Lloyds board comes through fraught AGM as boss sees pay slashed

Bank of Scotland owner Lloyds Banking Group yesterday avoided an anticipated revolt over executive pay as shareholders approved the Edinburgh-based group’s remuneration report by 97.7 per cent.

Prior to the meeting, there had been fears that the gathering could be the latest scene of corporate revolt after advisory group Pensions & Investment Research Consultants described executive pay at the bank as “excessive” and issued a note urging a vote against the remuneration report, despite the package including a paycut for chief executive Antonio Horta-Osorio.

Mr Horta-Osorio’s pay packet of £8.8m for 2015, a year that saw the group report a seven per cent fall in profits, was approved and down from £11.5m he took home in 2014.

But the cut in pay of the head of the bank was not enough to prevent discord at the meeting, held in the Scottish capital, which still saw angry questions aimed at bosses over pensions, bonuses and branch closures.

Members of Lloyds Trade Union, which represents 30,000 staff, handed out leaflets to arriving shareholders describing chief executive Antonio Horta-Osorio as “shameless” for introducing a pension freeze for staff while protecting his own benefits.

“We want (the bank) to stop paying executives ridiculous amounts in their pension schemes when they could be funding their own staff’s pension scheme,” said LTU regional officer Richard Dunscombe. The union said Mr Horta-Osorio had accrued an annual pension entitlement of £76,200 and also had a second pension worth 50 per cent of his base pay, while staff had lost pension benefits equivalent to £10 billion.

Lloyds noted that Mr Horta-Osorio’s second pension was to compensate for arrangements he had to give up when he moved from Santander and was linked to share price targets.

Meanwhile, while just 2.33 per cent of votes cast were against the directors’ remuneration report, David Harrison from Birmingham took the change to take aim at the banks payment policies.

He said: “The normal range between top and bottom (pay levels) in a company is one to 10 and occasionally one to 20. It must be about one to 300 in this company. Get the salaries down, get the bonuses down and get people working and encouraged to work.”

Chairman Lord Norman Blackwell said all staff were rewarded and recognised fairly for their role in the business.

Another shareholder protested angrily at the collapse in Lloyds’ share price from £7.22 to 66p since the financial crisis and merger with Halifax Bank of Scotland.

“I’ve now lost £6.52 per share, so you’ve not done a good job,” he said. “It’s a total disgrace.”

Lord Blackwell responded: “I don’t think you can blame me or this management team for events that happened before we were involved. Many banks over-leveraged and took on practices that weren’t appropriate – and all banks suffered with a fall in share price.”

Alexander Hopkinson-Woolley asked what the bank was going to do about disaffected staff and the risk of cronyism in board appointments. “It’s this kind of interbreeding that produced the boards that destroyed our banks,” he added. Lord Blackwell said the bank had managed to attract a high quality board and said engagement among its 75,000 staff had increased.

Michael Baird from Bonar Bridge, in Sutherland brought up[the issue of branch closures and described it as a “joke” that his local bank was now open for only five hours on a Tuesday, with the nearest alternative branches between 22 and 30 miles away.

“There can be no advantage in abandoning a community where the bank has been a cornerstone of life for more than a generation,” he said.

Lord Blackwell responded: “We expect to keep the largest branch network of any bank in the UK. But that doesn’t mean we can commit to (keeping every branch open).”

The highest percentage against a resolution was the notice period for general meetings, at 8.75 per cent, while re-appointment of the auditor was voted against by 2.17 per cent of those cast. Other issues raised by shareholders included gender and ethnic diversity on the banking group’s board.