholder meetings lies in store amid unrest over bumper pay deals at some companies, despite a push by some leading City figures to encourage higher pay as a way to protect London’s position as a global financial hub after Brexit.

Among those facing potential backlashes include the London Stock Exchange Group (LSEG), whose chief executive has publicly lamented a lack of competitive pay in the UK compared with the US, as well as the fund manager Abrdn.

Investors in LSEG have been warned by Glass Lewis, another influential advisory firm, to reject plans to double the pay of CEO David Schwimmer, the American former Goldman Sachs banker who has run the stock market operator since 2018.

“We do not believe that the company has sufficiently rationalised an increase of this magnitude in a lump sum approach, particularly given the CEO’s pay relative to UK peers,” Glass Lewis said.

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”.

ISS said it was also concerned about pay decisions at Abrdn, which has paid a £800,000 bonus to its CEO, Stephen Bird, despite a disappointing financial year.

That bonus was partly related to his role in a cost-cutting plan that will result in 500 job losses. “Basing bonuses on this factor may not be entirely palatable to all observers,” ISS said, noting that it would offer only qualified support for the company’s pay report.

An Abrdn spokesperson said: “We welcome that ISS are recommending a vote in favour of our remuneration report, acknowledging appropriate alignment with shareholder interests.”

Analysis by the financial data provider Reuters shows that 29 UK-listed companies, including Unilever and the education publisher Pearson, received substantial votes against either their pay reports, or pay policies, last year.

Amanda Cantwell, a senior editor at Thomson Reuters Practical Law, said: “The debate over boardroom pay, which has long been one of the more contentious issues for UK plc, has taken a new turn this year with more lobbying to close the pay gap with US directors.

“We can expect this heightened level of scrutiny on directors’ remuneration to continue particularly amid today’s cost of living crisis.”

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.