Royal Bank of Scotland faces a shareholder revolt over executive pay, just two days after BP suffered its biggest protest vote at an annual meeting for a decade, The Times has learnt.

Corporate governance watchdogs have attacked the banking group for using soft targets for boardroom bonuses.

They are also upset over a proposed new long-term incentive scheme that could hand Sir Fred Goodwin, the chief executive, up to £3.5 million — three times his salary — on top of his annual bonus. The Association of British Insurers has called for talks with the bank before its annual meeting in Edinburgh on April 25.

Peter Montagnon, the ABI’s head of investment affairs, said that it was concerned at the amount of discretion given to RBS’s remuneration committee. The ABI has put an “amber top” on RBS, signalling potential corporate governance breaches. Mr Montagnon said: “This reflect our concerns over the potentially quite serious issue of the level of discretion that the remuneration committee has. We are currently talking to the company and are waiting to hear back from them, which will allow us to come to a definitive view for our members.”

His comments were echoed by PIRC, the shareholder advisory group, which has urged investors to oppose the new share-option scheme at the annual meeting. PIRC said that the disclosed targets for current medium-term bonuses were “not sufficiently challenging”.

An RBS spokesman said that the bank was confident it could explain its position to the ABI. He added that targets set under the new share-option scheme would be revealed early next year. He defended the potential payouts available: “It’s in everyone’s interest to have a company that performs.”

Nearly one in five shareholders refused to back BP’s executive pay policy in a vote that overshadowed Lord Browne of Madingley’s final goodbye as BP chief executive on Thursday.

Remuneration revolts: the top ten

Company Dissent

United Business Media 87%
Freeport 81%
Manchester United 72%
Manganese Bronze 72%
Eurotunnel 67%

Company Dissent

Maiden Grou 64%
GlaxoSmithKline 63%
Atrium Underwriting 61%
Baltimore 61%
Galiform 60%

Source: Manifest

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