Blueprint
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
21
February 2018
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
21
February 2018
LLOYDS BANKING GROUP - 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).
2017 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.
Further
information will be available in the 2017 Annual Report and
Accounts.
Lord Blackwell, the Group's Chairman said:
Our
approach to reward aims to provide a clear link between
remuneration and delivery of the Group's key strategic objectives,
namely, becoming the best bank for customers whilst delivering
long-term, superior and sustainable returns to shareholders. We
believe in offering fair reward where colleagues are rewarded for
performance aligned to the long-term sustainable success of the
business, our commitment to rebuilding trust and changing the
culture of the Group.
2017 GROUP PERFORMANCE SHARE OUTCOME
As
announced in the 2016 Directors' Remuneration Report, the Group's
Annual Bonus plan is known as the Group Performance Share
plan from 2017. The Group Performance Share outcome is based on a
percentage of the Group's underlying profit, adjusted by a
strategic modifier based on the Group Balanced Scorecard metrics
and a collective adjustment to reflect risk matters and other
factors.
2017
saw the Group's successful return to full private ownership,
repaying the taxpayer's original investment of £20.3 billion,
plus an additional £900 million. The Group has delivered a
strong financial performance in a very challenging operating
environment that has been characterised by low interest rates for a
longer period than had perhaps been expected, as well as heightened
market volatility and uncertainty following the EU Referendum.
Despite this uncertainty, underlying profit increased to
£8,493 million in 2017, exceeding budget by 8.2 per cent.
Capital generation of 245bps has been well ahead of market
expectation.
The
ordinary dividend increased to 3.05 pence per share (2016: 2.55
pence plus special dividend 0.5 pence per share), in line with the
Group's progressive and sustainable dividend policy, with a share
buyback of up to £1 billion.
The
Committee determined that the share of underlying profit should be
5.1 per cent. In reaching this decision, the Committee took into
account the Group's actual performance against budget where
outperformance was 8.2 per cent and distributions to shareholders
which have increased by 46.9 per cent. This 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 2017 was
£109.6 million (approximately 21 per cent). The
overall Group Performance Share outcome determined by the Committee
was £414.7 million, approximately 5.5 per cent higher than the
equivalent bonus outcome for 2016 (£392.9
million).
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 2017 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.
2017 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 2018. The remaining 60
per cent must be deferred.
For the
2017 Group Performance Share, £2,000 is paid in cash in March
2018, with the balance of the upfront 40 per cent delivered in
Shares, 50 per cent delivered immediately in June 2018 and the
remainder subject to holding until March 2019. The remaining
60 per cent is deferred into Shares with 40 per cent vesting
in 2019 and 20 per cent in 2020.
|
Name
|
Number of
shares
awarded(1)(2)
|
|
António
Horta-Osório
|
1,050,075
|
|
George
Culmer
|
474,733
|
|
Juan
Colombás
|
474,733
|
|
Karin
Cook
|
256,871
|
|
Antonio
Lorenzo
|
403,086
|
|
Vim
Maru
|
399,984
|
|
Zak
Mian
|
380,070
|
|
David
Oldfield
|
442,204
|
|
Janet
Pope
|
213,035
|
|
Stephen
Shelley
|
407,281
|
|
1
|
Based
on an assumed share price of 66.65 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 2014, 2015 and 2016
Performance
Deferred
Bonus Awards are due to be released in 2018 which relate to
performance in 2014, 2015 and 2016. 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 2018 the number of Shares (for no payment) as
set out by their name, split between vesting in March and
September.
|
Name
|
2014
|
2015
|
2016
|
|
António
Horta-Osório
|
530,4631
|
617,0542
|
375,709
|
|
George
Culmer
|
-
|
335,413
|
176,935
|
|
Juan
Colombás
|
-
|
330,754
|
177,967
|
|
Karin
Cook
|
29,839
|
35,654
|
118,467
|
|
Antonio
Lorenzo
|
57,333
|
87,242
|
168,580
|
|
Vim
Maru
|
57,024
|
52,977
|
139,736
|
|
Zak
Mian
|
14,421
|
11,376
|
94,655
|
|
David
Oldfield
|
36,728
|
46,238
|
184,026
|
|
Janet
Pope
|
11,739
|
11,534
|
22,590
|
|
Stephen
Shelley
|
38,682
|
38,490
|
50,770
|
|
1
|
Subject
to holding period until March 2020
|
|
2
|
Subject
to holding period until March 2021
|
2018 Executive Director Base Salaries
Executive
salary levels are set in the context of all colleague salaries, for
which a budget of 2.7 per cent was agreed, including funding to
ensure a minimum salary award of £600 for eligible
colleagues.
