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Bonus pool is cut

Lloyds pays dividend and adds to PPI compensation

Bank of Scotland branchLloyds Banking Group  reported has made a further £2.1 billion provision to cover compensation for customers mis-sold payment protection insurance.

The bank, which includes Bank of Scotland, is recommending a final ordinary dividend of 1.5p, making 2.25p for the year, and a special dividend of 0.5p after underlying profit rose to £8.1 billion for the year against £7.8 bn last time, beating expectations. Pre-tax profit fell 7% to £1.6bn.

Despite better underlying financial results, the group’s total bonus outcome has reduced year-on-year to £353.7 million (from £369.5m in 2014).

Cash bonuses remain capped at £2,000 with additional amounts paid in shares and subject to deferral and performance adjustment. Average bonus awards across all staff are approximately £4,600.

Group chief execuive António Horta-Osório, is expected to be granted a deferred bonus award of 723,977 shares, worth £450,313 at the recent trading price of 62.2p per share. The actual payment will be determined by the average of the closing share price of the five trading days prior to the date of the award. 

He will only receive the award if the share price remains above 75.5p on average for any 126 consecutive trading days during the five years following grant or the UK government sells the remainder of its shareholding during the three years following grant. 

Subject to either of the conditions being met, vesting may commence no sooner than two years following grant. If neither of the conditions has been met by the fifth anniversary of the award, the award will lapse entirely.

Lord Blackwell, chairman said: “Our approach to reward is intended to provide a clear link between remuneration and delivery of the Group’s key strategic objectives, supporting the aim of becoming the best bank for customers, and through that, for shareholders. 

“We believe in offering fair reward.  We are embedding a performance-driven and meritocratic culture where colleagues are rewarded for behaviours aligned to the long term sustainable success of the business, our commitment to rebuilding trust and changing the culture of the Group. 

“We want to ensure colleagues are empowered, inspired and incentivised to do the right thing for customers.  Colleagues are rewarded in a way that recognises the very highest of expectations in respect of conduct and customer treatment, and when behaviour falls below acceptable standards, it is important that accountability is taken collectively as well as individually.  This is particularly the case when dealing with, and learning from, mistakes of the past.”

 

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