An £11.5m pay packet for the chief executive of Lloyds Banking Group was waved through by shareholders in the bailed-out bank at an annual meeting punctuated by outbursts from disgruntled customers and concern over the £12bn cost of the PPI scandal.
Fewer than 3% of investors voted against the cash-and-shares deal for António Horta-Osório, which, when announced in February, prompted the TUC to ask why the government had not done more to “hold back this excess”. Pirc, the shareholder advisory body, had recommended voting against.
After the vote, the TUC general secretary, Frances O’Grady, said: “The Trade Union Shares Owners group was one of the few to vote against Horta-Osório’s bumper package. It is a shame that the government didn’t use its voting block to do the same. If we don’t embrace sensible policies, like putting workers on remuneration committees, the pay gap between CEOs and ordinary workers will continue to widen.”
The government stake in Lloyds dipped below 20% this week, down from 43% following the 2008 bailout, and UK Financial Investments, which manages the taxpayers’ stake, said it had voted in favour of the remuneration report.
“Following a process of thorough engagement with the Lloyds remuneration committee, UKFI believes the committee has exercised reasonable judgement in relation to their approach to directors’ remuneration, particularly in the context of performance over the year,” it said.
Lord Blackwell, the bank’s chairman, was reportedly asked if the government would be able to sell of the rest of its stake next year. “It’s possible and would be very desirable. Whether the government can achieve that depends on the market conditions,” Reuters reported him saying.
At the three-hour meeting in the Edinburgh international conference centre, Blackwell said the bank believed in pay for performance. The £11.5m for Horta-Osório included a £7.5m share award handed to him three years ago and came in a year when the bank was fined £226m for rigging Libor and as the cost of the long-running payment protection insurance scandal reached £12bn.
Blackwell was asked by one shareholder how much bigger the dividend payments might have been without the fines imposed on the bank. The chairman said just over £250m had been paid out in fines since 2008, while the first dividend in six years cost £535m.
It was not so much about the financial cost, Blackwell said, adding: “It’s more the damage it does to the trust in the organisation.” Asked by another investor about the PPI scandal, he said: “That is £12bn we’d have liked to have been available for shareholders.”
He said another £2.4bn had been spent on carving out TSB – a requirement imposed by the EU after its bailout. TSB is in the process of being sold to Sabadell of Spain.
The dividend was a symbolic gesture, he said, and the bank intended to announce a dividend alongside its half-year and full-year results this year.
The longest intervention at the AGM was by Keith Elliott, owner of Premier Motor Auctions, a bank customer who is taking legal action over the way he was treated. He urged the board to “dig out the cancer” of poor customer treatment. Blackwell denied his allegations and said there was no room for misconduct at the bank.
This article was written by Jill Treanor, for theguardian.com on Thursday 14th May 2015 18.25 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010