ALL staff at TSB are to be handed £100 in free shares when the bank floats this month, while chief executive Paul Pester will be entitled to a maximum annual pay package of almost £1.7 million.
The lender, which is being spun off by state-backed Lloyds Banking Group, said its 8,600 workers will become “TSB Partners”, echoing the employee ownership model embraced by department store and supermarket group John Lewis.
Pester said: “I believe a sense of shared ownership amongst TSB staff is key to delivering a consistently great customer service – and to building a thriving TSB Bank. I’m therefore delighted that all of our staff will receive £100 of TSB shares and become TSB Partners.”
The partners, from the chief executive to front-line branch workers, will also be in line for an annual performance-related award that could pay a maximum 15 per cent of salary.
For the annual award to be paid, the bank and its staff must meet customer service targets and the group itself must be profitable.
A second scheme has been set up that will deliver cash and shares to its executive team over five years to a maximum of 100 per cent of salary. This means the bank will comply with the European Union guidance that bonuses must not exceed salary, unless otherwise approved by investors.
Pester, whose basic salary will increase from £600,000 to £700,000 a year, will be entitled to a maximum potential award of £1.68m – the equivalent of 65 times the current average pay of non-managerial TSB staff.
Lloyds is being forced to sell the bank as a condition of receiving state aid at the height of the financial crisis, and will initially float about 25 per cent, with a prospectus for the sale due to be published by the middle of this month.
The retail offer contains an incentive for small shareholders to receive one free share for every 20 acquired up to the value of £2,000 – as long as stock is held for a year after the public listing. Many applicants are likely to be customers.
TSB has 4.5 million retail customers and 631 branches, making it the seventh largest retail bank in the UK.