Lloyds Banking Group has been accused of “feverish desperation and boundless greed” over its pension plans for boss Antonio Horta-Osorio ahead of its annual shareholder meeting on Thursday.
Frank Field, chairman of the Commons Work and Pensions Committee, launched a scathing attack on the group amid reports its management released a video to employees in an attempt to garner support for pay deals that will be put to a vote at the AGM.
It is understood the video tells staff why it is important to exercise their vote at the AGM, and that if they vote it “makes a huge difference”.
Lloyds is facing a potential revolt over the pay and pension plans at the Edinburgh meeting, with Mr Field and Business, Energy and Industrial Strategy (BEIS) Committee chairwoman Rachel Reeves urging investors to vote them down.
Mr Field said: “Trying to twist the arms of thousands of hard-working staff – who helped generate £6 billion profit last year alone – to wave through executive pension levels twice their own smacks of feverish desperation and boundless greed.”
Mr Field took aim at the bank’s “litany of excuses” over the pension affair in response to questions by both the Work and Pensions Committee and the BEIS Committee, asking why Mr Horta-Osorio’s pension contribution rate stands at 33% when the average Lloyds employee’s contribution rate stands at 13%.
“Senior executives at Lloyds could bring this sorry episode to an end, today: Just give it up,” added Mr Field.
There has been an outcry since it emerged earlier this year that Mr Horta-Osorio was the only Lloyds employee left on a lucrative final salary pension scheme, which he gave up after mounting pressure.
The bank also reduced his pension top-ups worth 46% of salary to 33% in an attempt to diffuse the row.
But anger over his pension and £6.27 million a year pay is refusing to die down and is promising to take centre stage at Thursday’s meeting.
The Investment Association has issued its second-highest warning against the bank over the issue, while influential shareholder advisory group Pirc also recommended investors vote against Mr Horta-Osorio’s “highly excessive” pay plans.
It comes after a fifth of Lloyds shareholders voted against its pay report last year.
In a letter responding to questions over the issue by the Work and Pensions Committee and BEIS Committee, Lloyds remuneration committee head Stuart Sinclair said he believed the reduction of Mr Horta-Osorio’s pension marks an “important step towards aligning executive pensions to the contributions received by the wider workforce”.
Mr Sinclair went on to say the group’s next review of pay plans for top bosses will “cover all aspects of executive remuneration” and will be put to vote next year.
The Investment Association (IA) told the cross-party committees that the UK Corporate Governance Code states pension contribution rates “should be aligned with those available to the workforce”.
While the IA said contracts can act as an “impediment” to bringing down existing director pension contributions, it added directors can voluntarily give up contributions, “as demonstrated by HSBC”.
In March, HSBC bosses agreed to cut their pension payments by two thirds to placate furious investors, with chief executive John Flint reducing the contributions from 30% to 10% of salary.