Bonus plan for Royal Bank manager

The Royal Bank of Scotland is 70% owned by the government

One of the Royal Bank of Scotland's most senior managers is in line for a share bonus currently valued at more than £2.4m, it has emerged.

Ellen Alemany is chief executive of RBS America, including Citizens Bank.

Her share bonus of 5.9 million shares depends on performance targets being hit over the next three years.

An RBS spokesman said those receiving the bonuses were not those responsible for the huge RBS losses and said they have not had a bonus this year.

Ms Alemany's share bonus could be worth far more than the £2.4m valuation of the current share price at 41p, if the Edinburgh-based bank sees its stock market valuation rise.

Reckless risks

Three other British-based senior executives - Alan Dickinson, Chris Sullivan and Ron Teerlink - would gain roughly 1.8 million shares each.

The condition is that they hit their three year-targets, and there is a clause for clawing back the bonuses under some circumstances.

It was disclosed last month that John Hourican, head of global banking and markets, had been granted a share option on more than seven million shares as part of his incentive plan.

RBS is 70% owned by the government, after risky investing and lending by the previous management brought it close to collapse and required a public bail-out.

The former bonus culture at RBS, and in other banks, has been heavily criticised for being excessive while creating incentives for executives to take reckless risks, leading to the giant losses.

Exacting requirements

RBS made a loss last year of more than £24bn.

But the pressure to continue such incentive schemes has continued.

Stephen Hester, the new chief executive, has warned that RBS is losing some of its staff to rivals because its part-public ownership has led to an expectation that bonuses will be sharply curtailed.

Mr Hester's own bonus, on top of a £1.2m salary, is understood to have been discussed earlier this month by the RBS board's remuneration committee. It will be announced alongside other board level bonuses.

A spokesman for the bank stressed the bonuses were only on paper unless very exacting requirements are met, and in the past, even when bank performance looked strong, the share bonuses were not granted.

He added there will be no more cash bonuses, and that the system is designed to retain the best talent and provide incentives linked to shareholder interest.