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.
The bank claimed that the metrics used to assess bonuses were "stretching". Nevertheless, the package is still a huge upgrade over what Mr Culmer was on at RSA.
Excluding the "golden hello", he could expect to make a maximum of £2.4m at the insurer, compared to £4m at Lloyds, so his new package represents an effective pay rise of 67 per cent.
In 2010, RSA paid Mr Culmer an annual salary of £557,000. He could, in addition, have earned a maximum annual bonus of £1m, 180 per cent of his wages, 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 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.
The taxpayer has a stake of nearly 40 per cent of Lloyds as a result of a £20bn bailout during the financial crisis, and the package is likely to cause huge controversy given that and the bank's loss-making status.
Brendan Barber, TUC general secretary, said: "There's simply no evidence to suggest that such excessive remuneration levels do anything to improve performance, while they do plenty to increase pay inequalities and reduce employee morale.
"With Lloyds only recently announcing huge losses, people won't understand how the bank is still able to come up with a salary of millions for its new finance chief and must wonder if, as taxpayers, they are ever going to get their money back," Mr Barber added.
Mr Culmer, who had worked at RSA since 2004, has been hired to replace Tim Tookey, who is departing Lloyds to join Friends Life.
The affable Mr Tookey was often presented as the human face of Lloyds, which was almost as useful to the bank as his formidable financial skills.
Lloyds' chief executive, Antonio Horta-Osorio, said: "George brings a wealth of experience from his time at RSA and his appointment will strengthen further the senior team at Lloyds Banking Group."Reuse content