The chief executive of Britain's state-rescued Royal Bank of Scotland has bowed to intense political pressure and waived his annual bonus worth almost £1.0 million, the lender said on Monday.
A bank spokesman confirmed that Stephen Hester has decided to forego a bonus of £963,000 ($1.5 million, 1.15 million euro) in shares that was awarded last week, on top of his £1.2-million salary.
The huge award -- amid government calls for pay restraint, ongoing austerity and economic gloom -- sparked outrage among trade unions and the opposition Labour Party because RBS is 82-percent state-owned following a huge bailout.
Labour vowed at the weekend to force a parliamentary vote to call for Hester to be stripped of the bonus, piling enormous political pressure on the lender, while the bank's chairman renounced his own bonus on Saturday.
The government welcomed Hester's decision to spurn the payment, which was proving a major embarrassment for the Conservative-Liberal Democrat coalition that has pledged to crack down on excessive boardroom pay.
"This is a sensible and welcome decision that enables Stephen Hester to focus on the very important job he has got to do, namely to get back billions of pounds of taxpayers' money that was put into RBS," finance minister George Osborne said.
A spokeswoman for Prime Minister David Cameron stressed that it was "a matter for individuals" whether they would accept bonuses.
"The prime minister's view was that he wanted the bonuses to be lower. He always made it clear that it was a matter for Mr Hester whether he took that bonus or not, and that should remain the case.
"Reward for good performance is not in itself a bad thing," she added.
The controversial issue will likely resurface however since Hester's future bonuses could potentially reach £6.4 million under the terms of a long-term incentive plan.
John Hourican, the boss of RBS' investment banking division, stands to earn a bonus of up to £4.5 million in shares later this year.
Labour leader Ed Miliband, who had last week accused Cameron of a "failure of leadership" over Hester's bonus, called for more action.
I think it was the threat of that parliamentary vote that led to change but I don't think this can be just a one-off episode," Miliband said Monday.
"If we don't deal with this systematically, if we don't deal with the issue of bankers' bonuses in a proper way, this kind of thing will just reoccur."
British taxpayers own the vast majority of RBS since it was bailed out at the height of the global financial crisis in 2008. Since then, it has slashed tens of thousands of jobs.
Britain's biggest trade union Unite argued that the executive pay bonuses highlighted the "hypocrisy" of RBS.
"This gesture goes some way in acknowledging the hypocrisy of an organisation which has sacked over 21,000 staff, while still attempting to pay bumper bonuses to the bosses," said senior Unite official David Fleming.
Hester's large shares-only bonus was less than half the £2 million that he was awarded a year earlier.
RBS revealed Saturday that chairman Philip Hampton had waived a shares-only bonus worth £1.4 million.