BusinessCompany NewsBonus culture: the real cost of bank FDs

Bonus culture: the real cost of bank FDs

In the wake of the furore over Sir Fred Goodwin’s pension and criticism of big bonuses for bank bosses, the government is under pressure not to reward failure. But how will this affect FDs?

Chris Lucas, Barclays

Joined in April 2007. Previously partner at PwC.

Pay in 2007: Salary of £450,000 with benefits worth £135,000 and an
annual cash bonus of £450,000.
Performance bonus and Executive Share Award Scheme: Awarded 69,091 shares in
2007. Maximum 30% bonus, plus share award worth £195,000 to be made this March.

Performance Share Plan: 82,910 shares worth £599,000 with a possible
248,730 shares (£1.8m) subject to performance.

Other: 3,638 share options under Sharesave, exercisable at £4.83
(£16,800) and has a beneficial interest in 38,003 shares. Base salary rose to
£650,000 in April 2008.

Share price today: 68p

Mike Ellis, HBOS (now Lloyds Banking Group)

Rejoined in September 2007 having been FD from 2001 to 2004.

Pay in 2007: Salary of £169,000, benefits worth £45,000 and cash
bonus of £78,000. Ellis also receives a pension from his previous employment by
HBOS.

Long-term Incentive Plan: Granted 20,114 shares in 2007; 25,972
shares held from 2004 scheme were released during the year.

Other: Had a beneficial interest in 350,545 shares. The Guardian
estimated that Ellis left the group with £850,000, including share performance
schemes. HBOS
shares converted to Lloyds shares at a ratio of 0.605 Lloyds shares per HBOS
share.

Share price today (Lloyds): 46p.

Douglas Flint CBE, HSBC

Joined HSBC in 1995 having been a KPMG partner.

Pay in 2007: Salary of £679,000, pensions allowance £374,000,
benefits 325,000, performance bonus of £800,000 ­ a total of £1.9m.

Performance shares: Awarded 246,185 shares under the long-term
incentive plan with an expected value of £968,000. Vesting of performance shares
depends 50% on total shareholder returns compared with 28 major banks measured
over three years: A ‘top 7’ ranking = 100% award, ranking 14th = 30% award,
below that: nil.

Other: Beneficial owner of 83,467 shares and trustee over 29,314.
Bonuses in 2008 to be determined by a balanced scorecard.

Share price today: £3.62.

Guy Whittaker, RBS

Joined RBS in February 2006 from Citigroup.

Pay in 2007: Salary of £760,000, performance bonus of £1,425,000,
pension allowance of £262,000.
Share options: Granted 280,749 options in 2007 at an exercise price of £5.61.
Holds a total of 454,539.

Performance plan: Had 113,391 shares at the start of 2007 and
awarded 107,298 more, then worth £1.5m.
Restricted stock award: Held 373,533 shares at the start of 2007 worth £2.4m of
which 168,855 shares (worth £1.1m) vested during the year. A further 91,449
shares vested during 2008.

Other: Beneficial owner of 278,191 shares worth £1.2m at
end-December.

Share price today: 20p.

Tim Tookey, Lloyds Banking Group

Became deputy FD in 2006 and acting group FD in April 2008, succeeding Helen
Weir.

Pay in 2007: He was appointed to the board in 2008, so there are no
salary details available yet. Tookey’s predecessor earned £575,000 in basic
salary, £40,000 in benefits, £115,000 payment in lieu of pension and £891,000
bonus in 2007, with long- term incentive plan payment worth £725,000.

Other: The Lloyds board announced that executive directors agreed to
forego bonuses ‘of their own accord’.

Share price today: 46p

This is an abridged version of an article that first appeared in
Financial Director magazine. See the full article at
financialdirector.co.uk

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