The chief executive of taxpayer-backed Lloyds Banking Group will take no bonus for 2011, piling pressure on rival bankers including Royal Bank of Scotland's Stephen Hester to heed the Prime Minister's recent call for fat-cat pay restraint.
Antonio Horta-Osorio, who went on two months' sick leave at the end of last year after suffering from exhaustion, could have been in line for a bonus of up to £2.38m. But he has turned it down because, he said, customers and shareholders are suffering.
He told the board of Lloyds, which is 41 per cent-owned by the taxpayer, that he does not want to be considered for an annual bonus.
Mr Hester could be in line for an £8m payout this year after receiving £7.7m last year. But after announcing almost 4,000 job cuts this week, he has been widely called upon to show self-restraint.
Mr Horta-Osorio said: "I believe my bonus entitlement should reflect the performance of the group but also the tough financial circumstances that many people are facing.
"I also acknowledge that my leave of absence has had an impact both inside and outside the bank, including for shareholders. On that basis, I have decided to request that the board does not consider me for a 2011 bonus."
Under the terms of his contract, he was entitled to receive up to 225 per cent of his annual pay of £1.06m as an annual bonus. But given Lloyds' share price has more than halved in the last year and that annual profits will be below the £2.2bn it made in 2010, Mr Horta-Osorio was never likely to get the maximum bonus.
However, his decision to waive his payout will put pressure on other chief executives, particularly those at rival banks, to consider what rewards they accept for last year. At the height of the banking crisis, Barclays' then-chief executive John Varley and his successor Bob Diamond waived annual bonuses. Mr Hester followed suit, refusing his 2009 deal. That forced a reluctant then-Lloyds chief Eric Daniels to follow suit.
Mr Horta-Osorio said: "I joined Lloyds Banking Group to rebuild the pride in the bank. My goal remains to restore the bank to profitability enabling us to support the country's economic recovery sustainably and giving taxpayers the opportunity to get back their money."
A spokesman for Lloyds denied he had come under any political or boardroom pressure. He added: "Antonio recognises the general concern that there is about executive remuneration at a time when much of the country is struggling."
Sir Win Bischoff, the chairman of Lloyds, said: "Under Antonio's leadership, the bank made significant progress last year in its transformation against a very difficult economic backdrop. However, given the economic circumstances, the financial challenges that many people are facing and his recent leave of absence, Antonio felt it appropriate not to be considered for any award he might receive under the group's annual bonus scheme for 2011. The board has accepted Antonio's request."
Lloyds said it would determine other directors and executives' pay and bonus levels in the next month.
Bankers Who Said No
Lloyds: Antonio Horta-Osorio: £2.4m (2011)
RBS: Stephen Hester: £1.6m (2009)
Barclays: Bob Diamond: £4m+ (2008, 2009)
Barclays: John Varley: £2.9m+ (2008, 2009)
Lloyds: Eric Daniels: £2.3m (2009)
HSBC: Michael Geoghegan: £6m (2008, 2009 inc. £4m charity donation)Reuse content