Royal Bank of Scotland chief executive Stephen Hester is in line for a £9.6 million pay package if he leads a turnaround of the ailing lender.
RBS won support from UK Financial Investments (UKFI), which controls the Government's more than 70% stake, for Mr Hester's salary and long-term bonus arrangements at a meeting last week.
UKFI is thought to have backed the move because of links to the bank's share price, which would have to pass a 70p threshold for the long-term bonus to be paid in full, by which point the taxpayer would have made millions in profits.
The stock is currently trading at around 37p after hefty share falls earlier this year in the wake of the Government bailout.
Mr Hester is in line for £1.2 million in salary, around £2 million in annual non-cash bonus payments and around £6.4 million of long-term share and stock option awards.
Long-term incentives would be based on a mix of targets and the RBS chief's options would be paid for 2009 but would only be able to be redeemed after three years.
But critics said the decision to tie the bonus mainly to the performance of the bank's shares could encourage risk.
Roger Lawson, of the RBS Shareholders Action Group, said: "It is absolutely outrageous that the Government does not use its power to bring the remuneration of bankers in these companies down to a reasonable level. Do they need to pay him this much to make him work harder?"
He said basing a bonus on share price could mean the focus would be put solely on this one measure at the cost of other strategies.
An RBS spokeswoman confirmed the deal had been agreed but was in the process of being finalised by the firm's board. "We have said consistently it is all linked to performance and will only be paid out if targets are met," she added.
