SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
20
February 2019
LLOYDS BANKING GROUP
plc
(Translation of registrant's name into
English)
5th Floor
25 Gresham Street
London
EC2V 7HN
United Kingdom
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual
reports
under
cover Form 20-F or Form 40-F.
Form
20-F..X.. Form 40-F
Indicate
by check mark whether the registrant by furnishing the
information
contained
in this Form is also thereby furnishing the information to
the
Commission
pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes
No ..X..
If
"Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule
12g3-2(b):
82- ________
Index
to Exhibits
Item
No.
1 Regulatory News Service Announcement, dated 20 February
2019
re: Summary
Remuneration Announcement
20 February 2019
LLOYDS BANKING GROUP PLC - SUMMARY REMUNERATION
ANNOUNCEMENT
The purpose of this announcement is to provide transparency in a
single remuneration disclosure. It contains details of upcoming
remuneration disclosures for the Group, including salary, Group
Performance Share, Group Ownership Share awards and Fixed Share
Awards for the Person Discharging Managerial Responsibilities
(PDMR).
2018 REMUNERATION OUTCOMES
The remuneration outcomes set out in this announcement reflect the
Group's preference for a high proportion of awards to be delivered
in shares, deferred where appropriate and with the potential for
performance adjustment, and where applicable clawback, to be
applied, aligning the interests of senior executives with those of
shareholders and customers.
Where awards have not yet been made, estimates have been provided.
A statement will be provided to the market following the actual
awards in the normal way.
Key 2018 remuneration messages:
- Financial
and strategic performance in 2018 delivered a strong Group balanced
scorecard outcome of 83 per cent of maximum, slightly lower than
2017.
- Statutory
profit before tax is up 13 per cent to £6
billion.
- Underlying
profit increased by 6 per cent to £8,066
million.
- The
Group Performance Share outcome was down 3 per cent year-on-year
when adjusted for changes to eligible population. All colleagues
now participate in this short-term variable reward plan. The
total pool for 2018 is £464.5 million.
- Group
Performance Share awards for Executive Directors are 11-12 per cent
lower than 2017.
- The
2016 Long Term Incentive Plan (LTIP) is vesting at 68.7 per cent,
compared to 66.3 per cent for the 2015 LTIP.
- Reflecting
the lower Group Performance Share awards and the 2016 LTIP outcome,
Executive Director single figure remuneration is 2 per cent lower
than 2017. The single figure remuneration for the Group Chief
Executive is approximately 2.5 per cent lower than
2017.
- The
Group's gender pay gap reduced by 1.3 per cent to 31.5 per cent -
better than the average for Financial Services.
- Pay
budget of 2.6 per cent for all colleagues, with levels set higher
at 3.5 per cent for colleagues at lower grades - increases for
Executive Directors and other senior colleagues set lower at 2 per
cent.
- The
Group has increased the minimum full-time salary for all colleagues
which now exceeds National Living Wage by 7 per
cent.
Further details will be included in the Annual Report and Accounts
due to be published later today.
Lord Blackwell, the Group's Chairman said:
"We continue to align our remuneration principles to the
Group's strategic objectives to ensure we reward performance
and ensure our approach to remuneration is aligned to the
interests of our shareholders and other stakeholders. Despite
the Group's strong financial performance, other factors mean
the annual Group Performance Share has decreased relative to
last year."
Stuart Sinclair, the Chair of Remuneration Committee
said:
"The Remuneration Committee is particularly mindful of its
obligation to ensure that reward for Executive Directors is clear
and transparent, encouraging strong and sustainable performance,
and that the variable components of remuneration are truly
variable."
2018 GROUP PERFORMANCE SHARE OUTCOME
The Group Performance Share outcome is based on a percentage of the
Group's underlying profit, adjusted based on the Group Balanced
Scorecard metrics and a collective adjustment to reflect risk
considerations.
