Executive pay “wrong in a civilised society” but Lloyds bosses tell shareholders they must pay for performance

Antonio Horta-Osorio

Lloyds, which is also behind Scottish Widows, has received heavy criticism recently over executive pensions following the revelation that chief executive Antonio Horta-Osorio’s package included a pension contribution of 46 per cent, compared with a 13 per cent maximum for other employees.

This week MPs accused the firm of “boundless greed” over the pension plans, despite the Portuguese previously voluntarily reducing his contribution to 33 per cent.

His move also did not stop the Investment Association issuing its second-highest warning against the bank over the issue ahead of this week’s annual general meeting, while influential shareholder advisory group Pirc also recommended investors vote against Horta-Osorio’s “highly excessive” pay plans.

However, at yesterday’s meeting in Edinburgh, just over 8 per cent of votes went against the bank’s pay proposals.

The 91.95% of votes made in favour of Lloyds’ overall pay plans actually marked an improvement on last year’s result when one fifth of its shareholders voted against its remuneration report.

Although one billion votes were withheld yesterday.

Before the vote, chairman Lord Blackwell sought to defend Horta-Osorio’s £6.27 million-a-year pay deal.

He said the chief executive and other directors have “earned through their performance the rewards that they are entitled to”.

He added: “Let me be clear – our view is we should and need to pay for performance.

“Not many people would do the arduous hours and arduous tasks they do for free.”

However, one shareholder told the meeting at the EICC: “Paying people hundreds of thousands and even millions of pounds a year where we have food banks and people on benefits is wrong in a civilised society.”

Ahead of the AGM Lloyds also announced plans to pay quarterly dividends from next year in a move aimed at providing its 2.4 million shareholders with more regular returns.

It will pay out three equal payments in the first three quarters followed by a bumper dividend in the fourth. It currently pays dividends twice a year.

All members of the Lloyds Banking Group board were also re-elected at the event.