Cable says the figures show the “ludicrous” levels of remuneration in the City.
At a meeting last week, RBS chairman Sir Philip Hampton won the backing of UK Financial Investments and other shareholders for a long-term incentive plan which included Hester’s remuneration package.
Hester will receive £1.2m in salary, a projected £2m a year of non-cash bonus payments and around £6.4m of long-term stock and share options.
Cable says: “This is a different kind of problem from Fred Goodwin – we’re not talking about rewards for failure. Mr Hester is trying to turn around a failed and now nationalised bank.
“Nonetheless, these figures are a reminder of the ludicrous levels of remuneration expected in top jobs in the banking sector.
“This is due in large part to the fact that the leading banks are too big and Mervyn King’s advice of reducing the exposure of the British taxpayer has not yet been taken.”