In 2018, the Group made significant business progress, providing a
strong platform for the Group's strategic development and delivery
of key priorities. The Group delivered strong financial performance
in a period of political and economic uncertainty. This uncertainty
weighed heavily on the Group's share price during 2018; however,
the Group's resilient and low risk business model enabled strong
underlying performance. Underlying profit increased by 6 per cent
and the Group's capital position strengthened. The Group's cost :
income ratio remains market leading at 49.3 per cent. The ordinary
dividend increased to 3.21 pence per share in line with the Group's
progressive and sustainable dividend policy, with a share buyback
of up to £1.75 billion.
The Remuneration Committee determined that the share of underlying
profit used in determining the 2018 Group Performance Share should
be 5.1 per cent, consistent with 2017. In reaching this decision,
the Committee took into account the Group's actual performance
against budget where outperformance was approximately 6 per cent,
and distributions to shareholders which have increased by 26 per
cent. The funding was adjusted to reflect strong performance
against stretching Group strategic objectives and issues impacting
negatively on profitability and shareholder returns, customers,
conduct and the Group's reputation. The collective performance
adjustment for 2018 was £72.4 million (resulting in a
reduction to the pool of approximately 13 per cent).
The overall Group Performance Share outcome determined by the
Committee for 2018 was £464.5 million, approximately 3
per cent lower than the equivalent outcome for 2017 when adjusted
for changes in eligible population year-on-year. This
included the transfer of colleagues who were previously
participating in specific incentive arrangements, as previously
disclosed.
The individual awards for Executive Directors are determined in the
same way as for colleagues across the Group by reference to Group
and individual performance. Information regarding the performance
of the Executive Directors in 2018 will be available in the Annual
Report and Accounts. Group Performance Share awards are deferred
into ordinary shares of the Group ('Shares') under the Lloyds
Banking Group Deferred Group Performance Share Plan ('Deferred
Group Performance Share Award'). Deferred Group Performance Share
awards made to Executive Directors and members of the Group
Executive Committee are subject to clawback for at least seven
years from the date of grant. This period may be extended to ten
years where there is an ongoing internal or regulatory
investigation.
2018 Group Performance Share Awards
In line with requirements of the PRA Rulebook and FCA Remuneration
Code (SYSC 19D), a maximum of 40 per cent of any variable
remuneration awarded to Executive Directors and other members of
the Group Executive Committee can be paid in 2019. The remaining 60
per cent must be deferred.
For the 2018 Group Performance Share, £2,000 is paid in cash
in March 2019, with the balance of the upfront 40 per cent
delivered in Shares in June 2019. The remaining 60 per
cent is deferred into Shares, with 40 per cent vesting in 2020 and
20 per cent in 2021. A holding period of 12 months applies to
half the shares delivered.
|
Name
|
Number of
Shares
awarded(1)(2)
|
|
António
Horta-Osório
|
1,068,451
|
|
George
Culmer
|
476,964
|
|
Juan
Colombás
|
476,964
|
|
Antonio
Lorenzo
|
547,237
|
|
Vim
Maru
|
443,083
|
|
Zaka
Mian
|
384,957
|
|
David
Oldfield
|
421,879
|
|
Janet
Pope
|
250,083
|
|
Stephen
Shelley
|
423,101
|
|
Jennifer
Tippin
|
555,744
|
|
Andrew
Walton
|
270,815
|
|
1
|
Based
on an assumed share price of 58.32 pence. The actual number of
shares awarded will be determined by the average of the closing
share price of the five trading days prior to the date of
award.
|
|
2
|
The
number of shares shown is the net amount, after deductions for
estimated income tax and NIC.
|
Deferred Bonus Awards for 2015, 2016 and 2017
Performance
Deferred Bonus Awards are due to be released in 2019 which relate
to performance in 2015, 2016 and 2017. In accordance with the
Group's deferral policy, a proportion of the Shares are released
over three years, being received in tranches in March and
September.
