Seven members of the bailed-out bank’s top management team working with the Portuguese banker, who is on a £1m salary, could also share in payments worth a further £20m under the same bonus scheme.
Horta-Osório is just beginning his second three-year plan for the bank, which will involve 9,000 job cuts and the closure of 200 branches.
The payouts relate to awards of shares handed to Horta-Osório and his executive team in March 2012 under a long-term incentive plan linked to the bank’s performance over three years to the end of 2014.
The precise scale of the payments will not be known until the spring when the bank releases its annual report, by which time the precise number of shares handed to each executive will have been determined by the bank’s remuneration committee.
If all the performance criteria are met in full – 60% of them are linked to the bank’s stock-market performance, with the rest connected to measures such as consumer satisfaction and selling off businesses and assets – the top staff stand to receive shares that have more than doubled in value since they were awarded three years ago.
When the shares were awarded, they were valued at 34.7p each, but the share price has since risen to 75p. Horta-Osório’s maximum possible payout has increased from £3.2m in 2012 to £7.2m at current prices.
A Lloyds spokesman said: “No decisions have yet been made. Since the initial award, the share price has more than doubled, which has enabled taxpayers to start getting their money back. This reflects the hard work undertaken over the last three years to make Lloyds a safe and profitable bank that is supporting the UK economy.”
In addition to Horta-Osório, payouts could be due to George Culmer, the finance director, who stands to receive up to £3.5m, and Alison Brittain, the head of the high-street banking arm, who could be handed up to £3.4m in shares.
The government is scaling back its stake in the bank to 20% over the next six months by drip-feeding up to £3bn of Lloyds shares into the stock market in the runup to the general election in May.
The disposal of government-owned shares – which stood at 43% after the rescue of HBOS six years ago – began in September 2013.
Horta-Osório could also receive another £1.7m in shares, which were awarded to him last year, if the taxpayer stake falls to around 16% or if the share price remains above 73.6p for six months – the breakeven point of the bailout.
In 2014, he received around £1m in shares – alongside his £1m salary and a £500,000 pension contribution – as part of a scheme by Lloyds to sidestep the EU cap on bonuses. Lloyds is not alone in handing these extra shares to its top up high-ranking staff’s pay following the bonus cap, which restricts bonuses to 100% of salary or 200%, if shareholders approve.
The bank was fined £226m for rigging Libor in 2014 and is expected to cut its bonus pool for 2014 to reflect the penalties.
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