Bank of Scotland owner Lloyds Banking Group yesterday avoided a full-blown revolt over executive pay at its annual general meeting (AGM) as its chairman stressed it needed to “pay for performance”.
Just over 8 per cent of votes went against the bank’s pay proposals for bosses at the meeting in Edinburgh, which came a day after MPs accused the firm of “boundless greed” over its pension plans for chief executive Antonio Horta-Osorio. However, despite the criticism, the pay plans of the group saw increased backing compared with last year’s result when a fifth of shareholders voted against the remuneration report.
Before the vote, chairman Lord Blackwell sought to defend Horta-Osorio’s £6.27 million-a-year pay deal.
He said the chief executive and other directors have “earned through their performance the rewards that they are entitled to”. He added: “Let me be clear – our view is we should and need to pay for performance.
“Not many people would do the arduous hours and arduous tasks they do for free.”
Ahead of the AGM at the EICC, Lloyds also announced plans to pay quarterly dividends from next year in a move aimed at providing its 2.4 million shareholders with more regular returns.
It will pay out three equal payments in the first three quarters followed by a bumper dividend in the fourth. It currently pays dividends twice a year.
On Wednesday, Frank Field, chairman of the Commons work and pensions committee, had launched a scathing attack on the group over its pay deals for executives, and investors also took aim at the board at yesterday’s meeting.
Lloyds, which is also behind Scottish Widows, has come under heavy fire over executive pensions in particular following the revelation that Horta-Osorio’s package included a pension contribution of 46 per cent, compared with a 13 per cent maximum for other employees.
In February, he voluntarily reduced his contribution to 33 per cent. But anger has refused to die down, with the Investment Association issuing its second-highest warning against the bank over the issue, while influential shareholder advisory group Pirc also recommended investors vote against Horta-Osorio’s “highly excessive” pay plans.
At yesterday’s meeting, one shareholder said: “Paying people hundreds of thousands and even millions of pounds a year where we have food banks and people on benefits is wrong in a civilised society.”
The board also faced questions, including from TV’s Noel Edmonds, over the fraud case uncovered ten years ago at the group’s HBOS Reading arm.
Lord Blackwell admitted the criminal activity had shaken confidence in the lender.
He said the bank recognises the scandal “not only had a damaging impact” on victims, but also “cast a long shadow” on the wider Lloyds group and undermined trust in it.