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EDINBURGH/LONDON (Reuters) - Royal Bank of Scotland (RBS.L) Thursday defended its new executive pay plan at its annual shareholder meeting on Thursday after some investors criticized the policy for still being too generous.
A number of firms have faced investor rebellions in recent years over excessive payouts to company bosses and a broader social backlash has prompted the British government to consider changing the rules around corporate governance.
Despite the voices of dissent in Edinburgh where the state-controlled lender held its AGM, shareholders voted overwhelmingly to back the bank's executive pay plan, with over 96 percent approving the proposals.
RBS said it had recognized that its pay policies had become too complex and the new plan would reduce excessive risk-taking.
"The time is right for a new, simpler approach, developed specifically to align with RBS's culture and our thinking on pay," Sandy Crombie, the chairman of RBS's remuneration committee, said.
Pensions and Investment Research Consultants (PIRC) and Institutional Shareholder Services (ISS), two leading advisory groups, had urged shareholders to vote against the pay policy.
ISS said while the overall size of potential bonuses are being cut for Ross McEwan, its chief executive, and Ewen Stevenson, its finance director, the plan makes it easier to pay out.
PIRC said executives should only be rewarded for the period they serve the company and not receive any payout when they leave.
"We disagree with the conclusions reached in these reports and strongly challenged the view from ISS that the level of discount was insufficient," Crombie said.
The board faced a barrage of questions from irate shareholders throughout the meeting, ranging from handling of past scandals to branch closures.
Shareholders also criticized the bank's decision to reject demands for greater powers for ordinary shareholders to have a say on issues such as executive pay, company strategy and director appointments.
Chairman Howard Davies rebuffed criticism of the more than 100 million pounds RBS has spent defending itself against investors suing the bank over a cash call at the height of the financial crisis.
RBS was criticized earlier this month for the "staggering" costs it has spent on its "Rolls-Royce" legal team by the judge overseeing its battle with investors over the firm's then record 12 billion pound rights issue in 2008.
"The costs we are having to meet are high because of the extraordinary breadth and complexity of the case," Davies said.
The civil lawsuit has been brought by thousands of investors who bought shares in 2008 and lost most of their money when the bank collapsed a few months later, resulting in a 45.5 billion pound ($58.6 billion) government bailout.
The case is due to begin later this month and disgraced former RBS chief executive Fred Goodwin is scheduled to appear in court early next month.
Reporting By Andrew MacAskill, Lawrence White and Simon Jessop; Editing by Jane Merriman and Elaine Hardcastle