Judging by the figures disclosed in annual reports it clearly pays to run some of Scotland's best-known financial institutions.

Not everyone is happy, however, that pay for top jobs is rocketing. PIRC, a corporate governance consultancy, dubbed executives packages "excessive", while the Association of British Insurers (ABI) – which speaks for a lot of the UK institutional investors – has asked Royal Bank of Scotland to meet it to explain RBS's generous executive incentives scheme.

Commenting on the decision to place RBS on 'amber' alert – which could signal breaches in corporate governance – Peter Montagnon, the ABI's head of investment affairs, said: "This reflects our concerns over the potentially quite serious issue of the level of discretion that the remuneration committee has."

What’s all the fuss? Well, Sir Fred Goodwin, RBS chief executive, saw his total remuneration rise to £3.99m in 2006, up from £2.89m in 2005.

The headline figure includes a £2.76m performance bonus on top of a basic salary of £1.19m. Meanwhile, finance director Guy Whittaker, who joined from Citigroup in February 2006, was paid £4.5m. Although this included a performance bonus of £1.19m, and an award of £1m of shares in RBS, it also included £1.19m paid to compensate him for the loss of shares in an option scheme with his former employer.

Over at Standard Life, chief executive Sandy Crombie saw his pay rise by £871k last year to £2.2m. Keith Skeoch, chief executive of Standard Life Investments, received just under £2m, including £1.5m in bonuses. Meanwhile, Katherine Garrett-Cox, who started at Alliance Trust this month, got a £1m golden hello payment.

Scotland’s financial executives aren’t the only ones paying themselves handsomely. According to the Financial Times, FTSE executives’ basic pay rose by 8% last year while their bonuses increased by 39%.

Recruiters, however, believe the pay packages are fair. Alex Phillips at Morgan McKinley says: "It needs to be remembered that RBS are one of the largest banking groups in the world and not simply a Scottish domestic business; they therefore compete on a global scale, so they absolutely need to compete for candidates with other global businesses who also operate in their markets."