'Restrained' Lloyds could pay boss up to £6m

The bank – which is 41 per cent taxpayer owned – said in its annual report that it recognised the need for "continued restraint" in remuneration, with salaries remaining frozen at 2008 levels.

However, it is concerned executive pay could become "uncompetitive" and is increasing its long-term reward scheme to a maximum of 275 per cent of base salary – up from 200 per cent in 2009 – albeit with more stringent performance targets.

Mr Daniels waived a 2.3m bonus due for his 2009 performance last month in the wake of public anger over bank pay.

The 6.2m figure is a potential maximum of 1.03m in salary, a possible 2.33m annual bonus in shares as well as a further 2.85m in shares if the long-term scheme were to be awarded in full.

Lloyds said Mr Daniels has not received a bonus under this long-term scheme, which has been running since 2006, while the maximum percentage of salary for the programme on offer remains below the 2008 level.

The remuneration committee said it recognised the "sensitivity of the operating environment and the fact the group is still in a loss-making position".

Long-term targets have been firmed to include "stretching share price targets" affecting the final 75 per cent of salary segment, which can only be awarded after criteria on economic profits and earnings per share are also met.

The bank said its plans for executive pay for 2010 were discussed with shareholders.