Lloyds was left reeling from a shareholder revolt today after more than a third of investors voted against the bank’s pay policy for top executives.
The investor backlash came after influential proxy adviser group ISS recommended voting against the changes to the policy amid concerns it will all but guarantee long-term bonuses.
While the rebellion will be a bloody nose for Lloyds it was not enough to block the pay plan, which passed with 64 per cent of votes cast at today’s annual general meeting.
The controversy is centred on the lender’s switch to a restricted share incentive scheme for top executives — a move adopted by other blue-chip firms including BT.
Under the new policy chief executive Antonio Horta-Osorio will be entitled to maximum total earnings of £6.3m per year, down from his previous pay packet of £8.3m.
But ISS questioned whether the reduction was sufficient given the higher probability of receiving the bonuses.
Lloyds today stood behind its new policy, but said it would continue to consult with shareholders.
“The board recognises that developing a new remuneration approach that meets the needs of all shareholders is difficult, but felt the introduction of this new policy, which includes a significant reduction and harmonisation in pension contributions, would ensure greater alignment with shareholders,” it said in a statement.
Since last year’s meeting Lloyds has slashed pension allowances for top bosses and raised contributions for all staff after coming under fire from MPs over its pay policy.
Horta-Osorio and other executives have also waived bonuses this year due to the Covid-19 crisis.