Bloomberg News

RBS, Lloyds Shareholders Should Reject Pay Proposals, PIRC Says

April 23, 2010

Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc (LLOY) shareholders should reject the banks’ “excessive” pay awards at forthcoming annual general meetings, according to Pensions & Investment Research Consultants Ltd., which advises investors on corporate governance.

The RBS long-term incentive plan is generous because the maximum payout is 400 percent of base salary and could be higher in “exceptional circumstances,” the London-based body, which advises investors with combined assets of more than $1.5 trillion, said in an e-mail. PIRC criticized Lloyds for a lack of transparency, including a failure to disclose award levels, in its long-term incentive plan.

Banks are under pressure to cut compensation from governments and investors, part of an attack on practices blamed for causing the worst financial crisis since the Great Depression.

RBS (RBS) said in a statement it has led reform of remuneration policy in the U.K. and that its proposals aim to strengthen the link between company performance, shareholder interests and staff incentives. Lloyds said in a statement that its approach to remuneration has been developed with “extensive” input from existing shareholders.

RBS will hold its annual shareholder meeting in Edinburgh on April 28 and Lloyds will hold its meeting in the same city on May 6.

To contact the reporter on this story: Andrew MacAskill in London at amacaskill@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net


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