SIR Victor Blank is likely to face increased pressure over his reappointment as chairman of Lloyds Banking Group when shareholders vent their fury at the company's annual general meeting in Glasgow on Friday.
Lloyds appeased the market recently with news that Blank will step down from the group next year, but an influential voting adviser, RiskMetrics, is urging shareholders to abstain from his re-election.
There has been growing discontent with Blank
for his part in encouraging Lloyds to rescue HBOS last year. The deal has turned sour for Lloyds and losses racked up by HBOS have been far worse than expected.
Remuneration of directors is likely to be a controversial issue with investors expecting a high level of abstentions and no-votes for the report, which is usually backed by more than 90 per cent of the voters. The City was rocked earlier this month when the remuneration report of Royal Dutch Shell was voted down.
In a bid to quell anger over executive pay Lloyds has published further details of its new long-term incentive plan for directors. This will involve directors being paid up to 200 per cent of their salary in shares if they meet the next three-year targets. The maximum pay-out has been cut back from the original plan which was to award directors up to 375 per cent of their salary.
Under the new scheme, the pay-out will be based on Lloyds' growth in earnings per share and economic profit. Directors will also have to meet additional targets of £1.5 billion in cost synergies in its integration of HBOS.
Shareholders will also be asked to vote on the company's plans to raise £4bn through a share placing to convert the preference shares owned by the Government into ordinary shares.
The taxpayer currently owns 43.4 per cent of the bank, but if all other shareholders snub the issue, it could end up owning 65 per cent. Previous share offers by banks needing Government support have been turned down by investors because the price has been well above the market value.
This latest move may receive more support because the shares are being offered at 38.43p – a significant discount. However, with bank shares being seen as a risky investment amid the current volatility, many may rather opt out and wait instead for the compensatory cheque to arrive later in the summer.
The full article contains 411 words and appears in Scotland On Sunday newspaper.