Salary
increases for António Horta-Osório and George Culmer are
set below the budget for the wider colleague population, at 2 per
cent. Juan Colombás took on a new role of Chief Operating
Officer (COO) in September 2017 and accordingly it is proposed he
receive a salary increase of 3.4 per cent to reflect the fact that
the COO role is larger than his previous role as the Chief Risk
Officer.
Salaries
will therefore be as follows, with the effective dates shown
below:
|
António
Horta-Osório
|
£1,244,400
|
(1
January 2018)
|
|
George
Culmer
|
£779,351
|
(1
April 2018)
|
|
Juan
Colombás
|
£779,351
|
(1
January 2018)
|
Fixed Share Awards in 2018
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-Osório
|
178,919
|
|
George
Culmer
|
100,195
|
|
Juan
Colombás
|
98,803
|
|
Karin
Cook
|
80,712
|
|
Antonio
Lorenzo
|
99,360
|
|
Vim
Maru
|
90,453
|
|
Zak
Mian
|
90,453
|
|
David
Oldfield
|
97,411
|
|
Janet
Pope
|
69,579
|
|
Stephen
Shelley
|
98,803
|
|
1
|
Based
on a share price of 66.65 pence. The actual number of shares
awarded will be determined by the share price on the date of
award.
|
Release of Long-Term Incentive Awards made in March
2015
The
Long Term Incentive Plan (LTIP) awards made in 2015 are vesting at
66.3 per cent, as detailed in the table below.
This
reflects the Group's strong performance since 2015, balanced
against uncertainty in the economic and political
environment. In particular, this has impacted negatively on
absolute share price performance, resulting in no vesting for the
Total Shareholder Return component.
|
|
Threshold
|
Maximum
|
Actual
performance
|
Weighted
payout
|
|
Economic
profit(25% of award)
|
£2,870m
|
£3,587m
|
£3,987m
|
25%
|
|
Absolute
total shareholder return (30% of award)
|
8% per
annum
|
16% per
annum
|
(1.7)%
|
0%
|
|
Cost:income
ratio(10% of award)1
|
45.6%
|
44.5%
|
44.9
%
|
6.3%
|
|
Customer
Complaint Handling2 and
|
0.79
|
0.73
|
0.53
|
10%
|
|
(FCA
reportable complaints / FOS uphold rate)(10% of award)
|
=<32%
|
=<28%
|
15%
|
|
Net
promotor score(10% of award)
|
3rd
place
|
1st
place
|
1st
place
|
10%
|
|
Digital
active customer base(7.5% of award)
|
12.7m
|
13.3m
|
£13.4m
|
7.5%
|
|
Colleague
engagement score (7.5% of award)
|
62
|
70
|
76
|
7.5%
|
|
1
|
Adjusted
total costs.
|
|
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 2015. Executive
Directors and Material Risk Takers at the time of the award in
2015 are required to retain any shares vesting for a further two
years.
|
Name
|
Shares
|
|
António
Horta-Osório
|
1,792,442
|
|
George
Culmer
|
969,681
|
|
Juan
Colombás
|
956,214
|
|
Karin
Cook
|
146,920
|
|
Antonio
Lorenzo
|
883,487
|
|
Vim
Maru
|
320,974
|
|
Zak
Mian
|
124,882
|
|
David
Oldfield
|
781,131
|
|
Janet
Pope
|
109,357
|
|
Stephen
Shelley
|
318,328
|
Group Ownership Share Plan - 2018 awards
Awards
for the 2017 performance period are expected to be made in March
under the rules of the 2016 Long-Term Incentive Plan. The 2018
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
shares
awarded(1)(2)
|
|
Expected
value(3)
|
|
António
Horta-Osório
|
6,864,216
|
|
£2,287,500
|
|
George
Culmer
|
3,940,721
|
|
£1,313,245
|
|
Juan
Colombás
|
3,885,989
|
|
£1,295,005
|
|
Karin
Cook
|
2,829,294
|
|
£942,862
|
|
Antonio
Lorenzo
|
3,831,257
|
|
£1,276,766
|
|
Vim
Maru
|
3,661,852
|
|
£1,220,312
|
|
Zak
Mian
|
3,291,072
|
|
£1,096,750
|
|
David
Oldfield
|
3,831,257
|
|
£1,276,766
|
|
Janet
Pope
|
1,743,466
|
|
£581,010
|
|
Stephen
Shelley
|
2,356,568
|
|
£785,326
|
|
1
|
Based
on a share price of 66.65 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
regulations prohibit the payment of dividend equivalents on awards
in 2018 and subsequent years, the number of shares subject to the
award has been determined by applying a discount factor to the
share price on grant, as previously disclosed. The Committee
approved an adjustment of 25 per cent for colleagues who are senior
managers, including the Executive Directors.
|
|
2
|
Vesting
determined in 2021 subject to the satisfaction of stretching
performance targets over the performance period ending 31 December
2020.
|
|
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 malus and
clawback for at least seven years from the date of
award.
|
Shareholding Requirement
From 1
January 2017 the shareholding requirement for Executive
Directors has been focused on base salary only (previously: base
salary plus fixed share award) to provide greater transparency in
the measurement of the shareholding requirements. This resulted in
an increase in the percentage required as a multiple of salary. The
new requirements are 350 per cent of base salary for the GCE and
250 per cent of base salary for the 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 have three years from appointment to
achieve the shareholding requirement.
