RBS investors say CEO's incentives too low - paper

LONDON, June 14 (Reuters) - Part-nationalised lender Royal Bank of Scotland (RBS.L: Quote, Profile, Research) has re-jigged CEO Stephen Hester's incentive package after investors said it was not generous enough, the Sunday Telegraph reported without citing sources.

The paper said RBS had raised Hester's potential payout to 18 million shares and options from 13 million originally, while also introducing tougher targets.

RBS said it was still working on the plan.

"The detail is being worked on and is not yet finalised," the bank said in a statement.

"(Hester) is leading a major corporate turnaround and will only gain anything after three years if he succeeds."

Hester was appointed last year to restructure RBS after heavy exposure to risky credit-backed assets built up during the tenure of his predecessor, Fred Goodwin, forced the bank to accept 20 billion pounds ($33 billion) of government assistance.

RBS, now 70 percent owned by the state, has been at the centre of investor and public anger over excessive pay in the banking sector, stoked by the taxpayer-funded bailout of lenders across the U.S. and Europe.

In April, shareholders rejected RBS' directors' remuneration report by a majority of over 90 percent, in a move seen as a protest against a 703,000-pound-a-year pension awarded to Goodwin [ID:L3113004].

(Reporting by Myles Neligan; by John Stonestreet)