Frank Field, chairman of the Work and Pensions Committee, said that trying to push through executive pensions contributions twice the size of employees’ “smacks of feverish desperation and boundless greed”.
On 2 May, the Commons Select Committee wrote to the Lloyds’ remuneration committee to ask it why Lloyds Group chief executive António Horta-Osório’s pensions contribution of 33% was more than double the maximum employees’ contribution of 13% of salary.
It also asked why the COO and CFO’s contribution rate was 25% of salary.
Last week, Stuart Sinclair, one of Lloyds Banking Group wrote to the Business, Energy and Industrial Strategy (BEIS) Committee chair Rachel Reeves explaining the bank’s position and the complications over Horta-Osório’s pensions.
He stated that the bank’s responsibility was to balance shareholder expectations with the need to attract the right people, and that the remuneration committee was continuing to focus on the remuneration and training of all colleagues.
Field’s response was that the Lloyds’ remuneration committee’s “litany of excuses only further erodes what little dignity is left in the proceedings”.
In March, BEIS released a report on executive rewards, which urged the UK’s biggest companies to put a cap on “eye-watering” executive pay.
In the Commons Select Committees’ correspondence with Lloyds in March, the committees raised concerns over Horta-Osório’s fixed share increase to £1.05m, saying it wasn’t “in the spirit of the Investment Associations’ guidelines”.
Reeves said that this is “only the latest example of a damaging narrative in UK business” with one rule for bosses and another for employees.
She added that rather than setting challenging targets, remuneration committees are “gaming the system” and coming up with “more complicated pay packages to handsomely reward their executives”.
She noted that Investment Association guidelines suggest pensions contributions for executives should be aligned to those of employees but that often investors fail to protest about “extravagant executive awards”.
Total shares of held by employees at Lloyds Banking Group amount to less that 1% of total group shares, so their opinion will not significantly affect today’s vote.
Lloyds' Banking Group did not wish to comment.