The Group expects that, after the settlement of estimated income
tax and national insurance contributions, the PDMRs listed in the
table below will receive in 2019 the number of Shares (for no
payment) as set out by their name, split between releases in March
and September.
|
Name
|
2015
|
2016
|
2017
|
|
António
Horta-Osório
|
-
|
187,858
|
206,076
|
|
George
Culmer
|
-
|
88,470
|
93,336
|
|
Juan
Colombás
|
-
|
88,985
|
93,336
|
|
Antonio
Lorenzo
|
87,245
|
84,292
|
79,297
|
|
Vim
Maru
|
52,984
|
69,870
|
78,689
|
|
Zaka
Mian
|
11,380
|
47,332
|
108,099
|
|
David
Oldfield
|
46,244
|
92,013
|
86,961
|
|
Janet
Pope
|
11,539
|
11,298
|
42,056
|
|
Stephen
Shelley
|
38,492
|
25,386
|
80,119
|
|
Jennifer
Tippin
|
12,542
|
17,621
|
86,762
|
|
Andrew
Walton
|
-
|
-
|
-
|
2019 Executive Director Base Salaries
Executive salary levels are set in the context of all colleague
salaries, for which a budget of 2.6 per cent was agreed, including
funding to ensure a minimum salary award of £600 for eligible
colleagues.
Salary increases for António Horta-Osório and Juan
Colombás are set below the budget for the wider colleague
population, at 2 per cent. No increase has been proposed for George
Culmer.
Salaries will therefore be as follows, with the effective dates
shown below:
|
António
Horta-Osório
|
£1,269,288
|
(1
January 2019)
|
|
George
Culmer
|
£779,351
|
|
|
Juan
Colombás
|
£794,938
|
(1
January 2019)
|
Fixed Share Awards in 2019
After the settlement of income tax liabilities and national
insurance contributions, Shares are due to be acquired on behalf of
the PDMRs as listed in the table below in respect of each
quarter.
The Shares will be held on behalf of the PDMRs and will be released
over five years, with 20 per cent being released each year on the
anniversary of the award.
|
Name
|
Quarterly
share
awarded(1)
|
|
António
Horta-Osório2
|
238,554
|
|
George
Culmer
|
114,506
|
|
Juan
Colombás
|
112,915
|
|
Antonio
Lorenzo
|
113,551
|
|
Vim
Maru
|
103,373
|
|
Zaka
Mian
|
103,373
|
|
David
Oldfield
|
111,325
|
|
Janet
Pope
|
79,518
|
|
Stephen
Shelley
|
112,915
|
|
Jennifer
Tippin
|
95,421
|
|
Andrew
Walton
|
71,566
|
|
1
|
Based
on a share price of 58.32 pence. The actual number of shares
awarded will be determined by the share price on the date of
award.
|
|
2
|
Fixed
Share Award has increased to £1.05 million for 2019. At
the same time, the Group Chief Executive's pension allowance will
reduce to 33 per cent of base salary.
|
Release of Long-Term Incentive Awards made in March
2016
The Long Term Incentive Plan (LTIP) awards made in 2016 are vesting
at 68.7 per cent, as detailed in the table below.
This reflects the Group's strong financial and strategic
performance over the three financial years ended 31 December 2018.
However, uncertainty in the economic and political environment has
impacted negatively on share price performance, resulting in no
vesting for the Total Shareholder Return component.
|
Weighting
|
Measure
|
Threshold
|
Maximum
|
Actual
|
Vesting
|
|
30%
|
Absolute total shareholder return (TSR)
|
8% p.a.
|
16% p.a.