The
following table sets out the total shareholding for each of the
PDMRs as at 31 December 2017.
|
Name
|
Shareholding at
31
December
20171
|
|
António
Horta-Osório
|
21,609,127
|
|
George
Culmer
|
12,618,058
|
|
Juan
Colombás
|
7,935,164
|
|
Karin
Cook
|
2,188,943
|
|
Antonio
Lorenzo
|
8,699,280
|
|
Vim
Maru
|
3,959,478
|
|
Zak
Mian
|
1,431,115
|
|
David
Oldfield
|
2,288,570
|
|
Janet
Pope
|
1,451,665
|
|
Stephen
Shelley
|
1,763,545
|
|
1
|
Includes
shares owned outright reduced by forfeitable Matching Shares under
the Share Incentive Plan, plus the estimated net number of vested
unexercised options.
|
2017 Executive Director Remuneration Outcome Table
The
following table summarises the total remuneration delivered during
2017 in relation to service as an Executive Director.
|
|
António
Horta-Osório
|
George
Culmer
|
Juan Colombás
|
Totals
|
|
£000
|
2017
|
2016
|
2017
|
2016
|
2017
|
2016
|
2017
|
2016
|
|
Base
salary
|
1,220
|
1,125
|
760
|
745
|
753
|
739
|
2,733
|
2,609
|
|
Fixed
share award
|
900
|
900
|
504
|
504
|
497
|
497
|
1,901
|
1,901
|
|
Benefits
|
156
|
143
|
46
|
42
|
71
|
70
|
273
|
255
|
|
Group
Performance Share
|
1,323
|
1,220
|
599
|
574
|
599
|
578
|
2,521
|
2,372
|
|
Long-term
incentive1
|
2,257
|
1,834
|
1,221
|
992
|
1,204
|
883
|
4,682
|
3,709
|
|
Pension
allowance
|
565
|
568
|
190
|
186
|
188
|
185
|
943
|
939
|
|
Other
remuneration2
|
1
|
1
|
1
|
1
|
1
|
1
|
3
|
3
|
|
Total
remuneration
|
6,422
|
5,791
|
3,321
|
3,044
|
3,313
|
2,953
|
13,056
|
11,788
|
|
1
|
The LTIP vesting at 66.3 per cent and dividend equivalents
awarded in shares were confirmed by the Remuneration Committee at
its meeting on 19 February 2018. The total number of shares vesting
were 3,035,880 and 346,087 shares delivered in respect of dividend
equivalents for António Horta-Osório, 1,642,361 shares
vesting and 187,227 shares delivered in respect of dividend
equivalents for George Culmer and 1,619,551 shares vesting and
184,627 shares delivered in respect of dividend equivalents for
Juan Colombás. The average share price between 1 October 2017
and 31 December 2017 (66.75 pence) has been used to indicate the
value. The shares were awarded in 2015 based on a share price of
79.93 pence. LTIP and dividend equivalent figures for 2016 have
been adjusted to reflect the share price on the date of vesting
(67.51 pence) instead of the average price (58.30 pence) reported
in the 2016 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 2017,
the Group Chief Executive served as a Non-Executive Director of
Exor, Fundação Champalimaud, Stichting INPAR and
Sociedade Francisco Manuel dos Santos, for which he received fees
of £323,688 in total.
- END
-
For
further information:
Investor Relations
Douglas
Radcliffe
+44 (0) 20 7356 1571
Group
Investor Relations Director
douglas.radcliffe@lloydsbanking.com
Corporate Affairs
Matt
Smith
+44 (0) 20 7356 3522
Head of
Corporate Media
matt.smith@lloydsbanking.com
FORWARD LOOKING STATEMENTS
This
document contains certain forward looking statements with respect
to the business, strategy, plans and /or results of Lloyds Banking
Group and its current goals and expectations relating to its future
financial condition and performance. Statements that are not
historical facts, including statements about Lloyds Banking 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, 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 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 Lloyds Banking Group
expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to any forward looking
statements. 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.
LLOYDS
BANKING GROUP plc
(Registrant)
By: Douglas
Radcliffe
Name: Douglas
Radcliffe
Title: Group
Investor Relations Director
Date: 21st
February 2018