Financial News

  • 13 February 2014, 7:08

Lloyds Boss Horta-Osorio Lands 1.7m Bonus

Antonio Horta-Osorio, the chief executive of Lloyds Banking Group, will be paid a 1.7m bonus for 2013, the taxpayer-backed lender will disclose on Thursday.

Sky News can reveal the exact sum that Mr Horta-Osorio will receive following an agreement between Lloyds' board and UK Financial Investments (UKFI), which manages the state's 33% shareholding.

The 1.7m bonus will reflect the fact that Lloyds made a statutory profit for the year even after another mammoth set of provisions for payment protection insurance (PPI mis-selling), the bank will announce alongside its annual results.

Lloyds will also unveil a 395m bonus pot for staff, up from 360m in 2012, according to insiders.

Mr Horta-Osorio's bonus will be deferred for five years, meaning that he will not take ownership of the shares until 2019.

The number of shares he is awarded will not be decided until March, but at Wednesday's closing share price of 83.53p, a 1.7m bonus would mean the Lloyds chief receiving approximately 2m shares.

The award will only vest if Lloyds' share price remains above the average 73.6p price at which taxpayers bailed out the bank in 2008 for a continuous period of six months, or if the Government sells at least half of its remaining stake at a profit, under new conditions negotiated with UKFI in recent days.

The conditions are key because George Osborne, the Chancellor, will be able to argue publicly that Mr Horta-Osorio will only benefit when taxpayers also make money from their investment.

Such a structure echoes an arrangement devised last year, which saw Mr Horta-Osorio's bonus for 2012 vest if Lloyds' share price traded above the average price at which taxpayers invested in the bank during the 2008 financial crisis.

Under the terms of his contract, Mr Horta-Osorio is eligible for a maximum annual award of 2.387m, equivalent to 225% of his 1.061m basic salary.

A separate equity plan granted to Mr Horta-Osorio in 2011 and which could be worth up to 5.8m at the bank's current share price will pay out next month, although it is unlikely to do so in full.

Lloyds declined to comment on Wednesday.

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