Lloyds boss called before MPs over pension payments

Lloyds chief executive António Horta-Osório has been summoned before MPs over executive pension payments that have allowed him to pocket an extra £419,000 a year on top of his £1.3m basic salary.

The work and pensions committee and the Business, Energy and Industrial Strategy committee, led by MPs Frank Field and Rachel Reeves respectively, have called both the chief executive and the head of the bank’s remuneration committee Stuart Sinclair to give answer questions in Parliament ahead of the summer recess.

Related: Investor anger rises over pension pay and bonus bumps at Lloyds and Centrica

Lloyds has been a lighting rod for criticism over executive pension payments, which critics say are little more than extra “backdoor” pay. UK firms are under increasing pressure to cut them down to size and pay only the pension rate levels offered to the rest of staff.

Horta-Osório currently receives £419,000, or 33% of his basic salary, in cash payments in lieu of pension, while ordinary Lloyds bank staff get pension contributions of just 13%. Two other senior executives – the bank’s chief operating officer and chief financial officer – are handed cash worth 25% of their salaries, ostensibly to put towards their retirement plans.

Horta-Osório’s total pay package last year, including bonuses and other incentives, was worth more than £6m.

Last week, MPs slammed the bank for offering a “litany of excuses” for the gap between executive and staff pension rates.

The bank was also criticised after reports that workers with shareholdings were put under pressure, by an in-house video, to support the bank’s pay report – which includes the executive pension cash handouts - before last week’s AGM. Field said: “Trying to twist the arms of thousands of hard-working staff – who helped generate £6bn profit last year alone – to wave through executive pension levels twice their own smacks of feverish desperation and boundless greed.” .

Lloyds said the staff video in question encouraged employees to vote but denied nudging them in any direction.

Field urged the bosses receiving the handouts to refuse to accept them. “Senior executives at Lloyds could bring this sorry episode to an end, today: just give it up,” he said.

Rachel Reeves described the pension payments being handed to the Lloyd’s’ boss as “the latest example of a damaging narrative for UK business – there being one rule for the bosses, another for the workers”.

However Lloyds stood its ground at the bank’s annual shareholder meeting. The chairman, Lord Blackwell, said Horta-Osório’s £6.3m pay packet was justified given his hard work in turning the bank around since the 2008 financial crisis.

“There are not many people who would do arduous hours and tasks that our execs take on for free,” Blackwell said.

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His comments angered staff union Affinity, which represents about a third of the bank’s 75,000 workers. “To say they deserved their multimillion pound packages because of their arduous working hours is a kick in the teeth for ordinary members of staff who work just as hard for a fraction of the pay,” it said.

Lloyds earlier this year cut Horta-Osório’s pension payments from 46% of his salary. It also capped a portion of his pension which is linked to his final salary, upon his request, although that move only cost Horta-Osório £3,000.

His pension, at 33% of base salary, is still substantially above the 25% target set by the Investment Association, an influential investors’ trade group. The new UK corporate governance code also calls for pension payment rates to be in line with the rest of staff.