Lloyds Boss Closes In On £2.4m Share Bonus
The chief executive of taxpayer-backed Lloyds Banking Group is set to be awarded a bonus worth about £2.5m next month as the lender continues its recovery from the 2008 financial crisis.
Sky News can reveal that Antonio Horta-Osorio, who took the helm of Britain's biggest high street bank in 2011, will be awarded more than three million shares in November if Lloyds' share price remains above a specific level for the next three weeks.
On Friday, the bank's shares closed at 80.37p, continuing a run above a crucial 73.6p threshold that began on October 9.
Under the terms of an annual bonus awarded in March, Mr Horta-Osorio's payout for 2012 will vest if either of two conditions is met: if the bank's share price trades for 30 consecutive days above the 73.6p average price which the Government paid to rescue it; or if the Treasury sells at least 33% of its shareholding at prices above 61p.
Last month, ministers sold 6% of Lloyds, equating to around 15% of the Government's 39% stake, for 75p-a-share. The Chancellor pledged, however, not to undertake any further sales for several months.
Assuming the share price remains near its present level, Mr Horta-Osorio will gain - at least on paper - an unexpectedly high windfall in November.
At the time of the March announcement, the award to the Lloyds boss of 3.012 million shares was worth £1.485m, based on a share price that had been trading at under 50p.
However, the bank's stock has surged since then as investors have begun to price in its future profitability in an improving UK economy.
Many analysts believe that Lloyds shares could reach 100p by the time it reports full-year results next February, which would make the chief executive's bonus worth more than £3m.
People close to Lloyds point out that Mr Horta-Osorio's wealth will only increase if the taxpayer benefits. The Government's remaining stake in the bank is now worth approximately £19bn.
Mr Horta-Osorio will not be able to take receipt of his share award until 2018 as Lloyds' board attempts to demonstrate a long-term approach to executive pay.
On Tuesday, the bank will report its third-quarter results, with the City anticipating a significant boost in profits.
Further momentum is likely to be injected into Lloyds' share price by any positive news about the bank's discussions with regulators about a resumption of dividend payments.
Talks with the Prudential Regulation Authority on the issue are said to have made progress in recent weeks, with a definitive announcement likely in February.
Another issue preoccupying investors will be ongoing provisions for payment protection insurance compensation. Lloyds has already set aside nearly £7.5bn over the scandal but is likely to have to add to that total, insiders said on Sunday.
Lloyds declined to comment.