17th May 2019

Government committees question Lloyds’ pension contributions for executives

The UK Government’s Business, Energy and Industrial Strategy Committee and the Work and Pensions Committee have written to Lloyds Bank remuneration committee asking why Lloyds’ chief executive “Mr Horta-Osório’s pension contribution rate stands at 33 per cent, when the maximum employer contribution rate stands at 13 per cent for other Lloyds employees – and the contribution rate for Lloyds’ Chief Operating and Financial Officers stands at 25 per cent of salary.”

The Committees have also questioned whether Mr Horta-Osório’s fixed-share award increase, to £1.05m, is “in the spirit of the Investment Association’s guidelines”. The chief executive’s total pay package is worth £6.27m a year.

Rt Hon Frank Field said: “Trying to twist the arms of thousands of hard-working staff – who helped generate £6bn profit last year alone – to wave through executive pension levels twice their own smacks of feverish desperation and boundless greed. The bank’s remuneration committee churning out a litany of excuses only further erodes what little dignity is left in these proceedings. Senior executives at Lloyds could bring this sorry episode to an end, today: just give it up.”

Rachel Reeves said: Rachel Reeves MP, Chair of the Business, Energy and Industrial Strategy Committee, said: “The pension for the Lloyds Chief Executive is only the latest example of a damaging narrative for UK business – there being one rule for the bosses, another for the workers. Rather than setting challenging long-term targets for CEOs, pay committees are prone to gaming the system, designing ever more complicated pay packages to handsomely reward their executives. Setting CEO pay becomes an expensive version of whack-a-mole where pay committees, for appearance-sake at least, hammer down on one element, such as base salary, only to allow other parts, such as pension entitlement, to pop up to reward their executives.

“The Investment Association is clear that pension contribution rates for senior staff should be aligned with those of their workforce. But too often investors are supine in the face of extravagant executive rewards. In this AGM season, investors at Lloyds and other companies should take the opportunity to hold pay committees to account and vote against remuneration reports which include CEO pay packages vastly outstripping those of the wider workforce.”