NatWest investors give blessing to new executive pay policy
It came as NatWest chairman Rick Haythornthwaite declared the bank's return to full private ownership was 'in sight', with the UK Government's shareholding now less than 3%. He told shareholders the return to full private hands will be a 'symbolic moment' for the bank after a long period of recovery that followed the then Royal Bank of Scotland's £45.5 billion bailout by UK taxpayers at the height of the financial crisis.
Mr Haythornthwaite said: 'For the first time since 2008, the Government is no longer the biggest shareholder in the bank, and we are on the verge of a return to full private ownership. This will be a symbolic moment, marking a new, forward-looking chapter in our story.'
He added: 'We remain incredibly grateful to the Government, and to UK taxpayers, for their intervention and support, which protected millions of savers, homeowners and businesses at a time of global crisis.'
Around 97% of voted shares at the AGM went in favour of the bank's new policy on executive pay, which followed the scrapping by regulators of the bankers' bonus cap. The new policy replaces the restricted share plan award with an annual performance share plan (PSP), capped at 300% of salary. It also increases the annual bonus opportunity from 100% of salary to 150% of salary.
NatWest chief executive Paul Thwaite, who was appointed permanent success to Dame Alison Rose in February 2024, was paid a total of £4.9m for 2024. This included a base salary of £1.142m and variable pay of £2.463m for 2024.
However, under the new structure, which is designed to incentivise performance, Mr Thwaite could earn up to £7.7m per year.
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Asked in a huddle with reporters after the AGM whether shareholders had any concern regarding risk with the new pay policy, Mr Haythornthwaite said the bank had been 'very measured'.
He said: 'It has taken the ratio of fixed to variable [pay] from 1:1 to 2:1. Others are going further. We just feel, as step one, let's do that and make sure we are competitive, so we do attract the best talent and keep the best talent. But let's not open up the floodgates of risk exposure and forget the lessons of pre-2008 when it all got a bit out of sync. We don't think we are close to testing the limits of that. It was a good opportunity to make the shift and remain in sensible territory, with the recognition that others are pushing the boundaries.'
The bank's bosses were also asked if acquisitions had been put 'on ice' amid the turbulence whipped up by US President Donald Trump's trade tariffs. NatWest has been active on this front in recent months with deals to acquire £2.3bn of 'prime residential mortgages' from Metro Bank and the takeover of the bulk of the Sainsbury's Bank operations.
Mr Thwaite said: 'We made two small but important acquisitions last year… and they were right in our wheelhouse. They worked well for us. But as importantly, we grew the three businesses [of NatWest] – retail, commercial, and wealth – organically anyway. I am still confident we can grow our businesses organically. That is Plan A.
'From an acquisitions perspective, if there is the ability to add scale and capability, we will look at it, but I am on record consistently as saying it is a very high bar financially. It has to be very compelling for shareholders, it has to be very strategically [attractive]. We are not looking to change the direction of the bank.'
Commenting broadly on the uncertainty that has followed Trump's 'Liberation Day' tariff announcement at the beginning of the month, Mr Thwaite said the upheaval 'generally simmers down corporate finance activity'.
He also said the bank has 'no further plans' for international expansion. 'We think the shape of the bank at the moment allows us to grow 95% UK. We have important international outposts where it is needed for our client base. That works really well and that is what we are focused on.'
Asked to estimate how much the UK Government had recouped from the sale of its shares in the bank - it has been reported the Treasury will recover £25bn after a bail-out worth £45.5bn - Mr Haythornthwaite said it was 'very difficult to tell'.
He noted that the then UK Government had not intervened in the then RBS 'as an investment, this was a rescue of a sector, and they did well as a result of that… they protected millions of homeowners and businesses and ...savers'. He added: 'You need to ask them the question, but they would look at this as being a very smooth and pleasing exit'.
Mr Thwaite noted that the return to private hands would 'not change strategically or operationally what we do'.
Shares in NatWest closed up 3.65%, or 16.8p, at 476.5p.
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