Shareholder body criticises £11.5m award for António Horta-Osório

Investors in Lloyds Banking Group have been advised to vote against the £11.5 million pay deal for group chief executive António Horta-Osório.

PIRC, an advisory body on corporate governance, told shareholders that the award was “highly excessive” and it encouraged them to block its approval at the bank’s annual general meeting this Thursday.

Horta-Osório’s remuneration committee award was first announced in February when the bank unveiled a rise in profits and began paying share dividends for the first time since it was rescued by a taxpayer bailout in 2008.

The CEO’s deal comprises pay and share bonuses including the potential realisation of a long-term incentive plan awarded in 2012, which was due to become accessible this year if certain performance criteria were met.

But in a note to its clients PIRC wrote “the balance of CEO realised pay with financial performance is not considered acceptable”, adding that the increase in Horta-Osório’s total pay over five years was not appropriate given the total shareholder return on investment over the same period.

Pirc also raised concerns about the re-election of the bank’s chairman, Norman Blackwell, because he holds other boardroom roles.  He is chairman at Interserve, the support services company, although there are suggestions that he plans to step down.

Today the government sold another block of shares in Lloyds Banking Group, which reduces the state’s investment in the bank to less than 20 per cent. Public owned shares were initially sold off last December and the latest move means that a further £500m will be paid back into public coffers, boosting the total amount recovered to around £10bn.

While Lloyds Bank wouldn’t comment on PIRC’s advice to shareholders ahead of the AGM, a spokesman said that the news about the sale of shares was evidence of “further progress" in returning the bank to full private ownership.