Lloyds risks pay rebellion over boss’s £6.42m pay packet

Lloyds in Halifax
Lloyds in Halifax

Lloyds is facing the prospect of a shareholder rebellion after giving boss Antonio Horta-Osorio a bumper pay packet that is nearly 100 times the average worker’s.

Advisory group Institutional Shareholders Services (ISS) has recommended a vote against the banking group’s remuneration report, highlighting discrepancies between “pay and relative performance”.

It turned attention to an “unduly complex” bonus structure and said there is a “lack of clarity in the company’s public disclosures on how bonus outcomes are actually determined”.

“Although pay ratios have not been disclosed, ISS has calculated that the CEO’s pay is 95.0 times that of the average employee in the organisation”, ISS said.

Mr Horta-Osorio took home a total pay package of £6.42m in 2017, up 10.9 per cent from £5.79m in 2016.

It came during what Lloyds called a “landmark year” for the bank, having seen bottom-line profits surge 24 per cent to £5.3bn.

Lloyds said in a statement that it was “surprised” with ISS’s recommendation, given that the advisory group backed the new remuneration policy at last year’s annual general meeting, which implemented the pay framework.

“ISS does not challenge the quantum of the awards, which it states are aligned with the group’s strong performance, but raises concerns about the complexity of the framework,” Lloyds said.

“We do not agree with the assertions made within the ISS report as the group makes a high level of disclosure on the framework it operates.”

While ISS backed the policy, it did note some concerns around changes to deferred pay arrangements which it said resulted in a “higher proportion of the total remuneration package delivered in cash as compared to the previous policy”.

About 98 per cent of votes cast at the 2017 meeting were in favour of the policy.

Glass Lewis, another shareholder advisory firm, has recommended a vote in favour of the remuneration report.

If shareholders follow ISS’ recommendations, Lloyds could be next in line following a string of shareholder rebellions over pay.

Bookmaker William saw over 30 per cent of voting investors cast ballots against the firm’s remuneration report at last week’s AGM.

Consternation centred on a 9.1 per cent increase in base salary for boss Philip Bowcock, which will see him take home a total of £1.3m.

Gambling tech firm Playtech also suffered a bloody nose after 59 per cent of shareholder votes were cast against its own remuneration report following plans to raise the pay of its chief executive Mor Weizer by 78 per cent.

Meanwhile, Melrose – which sealed a controversial £8bn hostile takeover of engineering giant GKN – saw a total of 22.87 per cent of shareholders reject its remuneration report following a decision to award four bosses at least £42 million each in 2017.