|
(4.8%)
|
0%
|
|
25%
|
Economic profit
|
£2,507m
|
£3,308m
|
£3,291m
|
23.7%
|
|
10%
|
Cost:income ratio1
|
47.3%
|
46.1%
|
44.7%
|
10%
|
|
10%
|
Customer complaint handling2
|
4.18
|
3.78
|
3.04
|
5%
|
|
|
FCA reportable complaints/FOS uphold rate
|
=<29%
|
=<25%
|
18%
|
5%
|
|
10%
|
Customer Satisfaction
|
3rd
|
1st
|
1st
|
10%
|
|
7.5%
|
Digital active customer growth
|
13.4m
|
14.0m
|
14.1m
|
7.5%
|
|
7.5%
|
Colleague engagement score
|
66
|
72
|
73
|
7.5%
|
|
1
|
Adjusted
total costs. Further detail can be found in the Directors'
Remuneration Report (2016 LTIP vesting).
|
|
2
|
The FCA
changed the approach to complaint classification and reporting from
30 June 2016. The Committee determined that the original target
should be translated on a like-for-like basis into the new
reporting requirement. The Committee was satisfied that the revised
targets, set on a mechanical basis, were no less
stretching.
|
The Group expects that, after the settlement of income tax and
national insurance contributions, the PDMRs listed in the table
below will receive in March the number of Shares (including
dividend equivalents) as set out by their name, following the
partial vesting of long-term awards made in March 2016.
Executive Directors and Material Risk Takers at the time of the
award in March 2016 are required to retain any shares vesting
for a further two years.
|
Name
|
Shares
|
|
António
Horta-Osório
|
2,096,000
|
|
George
Culmer
|
1,156,579
|
|
Juan
Colombás
|
1,140,516
|
|
Antonio
Lorenzo
|
1,124,451
|
|
Vim
Maru
|
913,421
|
|
Zaka
Mian
|
153,304
|
|
David
Oldfield
|
1,023,660
|
|
Janet
Pope
|
146,604
|
|
Stephen
Shelley
|
286,338
|
|
Jennifer
Tippin
|
143,168
|
|
Andrew
Walton
|
-
|
Group Ownership Share Plan - 2019 awards
Awards for the 2018 performance period are expected to be made in
March 2019 under the rules of the 2016 Long-Term Incentive Plan.
The 2019 awards will be subject to a three-year performance period,
with vesting between the third and seventh anniversary of award, on
a pro-rata basis.
|
Name
|
Number of
|
|
Expected
|
|
|
shares
|
|
value(3)
|
|
|
awarded(1)(2)
|
|
|
|
António Horta-Osório
|
8,308,802
|
|
£2,422,846
|
|
George Culmer
|
-
|
|
-
|
|
Juan Colombás
|
4,770,050
|
|
£1,390,946
|
|
Antonio Lorenzo
|
4,637,552
|
|
£1,352,310
|
|
Vim Maru
|
4,432,496
|
|
£1,292,515
|
|
Zaka Mian
|
4,233,419
|
|
£1,234,465
|
|
David Oldfield
|
4,637,552
|
|
£1,352,310
|
|
Janet Pope
|
2,509,666
|
|
£731,818
|
|
Stephen Shelley
|
4,233,419
|
|
£1,234,465
|
|
Jennifer Tippin
|
2,259,607
|
|
£658,901
|
|
Andrew Walton
|
2,754,243
|
|
£803,137
|
|
1
|
Based
on a share price of 58.32 pence. The actual number of shares
awarded will be determined by the average of the closing share
price of the five trading days prior to the date of award. As
previously disclosed, the number of shares awarded is adjusted to
take into account the fair value of shares at grant. The Committee
approved an adjustment of 29.8 per cent for colleagues who are
senior managers, including the Executive Directors.
|
|
2
|
Vesting
determined in 2022 subject to the satisfaction of stretching
performance targets over the performance period ending 31 December
2021.
|
|
3
|
The
values for the Group Ownership Share awards are shown at an
expected value of 50 per cent of maximum value and before
deduction of income tax and NIC. The actual vesting value will
depend on the achievement of performance conditions and the share
price at the date of vesting. These awards are subject to clawback
for at least seven years from the date of award.
|
Shareholding Requirement
Executives are expected to build and maintain a company
shareholding in direct proportion to their remuneration in order to
align their interests to those of shareholders. The minimum
shareholding requirements Executive Directors are expected to meet
are as follows; 350 per cent of base salary for the GCE and 250 per
cent of base salary for other Executive Directors. The
shareholding requirement for members of the Executive Committee is
100 per cent of the aggregate of base salary and fixed share award.
