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Stephen Hester (RBS Boss) Rejects Bonus of £1m
The chief executive Stephen Hester (Royal Bank of Scotland) will give up his near £1m bonus.
Mr Hester would renounce the £963,000 shares-only payment after succumbing to "enormous political pressure".
Chancellor George Osborne said it was a "sensible and welcome" decision that now let Mr Hester focus on getting back billions of pounds for the taxpayer.
Earlier, Labour said it would force a vote on the issue after Prime Minister David Cameron refused to block the bonus from the mostly publicly owned bank.
Robert Peston said the board felt Mr Hester had earned the bonus for the way he had made RBS a less risky organisation.
But when it looked as though MPs were going to vote against it, the general consensus amongst the directors was that the "game was up", Peston added.
Last week Mr Cameron drew criticism after he said it was up to Mr Hester whether he accepted the bonus.
Labour leader Ed Miliband said the RBS boss had "done the right thing".
Mr Miliband said: "It is a shame that a feeble, out of touch David Cameron did not realise he should do the right thing and stand up for the interests of the British people.
"Labour was right to seek a parliamentary vote on this so that the people's voice could be heard. But the debate about fair executive pay and responsible capitalism is only just beginning. We need a government that will tax bankers' bonuses and bring responsibility to the boardroom."
Shadow business secretary Chuka Umunna said Mr Hester was already being adequately rewarded for his performance.
"He received £1.2m a year - that's 46 times the average salary of an average employee in this country - to do that job," he said.
"He's very well remunerated as it is. Usually you receive a bonus when you've done something above and beyond - exceptional, extraordinary.
"But many of the things that have been cited in terms of things that he's done for the bank are things that you would expect him to do."
Former Liberal Democrat Treasury spokesman Lord Oakeshott said Mr Hester's decision was "better late than never".
"I'm glad that eventually Stephen Hester has seen sense and seen the outrage of most people in this country and Lib Dems who have been complaining bitterly about this for weeks," he said.
"I'm very sorry that David Cameron and George Osborne didn't see that, and have been defending the indefensible right up to today."
Mr Hester was appointed chief executive at the end of 2008 to replace Sir Fred Goodwin, after the bank had to be bailed out by the government, which now owns 82% of it.
RBS chairman Sir Philip Hampton had already announced that he would waive his payout.
He had been on course to claim 5.17 million RBS shares in February, but it is thought he told the bank's remuneration committee it would "not be appropriate" to take a £1.4m payout.
Robert Peston said RBS's directors now recognise it would have been better to delay Mr Hester's bonus decision until after it was revealed how much Barclay's chief executive Bob Diamond received.
"Mr Hester's bonus would not look big in comparison," Peston explained.
The chief executive Stephen Hester (Royal Bank of Scotland) will give up his near £1m bonus.
Mr Hester would renounce the £963,000 shares-only payment after succumbing to "enormous political pressure".
Chancellor George Osborne said it was a "sensible and welcome" decision that now let Mr Hester focus on getting back billions of pounds for the taxpayer.
Earlier, Labour said it would force a vote on the issue after Prime Minister David Cameron refused to block the bonus from the mostly publicly owned bank.
Robert Peston said the board felt Mr Hester had earned the bonus for the way he had made RBS a less risky organisation.
But when it looked as though MPs were going to vote against it, the general consensus amongst the directors was that the "game was up", Peston added.
Last week Mr Cameron drew criticism after he said it was up to Mr Hester whether he accepted the bonus.
Labour leader Ed Miliband said the RBS boss had "done the right thing".
Mr Miliband said: "It is a shame that a feeble, out of touch David Cameron did not realise he should do the right thing and stand up for the interests of the British people.
"Labour was right to seek a parliamentary vote on this so that the people's voice could be heard. But the debate about fair executive pay and responsible capitalism is only just beginning. We need a government that will tax bankers' bonuses and bring responsibility to the boardroom."
Shadow business secretary Chuka Umunna said Mr Hester was already being adequately rewarded for his performance.
"He received £1.2m a year - that's 46 times the average salary of an average employee in this country - to do that job," he said.
"He's very well remunerated as it is. Usually you receive a bonus when you've done something above and beyond - exceptional, extraordinary.
"But many of the things that have been cited in terms of things that he's done for the bank are things that you would expect him to do."
Former Liberal Democrat Treasury spokesman Lord Oakeshott said Mr Hester's decision was "better late than never".
"I'm glad that eventually Stephen Hester has seen sense and seen the outrage of most people in this country and Lib Dems who have been complaining bitterly about this for weeks," he said.
"I'm very sorry that David Cameron and George Osborne didn't see that, and have been defending the indefensible right up to today."
Mr Hester was appointed chief executive at the end of 2008 to replace Sir Fred Goodwin, after the bank had to be bailed out by the government, which now owns 82% of it.
RBS chairman Sir Philip Hampton had already announced that he would waive his payout.
He had been on course to claim 5.17 million RBS shares in February, but it is thought he told the bank's remuneration committee it would "not be appropriate" to take a £1.4m payout.
Robert Peston said RBS's directors now recognise it would have been better to delay Mr Hester's bonus decision until after it was revealed how much Barclay's chief executive Bob Diamond received.
"Mr Hester's bonus would not look big in comparison," Peston explained.
