Lloyds Seeks Approval To Boost Pay Of Top 400
Lloyds Banking Group is to seek approval to boost the pay packets of up to 400 of its most senior staff in a move which could stoke political tensions over bankers' remuneration.
Sky News has learnt that the taxpayer-backed lender will disclose in documents ahead of its annual general meeting (AGM) that it wants the flexibility to pay the higher-than-expected number employees up to 200% of their salaries in bonus awards.
The 400 executives, who are known as 'code staff' by regulators because of their designation as the holders of the most important jobs at the bank, can only be paid the equivalent of their base salaries without shareholder approval under new European Union rules.
The move by Lloyds to seek approval to double the level of variable pay will put the Treasury in a delicate position as it strives to avoid being seen to endorse bumper bonuses, particularly at banks in which it has a direct ownership interest.
One route allowing it to navigate this dilemma would involve UK Financial Investments, the agency which manages taxpayers' stake, abstaining on the remuneration-related votes at Lloyds' AGM, although final decisions are not thought to have been taken.
Approximately 75 of Lloyds' staff are being awarded allowances which, in line with similar deals at other banks, count towards their base pay and will enable higher bonuses to be paid from this year.
Antonio Horta-Osorio, the bank's chief executive, will receive a £900,000 allowance in deferred shares which will boost his guaranteed annual pay to £2.6m.
Lloyds, less than 25% of which is now owned by the taxpayers after a £4.2bn sale of Government shares last week, has identified the 400 eligible employees in accordance with definitions imposed by the European Banking Authority.
The new EU rules have prompted major banks operating in Europe - including Barclays, Goldman Sachs, HSBC and Morgan Stanley - to devise new monthly or quarterly payments, drawing criticism from politicians in Brussels.
George Osborne, the Chancellor, has mounted a legal challenge to the pay ratio cap, arguing that it will do little to curb risk-taking and may damage the City of London.
Lloyds' move to seek approval for the higher payments will be disclosed in the circular to shareholders ahead of next month's AGM, which Treasury sources said was expected to be distributed in the coming days.
The bank is also understood to be tabling a resolution that will ask investors to approve the ability to pay a scrip dividend for the first time since it was bailed out by taxpayers following the merger of Lloyds TSB and HBOS in 2008.
Lloyds has already said that it hopes to resume dividend payments in the second half of 2014 and anticipates becoming a distributor of chunky payouts to shareholders in the coming years.
Sources said that the Lloyds documentation would also include a resolution seeking approval for the bank to draw up a prospectus for a possible sale of shares to the general public.
Such a plan, which is unlikely to be launched by the Treasury until the autumn, could see billions of pounds of shares offered to retail investors.
Lloyds declined to comment on Thursday.