Newly appointed individuals will have three years from appointment
to achieve the shareholding requirement.
There is no appetite for non-compliance with the Shareholding
Policy. In the event that exceptional individual circumstances
exist resulting in an Executive not being able to comply with the
Policy, the Remuneration Committee will consider whether an
exception should apply.
In addition to the Group's shareholding requirements, shares
vesting are subject to holding periods in line with regulatory
requirements.
The following table sets out the total shareholding for each of the
PDMRs as at 31 December 2018.
|
Name
|
Shareholding
at
31
December
20181
|
|
António
Horta-Osório
|
25,748,728
|
|
George
Culmer
|
14,751,534
|
|
Juan
Colombás
|
9,676,756
|
|
Antonio
Lorenzo
|
10,514,805
|
|
Vim
Maru
|
5,090,408
|
|
Zaka
Mian
|
2,170,133
|
|
David
Oldfield
|
3,718,823
|
|
Janet
Pope
|
1,988,665
|
|
Stephen
Shelley
|
2,665,438
|
|
Jennifer
Tippin
|
1,226,544
|
|
Andrew
Walton
|
26,211
|
|
1
|
Includes
shares owned outright reduced by forfeitable Matching Shares under
the Share Incentive Plan, plus the estimated net number of vested
unexercised options.
|
2018 Executive Director Remuneration Outcome Table
The following table summarises the total remuneration delivered
during 2018 in relation to service as an Executive
Director.
|
|
António
Horta-Osório
|
George Culmer
|
Juan Colombás
|
Totals
|
|
£000
|
2018
|
2017
|
2018
|
2017
|
2018
|
2017
|
2018
|
2017
|
|
Base salary
|
1,244
|
1,220
|
776
|
760
|
779
|
753
|
2,799
|
2,733
|
|
Fixed share award
|
900
|
900
|
504
|
504
|
497
|
497
|
1901
|
1,901
|
|
Benefits
|
157
|
156
|
49
|
46
|
68
|
71
|
274
|
273
|
|
Group Performance Share
|
1,178
|
1,323
|
527
|
599
|
527
|
599
|
2,232
|
2,521
|
|
Long-term incentive1
|
2,216
|
2,269
|
1,223
|
1,228
|
1,206
|
1,211
|
4,645
|
4,708
|
|
Pension allowance
|
573
|
565
|
194
|
190
|
195
|
188
|
962
|
943
|
|
Other remuneration2
|
2
|
1
|
1
|
1
|
1
|
1
|
4
|
3
|
|
Total remuneration
|
6,270
|
6,434
|
3,274
|
3,328
|
3,273
|
3,320
|
12,817
|
13,082
|
|
1
|
The
LTIP vesting and dividend equivalents awarded in shares were
confirmed by the Remuneration Committee at its meeting on 14
February 2019. The average share price between 1 October 2018 and
31 December 2018 (56.04 pence) has been used to indicate the
value. The shares were awarded in 2016 based on a share price of
72.978 pence. LTIP and dividend equivalent figures for 2017
have been adjusted to reflect the share price on the date of
vesting (67.1043 pence) instead of the average price (66.75
pence) reported in the 2017 report.
|
|
2
|
Other
remuneration payments comprise income from all employee share
plans, which arises through employer matching or discounting of
employee purchases.
|
External Appointments held by the Executive Directors
António Horta-Osório − During the year ended 31
December 2018, the Group Chief Executive served as a Non-Executive
Director of Exor, Fundação Champalimaud, Stichting INPAR
Management / Enable and Sociedade Francisco Manuel dos Santos, for
which he received fees of £380,569 in total.
