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Lloyds Banking Group CEO Antonio Horta-Osorio poses outside the bank's headquarters on his first day back at work after taking a leave of absence due to exhaustion, in the City of London, January 9, 2012. (ANDREW WINNING/ANDREW WINNING/REUTERS)
Lloyds Banking Group CEO Antonio Horta-Osorio poses outside the bank's headquarters on his first day back at work after taking a leave of absence due to exhaustion, in the City of London, January 9, 2012. (ANDREW WINNING/ANDREW WINNING/REUTERS)

Lloyds CEO gives up $3.7-million bonus Add to ...

Lloyds Banking Group Chief Executive Antonio Horta-Osorio has waived his bonus for 2011 due to a two-month absence, the bank’s performance and the tough economic circumstances faced by its customers.

The bonus could have been worth £2.4-million ($3.7-million U.S.) for Horta-Osorio, who will get basic pay of £1.1-million.

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He may also get £4.5-million in a long-term plan due to be paid in 2014.

“My bonus entitlement should reflect the performance of the group but also the tough financial circumstances that many people are facing,” he said on Friday.

“I also acknowledge my leave of absence has had an impact both inside and outside the bank, including for shareholders.”

Bankers’ pay, especially bonuses, has been politically contentious since the government spent 66 billion pounds bailing out Lloyds and Royal Bank of Scotland in 2008.

U.K. Prime Minister David Cameron wants to curb executive pay by making shareholder votes on remuneration packages binding.

Mr. Horta-Osorio’s move could put pressure on other European bank executives to waive their bonuses after a torrid year for shareholders and more job cuts. In Britain, an insurance mis-selling scandal affected millions of customers.

Lloyds’ shares slumped 60 per cent last year, one of the worst-performing stocks in the FTSE 100.

The shares were up 2.5 per cent at 29.9 pence at 1215 GMT, leaving the government, which owns 40 per cent of the bank, sitting on a £12-billion loss on its £20-billion bailout.

Mr. Horta-Osorio joined Lloyds at the start of 2011, taking over as CEO in March. Since then he has implemented sweeping changes, unveiling a plan aimed at returning the bank to financial health that includes 15,000 job cuts.

The 47-year-old Portuguese shocked investors in November when he temporarily stepped down, suffering from fatigue. He returned this week.

Mr. Horta-Osorio, by his own admission a detail-obsessed manager, plans to change his intensive working style and have fewer people reporting to him.

Lloyds, Britain’s biggest retail bank with more than 30 million customers, made a £3.9-billion loss in the first nine months of last year, and said it may miss medium-term financial targets due to the tough economic outlook.

Saddled with tens of billions of pounds of losses from its takeover of troubled rival HBOS at the height of the 2008 crisis, Lloyds could report a loss for 2012 as well as last year as bad loans remain high, analysts at Barclays Capital said.

Lloyds said it will be considering bonus awards for executives and staff in the next month.

Paul Myners, a Labour peer and former Treasury minister, this week slammed the “outrageous” bonus and consultancy package awarded last year to former Lloyds CEO Eric Daniels.

Mr. Daniels was awarded a £1.9-million bonus for 2010, but months later the bank announced a 3.2-billion pound hit to cover losses on insurance mis-selling.

“The decision to award Eric Daniels an almost full bonus was based on a board perception of his performance which should be revisited,” Mr. Myners said.

UBS CEO Oswald Gruebel was the first head of a big bank to forgo his 2010 bonus, but he was not followed by many peers after a good year for the industry.

A year earlier, Barclays bosses John Varley and Bob Diamond waived their awards, prompting UK rivals to follow suit or give their bonus to charity.

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