"The Committee believes the time is right for a new, simpler approach, developed specifically to align with RBS's culture and our thinking on pay."
In its AGM statement, released yesterday, the Bank confirmed that going forward, there will be a single long-term incentive, with no annual bonus.
The shareholding requirements for executive directors will also rise significantly, from 250% to 400% of salary for the Chief Executive and from 125% to 250% of salary for the Chief Financial Officer.
Sandy Crombie, Senior Independent Director, commented: "Our current remuneration arrangements include a number of adaptations to meet various challenges faced at RBS over recent years. These have led to a degree of complexity and lack of alignment with the bank RBS has become. The Committee believes the time is right for a new, simpler approach, developed specifically to align with RBS's culture and our thinking on pay."
The change comes three months after RBS reported its ninth consecutive annual loss of almost £7bn, as litigation and conduct costs rose to £5.9bn and restructuring costs hit £2.1bn.
However the Bank report a profit of £259 million for Q1 2017 and, despite taking further significant 'one-offs' in 2017 relating to conduct and litigation charges and restructuring, still expects to return to profitability in 2018.
Chairman Howard Davies said: "This was our first bottom line profit since the third quarter of 2015 and represents a strong start to the year. Over the year since I last stood before you, the share price has risen from 216p to 263p, in what has been a turbulent year for all banks. In fact over that period the RBS share price has risen more than those of our peers.
"But reporting large losses like the one we took for 2016 is always difficult. Shareholders suffer most, but the bank's management and employees also feel the pain. It is important to bear in mind that this loss reflected £10 billion of one-off provisions as we sought to conclude as many of our legacy issues as possible, while continuing to restructure the bank in line with our strategy."
