Investor anger at Lloyds' pay plans

More than 8.5 per cent of votes were cast against approving the directors' remuneration report for the year to the end of December 2009.

The vote came amid criticism of the group's pay policies for top bosses and followed calls for shareholders to vote down its remuneration plans.

Chief executive Eric Daniels waived his bonus for 2009, but the bank's remuneration committee has been criticised for making the award after Lloyds slumped into the red last year by a mammoth 6.3bn.

The decision has also been widely blamed for the unexpected announcement in March that the chair of the remuneration committee Wolfgang Berndt was to retire at yesterday's shareholder meeting.

Chairman Sir Win Bischoff told investors at the gathering in Edinburgh that the group had to "strike a balance" in making pay decisions for key executives.

He said: "The board, on the recommendation of the remuneration committee, believed that he (Eric Daniels) merited a bonus because of his significant personal contribution and the group's overall performance, albeit loss-making, in 2009."

In relation to wider incentive payments across the group, he said it was "right they receive appropriate financial recognition when stretching financial targets are met". His address to shareholders came in the week after it was revealed that Lloyds, which is 41 per cent owned by the state, is back in profit and expects to stay in the black for the rest of the year.

But there has been stiff opposition to the remuneration plans from shareholder group Pirc, which advised institutional investors to reject the Lloyds pay proposals it believes are potentially "excessive".

There has also been concern over performance measures in the long-term incentive awards and the inclusion of a share price target, especially given recent gains for Lloyds stock that have taken shares close to the trigger level at which rewards start to kick in.

But UK Financial Investments (UKFI) – the body charged with managing Government-owned banking assets – yesterday confirmed its support for Lloyds.

The topic of pay and bonuses drew comments from a number of speakers at the meeting, which was attended by several hundred people.

Alexander Hopkinson-Woolley, of the Isle of Wight, was applauded when he said: "Many shareholders in Lloyds bank have lost much of the capital value of their investments and have been deprived of any dividend income, while the directors of the bank have continued to receive very good salaries and, in some cases, increased bonuses.

"I do not accept the story that because of superior performance it is necessary to pay very large amounts to particular directors on the grounds that they may go somewhere else."