Lloyds chief’s no to annual bonus following sick leave

LLOYDS said chief executive Antonio Horta-Osorio has waived his annual bonus for 2011 after he took two months’ sick leave at the end of last year.

Mr Horta-Osorio said the decision reflected the “impact” his leave of absence has had on the bank.

Other concerns were the bank’s performance and the tough customer environment.

Sign up to our Business newsletter

Sign up to our Business newsletter

His bonus could have been worth £2.4m.

Mr Horta-Osorio will still get basic pay of £1.1m and could get £4.5m in a long-term plan.

“My bonus entitlement should reflect the performance of the group, but also the tough financial circumstances that many people are facing,” said Mr Horta-Osorio.

“I also acknowledge that my leave of absence has had an impact both inside and outside the bank including for shareholders.”

Pay for bankers, and bonuses in particular, are politically contentious since the Government spent £66bn bailing out Lloyds and Royal Bank of Scotland at the height of the banking crisis in 2008.

Prime Minister David Cameron has said he wants to try to curb executive pay by making shareholder votes on remuneration packages binding, rather than advisory.

Lloyds’ shares slumped by 60 per cent last year, one of the worst performing stocks in the FTSE 100.

The share price dive has left the Government, which owns 40 per cent of the bank, sitting on a £12bn loss on its £20bn bailout.

Mr Horta-Osorio joined Lloyds at the start of 2011, taking over as chief executive in March.

Since then he has implemented sweeping changes including 15,000 job cuts in a plan to return the bank to financial health.

The 47-year-old Portuguese shocked investors in November when he stepped down, suffering from fatigue. He returned to work this week having recovered from his severe sleeping problems.

Lloyds made a £3.9bn loss in the first nine months of last year and said it may miss financial targets due to the tough economic outlook.

The bank could report a loss for 2012 as well as for last year as bad loans remain high, said analysts at Barclays Capital.

Mr Horta-Osorio’s pay and bonus entitlement will be revealed in the group’s annual report next month.

He left the bank in the midst of implementing his strategic review, which included a revamp of the Halifax brand.

While Mr Horta-Osorio was away, Lloyds named the Co-operative as its preferred choice to buy 632 branches it is selling under European competition rules.

Mr Horta-Osorio’s decision to forego his bonus comes amid reports that John Hourican, the head of Royal Bank of Scotland’s investment banking arm, which yesterday announced 3,500 job losses, is in line to pick up £4m in long-term incentive shares that he was awarded in 2009.