£5.9m package for new Lloyds finance director

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Days after the banking results season ended Lloyds Banking Group has reignited the row over pay by hiring a finance director on a £5.9m package.

The Government-backed bank, which lost £3.5bn in 2011, has lured George Culmer away from the insurer Royal & SunAlliance (RSA) with an annual salary of £720,000 plus the prospect of an annual bonus of up to £1.44m, and a further share-based "long-term incentive scheme" bonus of up to £1.62m.

Lloyds will also pay an additional £180,000 "allowance" for his personal pension. On top of that Mr Culmer, 49, is being handed £1.9m in shares as a "golden hello" to compensate him for shares and bonuses he is losing through leaving RSA. That brings the total to a maximum of £5.9m, depending on his personal and Lloyds' corporate performance.

Lloyds claimed that the metrics used to assess bonuses were "stretching". But the package is still a huge upgrade over what Mr Culmer was on at RSA. Excluding the "golden hello", Mr Culmer could expect to make a maximum of £2.4m at the insurer, compared to £4m at Lloyds, so his new package represents an effective 67 per cent pay rise.

In 2010 RSA paid Mr Culmer an annual salary of £557,000. He could in addition earn a maximum annual bonus of £1m, 180 per cent of his salary, against up to 200 per cent of the much higher salary he will be paid at Lloyds. Under the most recent RSA long-term incentive scheme he would have been entitled to a further 150 per cent of his salary through this bonus, which is again significantly less generous than what he will be able to make at Lloyds, where the long-term incentive plan (LTIP) is 225 per cent of salary.

Mr Culmer received a further £111,000 in allowances and benefits from the insurer. That included a pension contribution of 15 per cent of his salary, which Lloyds has again increased dramatically. Brendan Barber, TUC general secretary, said: "There's simply no evidence to suggest that such excessive remuneration levels do anything to improve performance."