NatWest CEO set to pocket £6.5m as bank returns to private ownership

In December 2024, NatWest Group, a major UK bank, is poised to implement significant changes to its executive remuneration policies as it transitions back to full private ownership after almost 17 years of public ownership. The bank's chief executive, Paul Thwaite, who assumed his role permanently in February 2024 after serving as interim CEO since July 2023, is anticipated to receive a substantial pay increase pending approval from shareholders. The chair of the bank’s remuneration committee, Lena Wilson, is currently consulting with major institutional investors regarding a proposed overhaul of the boardroom pay structure. This proposal is set to be presented for a vote during NatWest's annual general meeting in the spring of next year, a requirement under governing regulations that mandate shareholder approval of executive pay policies every three years. As part of the planned changes, Thwaite’s maximum annual bonus could increase from 100% to 150% of his base salary, which is currently just below £1.2 million. Furthermore, the bank aims to replace Thwaite’s current restricted share plan with a performance share plan that could potentially reward him with shares worth up to three times his basic salary annually. Given this context, if Thwaite's salary remains stable, his total potential remuneration package, excluding pension contributions and other benefits, could rise to approximately £6.6 million, a significant increase from the £4.2 million he earned in the previous fiscal year. This prospective increase in compensation is designed to align Thwaite’s pay more closely with that of his peers at rival banks such as Lloyds Banking Group and Barclays. The bank’s shares experienced a remarkable surge in 2024, advancing by 90% in value, a trend that has contributed to the support from investors for the proposed changes. The bank has expressed confidence in achieving its goal of fully returning to private ownership, marking a significant turnaround from the financial crisis era when it required a government bailout. In recent discussions with stakeholders, NatWest has emphasized the importance of ensuring alignment between executive compensation and the long-term interests of shareholders. Although there have been controversies regarding executive pay and bonuses in the past, particularly related to the mismanagement during the financial crisis leading to taxpayer bailouts, NatWest’s revised policy appears to be welcomed in light of its improved performance and subsequent recovery. With the UK Treasury's stake in NatWest now below 10%, the move toward private ownership not only reflects a stabilizing banking environment but also aims to rectify previous political and economic challenges associated with excessive payouts in the sector.