Lloyds CEO Horta-Osorio reportedly in line for pay cut
Lloyds Banking Group's boss faces a big cut to his multimillion pound pay when the bank overhauls its bonus scheme, the Financial Times reported.
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The bank is planning to replace its long-term incentive plan (LTIP) for top executives with an arrangement that pays out a set number of shares, shareholders told the FT. Under this model bonuses are expected to be cut by at least half compared to the maximum payout in an LTIP as the executive accepts the certainty of a smaller payout.
Chief Executive Antonio Horta-Osorio would take a pay cut of more than £1m under the plan, which Lloyds is due to unveil later in February. As Britain's best-paid bank chief Horta-Osorio received a total of £6.3m in 2018. He can earn up to 300% of his £1.3m as a bonus under the LTIP though he has received about two-thirds of that amount in recent years, the FT said.
Despite their name, LTIPs have come in for criticism for encouraging bosses to aim for short-term targets to increase their personal earnings instead of focusing on the company's prospects in the long run. Executive pay is a contentious subject in the UK after years of austerity and squeezed incomes have widened the perceived gap between business leaders and the populace.
Horta-Osorio had already agreed to take a pay cut of more than £200,000 from his pensions package after the bank was forced to defend his earnings to MPs. Stuart Sinclair, chair of Lloyds' remuneration committee told the work and pensions committee Horta-Osorio was "a winner" and worth every penny the bank paid him.
The Portuguese banker has cut thousands of jobs, closed branches and reduced staff benefits to turn Britain's biggest retail bank into a leaner operation since the financial crisis.