June 24 (Bloomberg) -- Bank of England Governor Mervyn King said developments in bank remuneration are “disappointing” after Royal Bank of Scotland Group Plc said it may pay Chief Executive Stephen Hester 9.74 million pounds ($16 million).

“I share the concerns, King said in response to questions by Parliament’s Treasury Committee today. “I’m disappointed that it seems to have not yet sunk in that we need a change in the way things are structured.”

The comments come a day after Financial Services Authority Chairman Adair Tuner urged the cross-party committee to adopt rules to curb investment banks’ hiring and trading, saying they were returning to “risky” practices. The new agreement on Hester’s salary also drew criticism from a union representing some RBS employees. The bank posted the biggest loss in British corporate history last year.

Shares of Britain’s biggest government-controlled bank will have to rise to 70 pence and outperform its peers for Hester, who has a 1.2 million-pound annual salary, to receive the full amount of shares and options in a new pay package, the Edinburgh-based bank said yesterday in a statement.

Hester is selling assets, reducing lending and has cut 11,700 jobs this year in an effort to return RBS to profit.

To contact the reporters on this story: Svenja O’Donnell in London at sodonnell@bloomberg.net; Jennifer Ryan in London at Jryan13@bloomberg.net

Last Updated: June 24, 2009 11:51 EDT