Union anger as bank chief likely to net £2.3m bonus

Lloyds chief executive Antonio Horta-Osorio will qualify for a long-term bonus worth more than £2m within days if shares in the banking group hold steady.
Lloyds Chief Executive António Horta-OsórioLloyds Chief Executive António Horta-Osório
Lloyds Chief Executive António Horta-Osório

The boss of the state-backed banking group stands to receive just over three million shares should the stock close above 73.6p on Wednesday.

Mr Horta-Osorio will not be able to sell them until 2018 under the incentive scheme. They closed on Friday at 75.4p, at which price the bonus would have a paper value of nearly £2.3m.

Hide Ad
Hide Ad

It comes as Lloyds is reportedly poised to announce its Scottish Widows Investment Partnership is to be snapped up by Aberdeen Asset Management in a £500m all-share deal that will see the banking group acquire a 10 per cent stake in Aberdeen.

Mr Horta-Osorio is due to qualify for his share award should it complete a 30-day run of closing above 73.6p on November 20.

But it has fuelled anger among unions and will come two weeks after Lloyds announced plans to stop annual pension rises for the 35,000 employees still belonging to its final salary pension scheme.

The stock came perilously close to falling below target earlier this month, closing at 73.9p on November 7, but has since climbed.

Hide Ad
Hide Ad

Lloyds Banking Group, rescued by the taxpayer during the financial crisis after swallowing up Halifax Bank of Scotland, remains 33 per cent state-owned.

It notched up losses of £440m in the third quarter of this year and its bill for the payment protection insurance mis-selling scandal soared to more than £8bn, but underlying profits nearly doubled to £1.52bn for the period.

Shares have been buoyant over the past year as Lloyds looks to emerge from a turbulent period. They recently nudged above 80p and are worth twice as much as they were just over a year ago.

The bonus scheme was devised in March when the shares were worth just 50p.

Hide Ad
Hide Ad

The 73.6p level represents the average price paid by the taxpayer when the bank was rescued.

Mr Horta-Osorio would also qualify for the scheme should the Government sell at least a third of its shareholding in the group, at more than 61p per share.

But following the Treasury’s disposal of 15 per cent of its holding – or six per cent of the group – in September, the Chancellor pledged no more would be sold for 90 days.

It means that the share price criteria for the chief executive’s bonus looks set to be met first.

Hide Ad
Hide Ad

Details of the bonus have been criticised by trade union Unite, describing the shares scheme as “massive awards for the bosses while ordinary bank workers struggle to pay their household bills”.

The union has also criticised the fact that it comes as the final salary pensions scheme is being pared back.

Anger over the plan has left the bank facing possible industrial action.