Association of British Insurers issues 'amber top' alert to its members over António Horta-Osório's 'golden hello'
A multimillion pound pay deal for António Horta-Osório, the chief executive of Lloyds Banking Group, is facing intense scrutiny from shareholders ahead of next week's annual meeting.
The Association of British Insurers (ABI), whose members control 15% to 20% of the stock market, has issued a so-called "amber top" alert to highlight the signing-on deal for Horta-Osório at the bailed out bank. The warning is a signal to investors to think twice before backing the arrangement.
The Portuguese-born banker, who last week sanctioned a £3.2bn provision for payment protection insurance that forced rival banks to accelerate claims for mis-selling, has been handed a package of up to £13.4m.
He also has a complex and unusual pension scheme that is linked to the share price and could involve more than £800,000 being paid into his pension for the next five to six years.
The ABI, which confirmed it had issued an "amber top", is also alerting its members that performance targets for long-term incentive plans (LTIPs) have not been made public – which means investors will have to vote on the plans at next Wednesday's AGM without knowing the details.
The uncertainty about the performance targets is due to the on-going strategic review being conducted by Horta-Osório – who will update the City on his plans for the bailed out bank at the end of next month.
Hugh Savill, the ABI's acting director of investment affairs, said: "The report has been amber topped to highlight the joining arrangements for the new chief executive and that the performance targets for future LTIP awards are pending the outcome of the new chief executive's strategic review. The company has confirmed it will consult widely on targets with shareholders once that review is finalised."
While Horta-Osório's pension arrangements – which were put in place because he "suffered significant loss" from his retirement plans – are regarded as unusual, investors believe they were required to lure him from Santander and will only pay out in full if the bank's share price rises sharply. Lloyds declined to comment.