Lloyds Banking Group is to hand boss Antonio Horta-Osorio a £900,000 shares allowance this year on top of his salary and potential bonus as it looks to sidestep new European rules capping payouts.
The taxpayer-backed group’s annual report confirms it plans to introduce new “fixed annual payments” for staff which will put Mr Horta-Osorio in line for a potential total salary and bonus package worth £4.9m for 2014.
Lloyds said it will ask shareholders to approve plans to offer its executive team and a “small number” of other employees the maximum allowable bonus worth 200% of salary for this year.
Its annual report showed that 27 employees were handed €1m (£821,000) or more in pay and bonuses last year, up from 25 in 2012. Lloyds said its remuneration committee “strongly believes in pay for performance, in providing a competitive package that allows us to attract and retain the key talent necessary to deliver the strategy set by the board, and in ensuring that fixed costs are properly managed”.
But its plans to defy the bonus cap are controversial, given its status as a part-nationalised bank and in light of its mammoth bill for the payment protection insurance (PPI) scandal and recent record £28m fine for handing sales staff “champagne bonuses” that encouraged mis-selling.
It is thought that Lloyds is clawing back the remaining bonus handed out to former chief executive Eric Daniels for 2010 as a result of its PPI compensation bill, which has now hit nearly £10bn after another £3.1bn was set aside for 2013 alone.
The bank has already recouped around 80% of the £1.45m 2010 deferred bonus that was earmarked for Mr Daniels and is now expected to claw back the remaining 20%. Helen Weir – the former Lloyds head of retail banking at Lloyds – is also among those said to be in line for further clawback after she was paid £875,000 in deferred shares for 2010.
Lloyds declined to comment on the clawback plans, saying only in the annual report that its remuneration committee had recommended the board “should exercise its discretion to adjust the value of certain 2010 and 2011 bonus awards, on a basis equivalent to that applied in the previous year”.
The Bank of England said yesterday it was consulting on plans to go even further with bonus clawback, with aims to give firms the power to recoup bonuses that had already been paid to staff in time for the 2014/15 bonus round.