Lloyds Banking Group boss Antonio Horta-Osorio yesterday defended his bumper £1.7million shares bonus as well as the £395million handed out to staff, claiming it was in the interests of the taxpayer to make the payouts.
The chief executive of the bank – in which the taxpayer still has a 33% stake – defended the decision as he claimed Lloyds was now “a normal bank”.
The bank yesterday said it had made its first bottom-line profit since 2010 thanks to turnaround efforts following its £20.5billion bailout at the height of the financial crisis.
The move comes despite pressure on the group to cut bonuses after it was left counting the cost of past misdemeanours, recently revealing another £1.8billion in payment protection insurance (PPI) provisions and a record £28million fine for paying staff “champagne bonuses” that drove mis-selling.
Mr Horta-Osorio’s counterparts at Barclays and Royal Bank of Scotland have waived their entitlements to bonuses for 2013.
Mr Horta-Osorio said: “I strongly believe you should link compensation with performance, and having increased our underlying profits by 140%, we thought it was appropriate to increase the bonus pool of the bank by 8%.”
Lloyds said Mr Horta-Osorio’s windfall is deferred for five years and is dependent on the government selling another 50% of its remaining stake. The bonus will also be paid if the share price holds above 73.6p – the average price paid by the government when the bank was rescued – consecutively for six months.
Details of the payouts were revealed as Lloyds confirmed statutory profits of £415million against losses of £606million in 2012 – its first bottom line profit since 2010.
This came despite its soaring bill for mis-selling compensation, which was revealed alongside headline profit figures earlier this month.
Underlying profits more than doubled to £6.2billion in 2013, with provisions such as PPI stripped out.
Unions attacked Mr Horta-Osorio’s refusal to forgo his annual bonus.
TUC general secretary Frances O’Grady said: “With Lloyds still owing billions to the taxpayer and the amount it has had to set aside for PPI mis-selling rising by a whopping £1.8billion, now is not the time for its chief executive to be taking a multimillion-pound bonus.”
But the payout means the majority of Lloyds staff – around 91,000 employees – will receive an average of £4,500 each, although cash handouts are capped at £2,000 and bonuses are fully deferred for directors.