Lloyds CEO Horta-Osorio's Pay Falls 24% Amid Higher PPI Chargeby
CEO's 2016 salary increased 6%, average employee raise 2%
Number of staff earning 1 million euros rises to 66 from 49
Lloyds Banking Group Plc cut Antonio Horta-Osorio’s pay 24 percent to 8.8 million pounds ($12.2 million) after the lender booked another 4 billion pounds of charges for wrongly sold payment protection insurance.
The chief executive officer’s long-term stock incentive fell to 5.3 million pounds last year, from 7.4 million pounds in 2014, according to the bank’s annual pay report published Thursday. Cushioning the decline, the CEO received a 6 percent raise in his 2016 base salary to 1.125 million pounds, compared with an average employee increase of 2 percent.
Lloyds has now set aside more than 16 billion pounds to compensate customers for wrongly sold PPI, more than double the amount of any other U.K. lender. The scandal, now half a decade old, continues to besmirch Lloyds’s reputation as Chancellor George Osborne seeks to sell shares to return the bailed-out lender to full private ownership. Still, the bank indicated alongside its annual results the latest PPI charge may be its last, helping drive up the shares the most since 2011.
The bank also created 17 more millionaires among its staff, even as total bonuses were cut. The pool of 354 million pounds was about 4 percent lower than 2014. It would have been 26 percent greater if not for reductions tied to the PPI charges.
It was reduced “reflecting additional conduct-related provisions relevant to the year which impacted negatively on profitability and shareholder returns,” Lloyds said. “As previously announced, 30 million pounds was deducted to recognize the impact of failing to deliver the highest levels of customer service in PPI complaint handling.”
The number of senior bankers and “material risk takers” that earned more than 1 million euros ($1.1 million) rose to 66 last year from 49 in 2014, according to the report. That compares with 453 staff at HSBC paid more than that amount in 2015.
Cash bonuses at Britain’s biggest mortgage lender remain capped at 2,000 pounds and the average bonus per employee was 4,600 pounds, Lloyds said. The total salary budget rose 2 percent.
Executive directors Horta-Osorio, Chief Financial Officer George Culmer and Chief Risk Officer Juan Colombas earned a combined 18 million pounds in 2015, down from 22.4 million pounds a year earlier, the report shows. The CEO’s pay was also lower than last year because in 2014 he received a 712,000-pound pension buyout.
The stock soared 9.4 percent to 68.08 pence at 9:23 a.m. in London after the bank raised its dividend and introduced a special payout, while matching its 8.11 billion-pound pretax profit estimate.