Lloyds shareholders are preparing for battle, protesting against the bank's bonus scheme, and threatening to sue over its takeover of struggling banking group HBOS which has resulted in the majority of its losses and bad debts.
Lloyds faces a backlash from investors when they meet for the annual meeting next week, over a new incentive scheme for bosses, which could see chief executive Eric Daniels get millions of pounds in bonus shares, depending on how quickly he gets Lloyds up and running again.
The UKSA (UK Shareholders' Association) is calling on shareholders to vote against the new incentive scheme; many industry experts, politicians, and individuals have criticised the bonus system which has continued to reward failure because the bonuses are often contractual obligations.
While the UKSA agrees with the recommendations of the recent Treasury Committee Report that bonuses should still have a place in the remuneration of senior banking executives, it said: "we do not accept that Lloyds has gone far enough in reforming its practices. We agree with the Treasury Committee that a high percentage of remuneration paid in bonuses encourages risky behaviour and that this was one factor in the banking crisis."
The bank has been hit hard by bad debts which it took on with HBOS, a takeover which has been universally deemed a disaster, leading the Government to step in and take a 43 per cent share in the newly formed Lloyds Banking Group. The UKSA said: "That decision was clearly a mistake and has resulted in a good quality bank, which paid a high dividend, being intermingled with the poor assets of HBOS."
Shareholders are also being urged by the UKSA to vote for Lloyds chairman Victor Blank's resignation. He has already volunteered to step down by next summer, but the UKSA said "we would prefer to see him go sooner rather than later," for his role in Lloyds' part nationalisation. It would also like to see all other directors voted out who were on the board at the time the HBOS deal was decided on, sealing Lloyds' fate.
"There were a lot of people who bought Lloyds shares
thinking it was a safe, solid place to put your money," said Roger Lawson, UKSA communications director, according to The Times.
"Now that you see the size of losses at HBOS, these people are questioning why taking over HBOS was in their best interests."
© Fair Investment