Goodwin’s Pension Stance Is ‘Unacceptable,’ U.K.’s Myners Says

By Thomas Biesheuvel

Feb. 27 (Bloomberg) -- Former Royal Bank of Scotland Group Plc Chief Executive Officer Fred Goodwin’s decision not to voluntarily reduce his pension is “unfortunate and unacceptable,” Treasury Minister Paul Myners wrote in a letter to Goodwin today.

Before last week the government was unaware that Goodwin’s pension may have been a discretionary choice by the previous board of RBS, Myners wrote in the letter, a copy of which was e- mailed by the government to Bloomberg News late yesterday.

RBS, which has sought legal advice on Goodwin’s 650,000- pound annual pension, yesterday posted a 24.1 billion-pound net loss, the biggest ever by a U.K. company. It may sell as much as 19 billion pounds of preference shares to the government and plans to put 325 billion pounds of investments into an insurance program backed by British taxpayers.

Goodwin won’t voluntarily reduce his pension entitlement the British Broadcasting Corp reported, citing a letter Goodwin wrote to Myners. Goodwin’s offer to waive his 12-month notice period before he left the bank was indicated by Myners to be an “appropriate and sufficient recognition of the circumstances,” Goodwin wrote.

While the topic of Goodwin’s pension entitlement was raised with Myners by the bank before Goodwin stood down in November, it was indicated to Goodwin that no further “gestures” were required, Goodwin wrote in the letter.

Myners said that while he welcomed Goodwin’s decision to waive his 12-month notice period and certain share awards before he left the bank, that did not amount to approval of his pension arrangements.

‘Cannot Justify’

“I hope that on reflection you will now share my clear view that the losses reported today by the bank which you ran until October cannot justify such a huge award,” Myners wrote in the letter to Goodwin.

Prime Minister Gordon Brown has “demanded action” on the issue, saying pension payments on such a scale could not be justified when the company was losing so much money and cutting thousands of jobs, the BBC reported.

New RBS chairman Philip Hampton, has said he had asked Goodwin two weeks ago to voluntarily reduce the pension but had yet to receive an answer, the BBC also said.

RBS spokesman Neil Moorhouse declined to comment about Goodwin’s pension arrangements or whether Hampton has contacted Goodwin on the matter.

To contact the reporter on this story: Thomas Biesheuvel in London tbiesheuvel@bloomberg.net.