£11.5 million pay bonanza for Lloyds boss
THE boss of Lloyds has collected an £11.5million pay package after steeri ng the state - backed bank to its first annual after-tax profit since the financial crisis.
Antonio Horta- Osorio’s lavish reward includes a £7.4 million bonus and two pension payouts together worth £1.28 million.
Lloyds said yesterday that it would pay a dividend for the first time since its £20 billion bailout in 2008. The after-tax profit of £ 1.5 billion comes despite its bill for payment protection insurance now topping £12 billion.
Mr Horta- Osorio’s pay bonanza was widely condemned, with one trade union leader saying it would outrage the public. But George Osborne said the resumption of dividend payments was good news for taxpayers and savers who hold Lloyds shares or have money invested in the bank through their pensions.
The Chancellor added: ‘Today’s results are another major milestone in the recovery of the British economy from the Great Recession and the bank bailouts.’
The bank’s return to health was the trigger for the payment of the £7.4 million long-term share bonus Mr Horta-Osorio was initially granted in 2012. This took his salary, bonus and pension package for last year to £11.5 million.
Accounts published yesterday showed he received a £568,000 contribution from his employer towards his retirement fund.
Lloyds also paid the equivalent of £712,000 into a separate final salary pension scheme.
Mr Horta-Osorio received a basic salary of £1.061million with the balance of his pay package being made up of other perks and bonuses. The 11 members of the management team he installed after becoming chief executive in 2011 are sharing £30 million of bonuses.
Mr Horta-Osorio, 51, who is from Portugal, insisted the cash was merited because he had met strict targets.
‘It’s very important that people focus on pay for performance – which by the way I think is one of traditions of the culture of this country,’ he said.
The Treasury has picked up £8 billion by selling down its 40 per cent stake in Lloyds to 24 per cent. Shares in the bank have trebled – from 25p to 79p – during the period covered by Mr Horta-Osorio’s bonus.
He said he has not sold a single share in Lloyds since j oining t he bank and he planned to keep his holding until the Government’s stake is significantly reduced.
Frances O’Grady, general secretary of the TUC, said the bonus payments suggested the banks had learnt nothing from the financial crisis. ‘This £7 million bonus will outrage customers and the taxpayers who bailed out the bank,’ she added.
The bank’s 2.7 million shareholders will receive a 0.75p dividend for each share they own. Lloyds said this was a ‘token’ dividend and promised to pay significantly more in future. Labour MP John Mann pointed out that the £130 million set aside for dividends was dwarfed by the £370 million for company-wide bonuses.
‘This will outrage customers’
ALMOST three million Lloyds shareholders will receive their first dividend since the financial crisis.
The state-backed lender confirmed it would pay a full-year dividend of 0.75p per share to 2.7m investors, handing out a total of £535m. The Treasury, which has a 24pc stake, will receive £130m after Lloyds was given the green light by regulators to resume payments.
The news came as the bank posted a £1.8bn pre-tax profit last year, up from £415m in 2013.
But it also revealed its mounting bill for past misconduct.
A £2.2bn provision for mis-selling payment protection insurance pushed its total bill for the scandal above £12bn.
The bank set aside an extra £430m to pay compensation for mis- selling a range of products, although it refused to give details.
The bank also put aside £150m to compensate customers missold interest rate swaps alongside loans to small firms. Its total provision for that scandal now stands at £680m. But while this will be all too familiar to investors, they were offered consolation in the form of the first full-year dividend payment since 2007.
Lloyds was authorised to make the payment by the Bank of Engl and’s Prudential Regulation Authority, which is satisfied that the bank is finally robust enough to reward shareholders.
The bank was barred from paying dividends following its £20bn bailout in 2008. Its payout of 0.75p per share has been described as a ‘token’ dividend by chief executive Antonio Horta-Osorio who said it will be increased significantly over the ‘medium term’.
Lloyds’ last payment to shareholders was an 11.4p per share dividend for the first half of 2008, handed out in October of that year. Lloyds and HBOS – which combined to form Lloyds Banking Group – accounted for an estimated £6.20 of every £100 of dividends in 2007.