Now Eric Daniels gives up 'merited' bonus payment

Bank insists that decision not influenced by political pressure ahead of results
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The Independent Online

Lloyds Banking Group's chief executive, Eric Daniels, last night agreed to give up his £2.3m annual bonus.

Mr Daniels took the decision – which the company insisted was not influenced by political pressure – a day after Royal Bank of Scotland's chief executive, Stephen Hester, made a similar move.

Pressure has been mounting on the two banks ever since Barclays' chief executive, John Varley, and president, Bob Diamond, last week both opted to waive their bonuses for the second year in a row despite the bank recording a record profit of £11.6bn in 2009. Both Lloyds and RBS, by contrast, are expected to report heavy underlying losses when they reveal their full-year results at the end of the week.

In a statement, Lloyds' chairman, Win Bischoff, said the company's remuneration committee had decided that Mr Daniels' work over the last year had merited "the full payout under the company's annual bonus scheme because of his significant individual contribution, and the group's overall performance, in 2009".

But he said that while the Lloyds board endorsed this recommendation, "Mr Daniels has informed the board, however, that he wishes to waive his bonus, the second consecutive year that he has done so".

He added: "Mr Daniels has taken this action because he believes that the excellent progress the group is making, based on the considerable contribution of many colleagues across the company, is in danger of being obscured by the current debate on executive bonus awards in the banking sector."

Mr Daniels is still paid an annual salary of just over £1m. Mr Bischoff said that "appropriate" annual bonuses to other executive directors will still be made, although they will be paid in shares and fully deferred until 2012. The payments will also be subject to clawback under principles agreed by the G20 nations.

Lloyds, which is 41 per cent owned by the taxpayer, has laid off thousands of workers over the last year as it has integrated HBOS, which it took over at the height of the financial crisis.

Unlike RBS, Lloyds managed to avoid having to enter the Government's asset protection scheme last year, but still received a second injection of state funds when it pulled off the biggest rights issue yet seen in London because the Government agreed to take up the taxpayer's rights.

The bank has been ordered to sell around 600 branches by European regulators as a consequence of the massive injection of state funds that has kept it afloat.

A spokesman for Lloyds Banking Group said that Mr Daniels wanted the focus of Friday's results presentation to be on the company's future strategy rather than on his remuneration.

He added: "We believe we made very substantial progress. Last year we completed a very large capital raising, did a fair deal with the European Commission, and have been very successful in the biggest integration programme in this century."

Earlier in the day a spokesman for the Treasury declined to say whether Mr Daniels should forgo his bonus, but added: "We have been very clear that we expect all banks to show restraint on bonuses and pay, this year in particular, although in general we recognise that they need to retain staff and perform commercially."

Neal Lawson, chair of the left-wing think tank Compass, dismissed the decision: "If they fail to change the culture of greed at the top of financial institutions, the decision by these chief executives to forgo their bonuses amounts to nothing more than a cynical PR stunt."