“Paying the CEO Antonio Horta-Osorio a £1.7m bonus is as much about image management as it is about rewarding performance. Lloyds desperately want to send a signal to the market that it looks like a normal commercial bank, and is ready to be privatised. One way to do this is by paying bankers in a similar way to commercial competitors.
“Some claim Lloyds may have learned nothing from the crisis, but here they are actually following good practice by deferring bonuses and paying in shares. This encourages a longer term perspective. The worst excesses of the financial crisis were fuelled by cash bonuses for short term performance, not share based rewards for long term performance.
“Another wider effect of paying large bonuses is to further drive up social inequality. Recent research shows that much of the increase in inequality in the last two decades has been due to the increasing size of bonuses for the most highly rewarded employees.”
If you have any further questions about Dr Spicer’s comment, or if you would like to arrange an interview with him, please contact me by responding to this email.