Institution Shareholder Services (ISS), the world's biggest investor advisory group, has recommended a vote against Lloyds' remuneration report at the lender's annual general meeting on 24 May.
Lloyds' bonus framework was labelled "unduly complex" and ISS has "concerns [over]... the alignment of pay and relative performance" – Horta-Osorio's remuneration was more than 100 times that of the average Lloyds employee.
The recommendation against Horta-Osorio's £6.2m pay packet left Lloyds "surprised" and refuting ISS' assertions in relation to pay.
Lack of clarity
In its report, ISS identified a "lack of clarity in the company's public disclosures on how bonus outcomes are determined".
Horta-Osorio has overseen Lloyds complete return to the private sector, with the government selling its final stake in the lender it bailed out at the height of the financial crisis.
The Portuguese banker has been subject to reports that his tenure at the top of Lloyds would some come to an end. However, he has responded by committing to the delivery of a three-year plan which will see Lloyds focus on its home market.
A spokesperson for Lloyds said: “We are surprised with ISS’ recommendation to vote against the 2017 Annual Remuneration Report given ISS had recommended shareholders to vote in favour of the director’s remuneration policy at last year’s AGM, which implemented this same framework.
This policy was given strong support by shareholders at the 2017 AGM, with 98 per cent of votes cast in favour. The group actively engages with its main shareholders and other key stakeholders. ISS does not challenge the quantum of the awards, which it states are aligned with the group’s strong performance, but raises concerns about the complexity of the framework. We do not agree with the assertions made within the ISS report as the group makes a high level of disclosure on the framework it operates.