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Lloyds exec defends CEO's £2.8m pay: 'People like a winner'

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
Lloyds Banking Group chief executive, Antonio Horta-Osorio, listens to a speech during the Lord Mayor's Banquet at Guildhall, 2016. Photo: Carl Court/Getty Images

A senior Lloyds (LLOY.L) executive has defended the pay package of the bank’s CEO by saying he is a “winner” who has “charisma.”

Stuart Sinclair told MPs on the Work and Pensions Committee on Wednesday: “People like a winner. When I go out to see people who are on £22(000), £30,000, £40,000, they see Antonio as a winner.”

Sinclair is an independent director at Lloyds and chair of the bank’s remuneration committee, which decides pay policy at the bank. He was responding to a question from Labour MP Frank Field about whether Lloyds Bank staff resent Lloyds CEO Antonio Horta-Osorio’s multimillion pound pay package.

“Thank goodness for British taxpayers, he [Antonio Horta-Osorio] did, through his effort with others, pull this bank back from the brink,” Sinclair told the committee.

“There’s a charisma around Antonio, which actually means a lot of people say, good luck to him, he works incredibly hard and I don’t resent the money.”

Field said staff had contacted his committee to express frustration with the pay gap between CEO and front-line staff at Lloyds. Sinclair said he regularly spoke to staff and had not picked up on any disquiet.

Horta-Osorio, who joined Lloyds at CEO in 2011, had a fixed salary of £2.8m in 2018 but took home £6.2m last year when bonus and share awards are included.

The Lloyds CEO has come under pressure from MPs in recent months over what they see as excessive pension awards. Horta-Osorio received 33% of his base salary, £419,000, as a cash payment in lieu of pension last year. This is out of line with the vast majority of Lloyds staff who get 13% of their salary contributed to their pensions.

Investment Association (IA) guidelines state that pension contributions for staff and executives should be aligned. The IA has also criticised Lloyds for failing to heed its guidelines that total pension contributions for CEOs should be capped at 25%.

Defending the arrangement, Horta-Osorio said on Wednesday: “2011, when I joined the bank, the pension contribution was really not seen as it is seen today, it was seen as part of a total fixed package. The package was approved by the government and what really mattered was the total fixed package.”

Field, who chairs the Work and Pension Committee, accused Horta-Osorio of greed for demanding such a large pay package. The Lloyds CEO replied that it “is very difficult to accept the word greed that you used.”

“My total compensation is absolutely in-line with other major bank chief executives,” Horta-Osorio told the committee, pointing out that his pay was lower than that of HSBC’s CEO.

“That is the market value for bank chief executives,” Horta-Osorio said. “That doesn’t mean at all that we should not, and we are, be mindful of reducing the pay gap, which I think should mostly be done by increasing the pay of lower paid staff because that’s what most affects their living conditions.”

Both Horta-Osorio and Sinclair stressed that Lloyds was reviewing its remuneration policies and would present a new 3-year plan to investors next year.

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Oscar Williams-Grut covers banking, fintech, and finance for Yahoo Finance UK. Follow him on Twitter at @OscarWGrut.

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