EDINBURGH (Reuters) - State-backed Lloyds Banking Group (LLOY.L) is braced for tough questions from shareholders at its annual meeting on Thursday over a 7.8 million pound ($13.1 million) pay package handed to Chief Executive Antonio Horta-Osorio.
The bank, which is 25 percent-owned by British taxpayers, said in March that it expected Horta-Osorio to be paid 4.9 million pounds this year but his package could be worth almost 3 million more if targets are hit.
Banks across Europe have come under fire from the public, shareholders and politicians for rewarding staff lavishly at a time of austerity that was partly brought on by reckless lending by some financial institutions.
Lloyds and part-nationalized Royal Bank of Scotland (RBS.L) are subject to greater scrutiny than rivals after the government pumped a combined 66 billion pounds into the banks to keep them afloat during the 2008/9 financial crisis.
In April, the government blocked plans by RBS to pay bonuses worth double an employee’s fixed salary but said it would support Lloyds’ plans to do the same. That proposal will be voted on by shareholders at the annual meeting.
Unlike RBS, Lloyds has returned to profit and the government has begun selling shares in the bank. Horta-Osorio has turned the bank’s financial performance around, slimming the company down to focus on domestic lending and meet tougher regulatory requirements on the amount of capital it holds.
Lloyds has said it will ask Britain’s financial regulator for permission to restart dividends in the second half of the year, potentially paving the way for a sale of the government’s remaining shares before the next general election in 2015, including an offer to private retail investors.
The bank, whose registered offices are in Edinburgh, may face questions over whether it will remain in Scotland if voters back independence from the rest of the United Kingdom.
Lloyds has warned it could face significant cost increases in the event of a “yes” vote and is assessing the potential implications of independence for its business and customers.
The meeting will be the first to be chaired by Norman Blackwell, who took over as Lloyds’ chairman from Win Bischoff on April 3. Blackwell is a representative of the ruling Conservative Party in Britain’s upper house of parliament.
Editing by Susan Thomas