At last! Bank boss told to pay back bonus
Lloyds plans to strip former chief Daniels of £1.5m payout
Nikhil Kumar is The Independent's New York correspondent. He was formerly assistant editor on the foreign desk and has also done a variety of jobs on the city desk, where he wrote about markets, commodities and other business and economics topics.
Saturday 03 December 2011
Eric Daniels,who stepped down as the chief executive of Lloyds at the end of February, may have to hand back part of the £1.45m bonus he was awarded for his last year at the helm.
The part-nationalised bank is being forced to take the unprecedented action after it mis-sold payment protection insurance (PPI) to customers, and so was made to set aside £3.2bn to cover claims to pay them back. The multibillion-pound hit pushed the bank into the red for the first three months of this year.
Lloyds confirmed that senior executives' bonuses are being looked at in light of the PPI charge. This is believed to be the first time a major UK bank has considered clawing back a bonus from a board-level executive.
Lord Oakeshott of Seagrove Bay, the former Treasury spokesman for the Liberal Democrats, welcomed the move, saying: "It's better late than never, but why was he paid a bonus at all?" Given the public dismay at repeated failures to control City pay following the role of banks in the economic crisis, the sentiment will be widely echoed. On Thursday, the Bank of England's Governor, Sir Mervyn King, advised banks to cut bonuses this year and use the money to protect themselves from the euro debt crisis.
Lloyds said it would make a decision in keeping with the Financial Services Authority code on compensation. "The implications on compensation are being considered by the Remuneration Committee and will be determined by the board," a spokeswoman said.
The 2010 bonuses are deferred in the form of shares that are not handed out until at least March 2013.
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