NatWest Group is making changes to its chief executive’s pay structure as it prepares to return to full private ownership after nearly 17 years under state control.
Sky News has learned that the bank’s remuneration committee chair, Lena Wilson, is seeking input from major institutional shareholders regarding a revamp of the boardroom pay policy.
The proposed changes will be presented for a vote at NatWest’s annual meeting next spring as part of an obligation for investors to vote on remuneration policies every three years.
Under the new plan, Paul Thwaite, who became the bank’s interim CEO in July 2023 and was later confirmed in the role in February, could see an increase in his maximum annual bonus from 100% to 150% of his base salary.
NatWest also plans to replace its restricted share plan for Mr. Thwaite with a performance share plan that could potentially offer him up to three times his basic pay annually.
If his salary remains around £1.2 million, he could potentially receive a total package of about £6.6 million, up from the current approximately £4.2 million, excluding other benefits.
Last year, his total package was slightly over £2.4 million.
The proposed pay adjustment for Mr. Thwaite aims to align his compensation more closely with executives at rival banks such as Lloyds Banking Group and Barclays.
“CEO target pay at NatWest will continue to be below that of other UK banking peers and is positioned around the FTSE-50 mid-market level,” Ms. Wilson stated in a letter to shareholders.
Mr. Thwaite took over from Dame Alison Rose, who stepped down following the debanking row involving Nigel Farage, the Reform Party leader.
City investors involved in the consultation process have reportedly shown overwhelming support for the proposed pay changes, especially given NatWest’s strong performance in 2024, with its shares up by 90%.
Regulators have also begun easing restrictions on banker compensation put in place after the 2008 crisis, with the Bank of England hinting at reducing the duration over which share awards must be held.
Read more from Sky News:
Royal Mail fined for missing targets
Telegraph bonuses amid ownership uncertainty
A spokesperson for NatWest Group stated: “Our remuneration policy is subject to shareholder approval at our AGM, and we do not comment on specific proposed changes.
“Our goal with our remuneration policy is to ensure alignment between executive pay, performance, and long-term value for our shareholders.”
Executive pay has been a sensitive issue for NatWest, formerly known as Royal Bank of Scotland Group, since it was bailed out during the 2008 financial crisis.
The high pension package for former RBS chief Fred Goodwin and bonuses for his successor, Stephen Hester, created significant political debates.
Since the government began selling off its majority stake in RBS in 2015, bonuses have become less of a contentious issue.
Last Friday, NatWest announced that the Treasury’s stake had dropped below 10% for the first time since the bailout.
“We are pleased with the ongoing progress in reducing HM Treasury’s stake in NatWest Group,” the bank said.
“Returning the bank to full private ownership is a common goal that benefits all our stakeholders.”
In October, Sky News reported that the government was on track to fully exit its NatWest shareholding by mid-2025, potentially sooner through an institutional placing of part of its remaining stake.
Despite a partial recovery in valuation, taxpayers are expected to incur a loss running into billions of pounds from the emergency bailout.
At the close of trading last Friday, NatWest’s shares were priced at 405.5p, with a market capitalization of £32.6bn.