Lloyds Banking Group PLC board has won an investors’ vote on its remuneration report despite the bank coming under fire from MPs for "boundless greed."
Yet 10% of investors did not support the payouts on May 16. Ahead of the vote, Frank Field MP, chairman of the House of Commons' work and pensions committee, accused the bank of "feverish desperation and boundless greed" in its executive remuneration arrangements.
The Investment Association, which represents 250 fund managers managing £7.7 trillion of assets, gave the bank an amber top in its shareholder report, its second highest indication of concern, while investor advisory group Pensions and Investment Research Consultants advised investors to oppose the remuneration report.
Much of the anger focused on the pension arrangements of Lloyds' chief executive Antonio Horta-Osorio who received £573,000, or 46% of his £1.24 million 2018 salary in cash in lieu of pension, and though this has been reduced to 33% for 2019, it is still much higher than the 13% awarded to most Lloyds’ staff. Executive cash in lieu of pensions is sometimes seen as a pay rise by the backdoor.
The Financial Reporting Council revamped the U.K. Corporate Governance Code last year and said executives should have the same pension rates as other employees.
Of those who voted at the bank's annual general meeting, 91.95% of investors were in favor of the remuneration report and 8.05% voted against it. About 2% abstained.
Although this was a significant improvement for the bank on last year when 20.78% of investors voted against the remuneration report, it still fell significantly short of the level of the previous year when 98% of investors backed the report.
Shareholder advisory group Institutional Shareholder Services had recommended a vote in favor of the report but it made it clear it was offering only "qualified support."
The Investment Association has been campaigning for executive pension arrangement to be brought in line with other staff, winning a victory earlier this year at HSBC that cut the amount its executives receive in lieu of pension contributions by a third.