The boss of Lloyds Banking Group is on track to receive a shares windfall just as he bows out of the lender.
Antonio Horta-Osorio, who will step down from running the bank before July, has been awarded 1.4million shares so far this year through the ‘fixed share award’ bonus scheme.
The shares were bought through the year at an average price of just over 29p for an outlay of more than £425,000.
Moving on: Antonio Horta-Osorio will step down from running the bank before July
But a quirk of the scheme means Horta-Osorio could see a huge ‘windfall gain’ if the share price rises over the next few years, when he can cash in the stock.
Analysts said if the shares bounce back to 38p – the pre-lockdown level – the value of the award would jump above £548,500.
If the shares return to 64p – their price in January – his bonus would soar to above £900,000. However, a source close to the bank said Horta-Osorio has lost millions of pounds from his shareholding in the bank because of the plunging price.
Bank shares have been hard hit by coronavirus, partly because lenders have had to set aside more than £20billion to cover customer debts that could turn sour.
The Bank of England forced lenders to stop shelling out dividends in March to shore up capital reserves, dealing a huge blow to investors.
Gary Greenwood, analyst at Shore Capital, said: ‘Share prices could go up if dividends are restarted.’
Mark Brown, general secretary of the union BTU, said the bonus will be paid irrespective of performance, so Horta-Osorio could see a big gain ‘for doing nothing’.
Brown admitted it was not Horta-Osorio’s fault that the bank’s share price had tanked before he was given his award. But he added: ‘That doesn’t mean he should simply trouser the money. He could commit now to give it to charity.’
Horta-Osorio and other FTSE100 chief executives slashed their pension pay following a backlash last year. Horta-Osorio’s payment was cut from £419,000 to £190,000.
Luke Hildyard, executive director of the High Pay Centre, said: ‘It’s heartening to see the investment industry taking steps to hold corporations to account.’
The Investment Association warned last week that bosses’ pension perks should not exceed 15 per cent of their salary by 2022, to fall closer in line with staff.
About a quarter of FTSE100 companies have an executive with a pension contribution worth more than 15 per cent of salary – with no plan of action to cut it.