Lloyds to face revolt over executive pay at annual meeting
UK’s biggest retail bank has been criticised for its CEO’s pension perks with law makers say recent cuts to his pay package are not enough
London — Lloyds Banking Group is braced for a potential shareholder revolt over senior executives’ pay at its annual meeting on Thursday, after criticism by politicians and a string of similar rebellions at rival banks.
The bank’s CEO António Horta-Osório’s £6.3m pay in 2018 has faced objections from investors, with particular focus on the generous pension perks that eclipse those on offer to Lloyds’ broader workforce.
Horta-Osório, Britain’s highest paid banking CEO, has already waived part of the bank’s contributions to his pension pot this year, taking the annual payments to 33% of base salary from 46% previously. But this is still more than double the 13% contribution made to the retirement pots of less senior Lloyds employees and higher than the 25% rate recommended by the UK Investment Association.
Barclays, Standard Chartered and Standard Life Aberdeen have all had sizeable investor rebellions against the pay of senior management in the past few years, although all companies ultimately secured a majority of shareholder support.
The rise in shareholder dissent comes as banks provide more disclosure on pay to comply with new reporting rules on company remuneration. These reforms aim to put disparities between management and workers’ pay at the country’s biggest businesses under closer scrutiny. From next year, firms will be obliged to set out the ratio of CEO pay to a median UK employee and those in the lowest and upper pay quartiles.
The top bosses of Britain’s biggest banks were paid on average 120 times more than the median pay of their UK employees in 2018, bank filings showed. At Lloyds, Horta-Osório was paid 169 times as much as the bank’s median paid employee, who earned £37,058 a year.
The heads of parliament’s work and pensions and business committees, Frank Field and Rachel Reeves, accused Lloyds bosses of “boundless greed” for failing to bring the pension contributions in line with other workers, and urged investors to vote against the policy at the meeting.
In response, Stuart Sinclair, head of Lloyds’ remuneration committee, said the pension allowance cut for this year is an “important step” and the remuneration policy will be reviewed ahead of next year’s annual meeting.
Shareholder advisory groups Glass Lewis and ISS both recommended investors vote in favour of the pay report.