- END -
For further information:
Investor Relations
Douglas
Radcliffe
+44 (0) 20 7356 1571
Group Investor Relations Director
Corporate Affairs
Matt
Smith
+44 (0) 20 7356 3522
Head of Corporate Media
FORWARD LOOKING STATEMENTS
This document contains certain forward looking statements with
respect to the business, strategy, plans and/or results of the
Group and its current goals and expectations relating to its future
financial condition and performance. Statements that are not
historical facts, including statements about the Group's or its
directors' and/or management's beliefs and expectations, are
forward looking statements. By their nature, forward looking
statements involve risk and uncertainty because they relate to
events and depend upon circumstances that will or may occur in the
future. Factors that could cause actual business, strategy, plans
and/or results (including but not limited to the payment of
dividends) to differ materially from forward looking statements
made by the Group or on its behalf include, but are not limited to:
general economic and business conditions in the UK and
internationally; market related trends and developments;
fluctuations in interest rates, inflation, exchange rates, stock
markets and currencies; the ability to access sufficient sources of
capital, liquidity and funding when required; changes to the
Group's credit ratings; the ability to derive cost savings and
other benefits including, but without limitation as a result of any
acquisitions, disposals and other strategic transactions; changing
customer behaviour including consumer spending, saving and
borrowing habits; changes to borrower or counterparty credit
quality; instability in the global financial markets, including
Eurozone instability, instability as a result of the exit by the UK
from the European Union (EU) and the potential for other countries
to exit the EU or the Eurozone and the impact of any sovereign
credit rating downgrade or other sovereign financial issues;
technological changes and risks to the security of IT and
operational infrastructure, systems, data and information resulting
from increased threat of cyber and other attacks; natural, pandemic
and other disasters, adverse weather and similar contingencies
outside the Group's control; inadequate or failed internal or
external processes or systems; acts of war, other acts of
hostility, terrorist acts and responses to those acts,
geopolitical, pandemic or other such events; changes in laws,
regulations, practices and accounting standards or taxation,
including as a result of the exit by the UK from the EU, or a
further possible referendum on Scottish independence; changes to
regulatory capital or liquidity requirements and similar
contingencies outside the Group's control; the policies, decisions
and actions of governmental or regulatory authorities or courts in
the UK, the EU, the US or elsewhere including the implementation
and interpretation of key legislation and regulation together with
any resulting impact on the future structure of the Group; the
ability to attract and retain senior management and other employees
and meet its diversity objectives; actions or omissions by the
Group's directors, management or employees including industrial
action; changes to the Group's post-retirement defined benefit
scheme obligations; the extent of any future impairment charges or
write-downs caused by, but not limited to, depressed asset
valuations, market disruptions and illiquid markets; the value and
effectiveness of any credit protection purchased by the Group; the
inability to hedge certain risks economically; the adequacy of loss
reserves; the actions of competitors, including non-bank financial
services, lending companies and digital innovators and disruptive
technologies; and exposure to regulatory or competition scrutiny,
legal, regulatory or competition proceedings, investigations or
complaints. Please refer to the latest Annual Report on Form 20-F
filed with the US Securities and Exchange Commission for a
discussion of certain factors and risks together with examples of
forward looking statements. Except as required by any applicable
law or regulation, the forward looking statements contained in this
document are made as of today's date, and the Group expressly
disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward looking statements contained in
this document to reflect any change in the Group's expectations
with regard thereto or any change in events, conditions or
circumstances on which any such statement is based. The
information, statements and opinions contained in this document do
not constitute a public offer under any applicable law or an offer
to sell any securities or financial instruments or any advice or
recommendation with respect to such securities or financial
instruments.
Signatures
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
LLOYDS
BANKING GROUP plc
(Registrant)
By: Douglas
Radcliffe
Name: Douglas
Radcliffe
Title: Group
Investor Relations Director
Date: 20
February 2019