Lloyds Banking Group is facing the prospect of a shareholder rebellion after giving its chief executive, António Horta Osório, a pay packet that is nearly 100 times larger than the average worker’s at the bank.
The advisory group Institutional Shareholders Services (ISS) has recommended a vote against the bank’s remuneration report at the annual general meeting on 24 May, highlighting discrepancies between “pay and relative performance.” It turned attention to an “unduly complex” bonus structure and said there was a “lack of clarity in the company’s public disclosures on how bonus outcomes are actually determined”. Referring to the gap between executive pay and the rest of the bank’s staff, ISS added: “Although pay ratios have not been disclosed, ISS has calculated that the CEO’s pay is 95.0 times that of the average employee in the organisation.”
Horta Osório took home a total pay package of £6.4m in 2017, up 11% from £5.8m in 2016. It came during what Lloyds called a “landmark year” for the bank, having seen bottom-line profits surge 24% to £5.3bn…. If shareholders follow the recommendations by ISS, Lloyds could be next in line following a string of shareholder rebellions over pay. The bookmaker William Hill saw more than 30% of voting investors cast ballots against the firm’s remuneration report at last week’s AGM.
Consternation centred on a 9.1% increase in base salary for the chief executive, Philip Bowcock, which will see him take home a total of £1.3m. The gambling tech firm Playtech also suffered a bloody nose after 59% of shareholder votes were cast against its own remuneration report following plans to raise the pay of its chief executive, Mor Weizer, by 78%.
Meanwhile, Melrose – which sealed a controversial £8bn hostile takeover of the engineering giant GKN – saw a total of 23% of shareholders reject its remuneration report following a decision to award four bosses at least £42m each in 2017.