UK bank chief set for £2.3m bonus despite £440m loss
on 29/10/2013 11:33:26
The UK state-backed group may have notched up £440m losses for the quarter and face an £8bn bill for the payment protection insurance mis-selling scandal, but underlying performance is improving and shares are buoyant.
A bonus scheme announced earlier this year will see Mr Horta-Osorio qualify for three million shares should the stock price remain above 73.6p for 30 trading days.
This represents the average price paid by the Government when the bank was rescued.
The shares have been trading above this level since October 9 and if they remain so at the close on November 20, the chief executive will qualify for the bonus.
It means that on paper he will receive £2.3m of stock based on the share price of 77.9p following third quarter results announced today.
However, Mr Horta-Osorio will not be able to sell the shares until 2018 under the long-term bonus plan.
He would also qualify for the scheme should the Government sell at least 33% of its shareholding in the group, at more than 61p per share.
But following the disposal of 15% of its holding - or 6% of the group - in September, the Chancellor pledged no more would be sold for 90 days.
It means that the chief executive looks set to qualify for the bonus first under the share price criteria.
Lloyds shares dropped by nearly 4% today on third quarter results that showed a statutory pre-tax loss of £440 million for the period, but they later pared back some of the losses.
In the last 12 months they have nearly doubled in value from around 40p as investors began to see improved profitability in the business as the UK economy recovers.
If the shares continue to rise after Mr Horta-Osorio qualifies for a bonus, its value will increase further.
At 100p a share, the three million shares would be worth £3m.