Anger grows over RBS chief's £900,000 bonus Ed Miliband and Boris Johnson have joined the chorus of criticism over the decision by the Royal Bank of Scotland to award its chief executive a bonus of nearly £1m. The bank is more than 80% owned by the taxpayer, and Johnson, the Conservative mayor of London, reacted to the payout by saying the government "should step in and sort it out." The bonus, which has been described as "utterly unacceptable" by a Liberal Democrat peer, will net the RBS chief, Stephen Hester - who earns a basic salary of £1.2m - a further 3.6m bank shares that can be cashed in in 2014. At current prices, the shares are worth £963,000. Miliband, the Labour leader, said David Cameron had failed to live up to his rhetoric on executive pay and shareholder activism. "It's a disgraceful failure of leadership by the prime minister," he said. He's been promising, for months, action against excessive bonuses, executive pay, and now he's nodded through a million-pound bonus. He's also been lecturing shareholders about how they need to be more active in holding executives to account. He owns, through the British government, 83% of the Royal Bank of Scotland. He must now explain, not least to the British people, why he has allowed this to happen. Hester's payout was understood to be limited to around 60% of the maximum following intense political pressure at the bank, which had to be bailed out with £45bn of public funds during the credit crunch. Speaking from the World Economic Forum in Davos, Switzerland, Johnson described the bonus as "absolutely bewildering" and said it should have been blocked by ministers. He said RBS should be run "on public sector lines." In an interview with the BBC, he added: "The idea that this is not in the control of the government seems to me to be far-fetched. Stephen Hester is an able man, probably doing a difficult job, and his contract must have been drawn up, I guess, when he was appointed in 2008 under Alistair Darling and Gordon Brown. I do not know what they were thinking of when they drew it up that way, but it certainly seems to me to be right that the government should step in and sort it out. People will not understand how somebody can get a whacking great bonus like that when they are basically running a state-owned concern, and I am at a loss to justify it. But the deputy prime minister, Nick Clegg, said it was up to Hester to make the decision about whether he would take the bonus. Clegg put the blame for the government's inability to stop the payout on the previous Labour administration. He said: "The chancellor and the Treasury have explained the frustrating realities about all of this - which is that if we ripped up the contracts which the Labour government had signed with them, or changed the arrangements of these arms-length taxpayers bodies that manage our stake in the banks, we probably, as taxpayers, would have ended up paying even more money." On Thursday night, the Liberal Democrat Foreign Office minister, Jeremy Browne, appealed on BBC1's Question Time to Hester to turn down the bonus, equating three days of the bank chief's pay with a year's salary for a soldier "risking his life" in Afghanistan. "He is working for a company which is five-sixths owned by us, the taxpayer, and I think he has to think like a public servant, not like someone who's there to line their own pocket," Browne said. No one's forcing him to take this money. He could struggle on with £1.2m. But the Conservative Mark Field, the MP for the City of London and Westminster, told BBC News 24 it was "easy to kick" Hester and accused Johnson of electioneering. He accused Miliband and Browne of "grandstanding hypocrisy" and employing the "ethics of the schoolground bully." No 10 has said its hands were tied on the bonus because of previous contractual arrangements drawn up under the Labour government. However, this argument appeared to be undermined by the intervention of Lord Myners, the former financial services minister, who negotiated the RBS deal. Earlier on Friday, he said: "There is nothing in the employment contract of Stephen Hester or any director of Royal Bank of Scotland which binds the company or its remuneration committee to pay a mandatory bonus. All matters relating to bonuses are at the full discretion of the board of directors and the shareholders, including UKFI, who have elected them. The shadow business secretary, Chuka Ummuna, also hit back at accusations from the government that Hester's bonus arrangements were fixed. "The deputy prime minister, prime minister and others have tried to suggest that the bonus framework was set by the last Labour government, which is simply untrue," he said. RBS has been very clear that the remuneration committee of the board of the bank had discretion in this case. The TUC general secretary, Brendan Barber, described Hester as Britain's best-paid civil servant at a time of austerity in the public sector. "Ordinary people facing the biggest squeeze in their living standards for decades and businesses desperate for credit will not understand why Mr Hester should get such a huge bonus," he said. They seem to have made an exception for Britain's best-paid civil servant. Since Hester joined RBS in November 2008, it has cut 33,000 jobs. Shares in RBS are trading at around half the value of their 2010 high. The announcement of the bonus came after Cameron gave a speech condemning a financial transaction tax on the City as "madness." "Even to be considering this at a time when we are struggling to get our economies growing is quite simply madness," he told leaders in a speech to the World Economic Forum. Lord Oakeshott, the Liberal Democrat peer who resigned as a Treasury spokesman a year ago over what he perceived to be the financial sector's lax treatment by the government, said the bank should realise that any bonus for Hester this year was "utterly unacceptable." Sir Philip Hampton, the RBS chairman, said on Thursday: "[Hester's] pay is strongly geared to the recovery of RBS, which he was recruited to turn around, having played no part in its collapse. John Hourican, the head of the RBS investment arm, who will oversee a restructuring that will include around 3,500 job losses, will receive up to £4m in long-term incentive shares that he was awarded in 2009. Britain's biggest banks are expected to unveil their bonus plans when they publish their annual results next month.