A prominent Cass Business School professor has hit back over criticism that Lloyds Banking Group has bumped up its banker bonus pool by 10% and awarded its chief executive £1.7m in extra rewards despite the bank stumping up billions of pounds mass mis-selling scandal compensation.
Andre Spicer, Professor of Organisational Behaviour at Cass Business School, said in a statement that Lloyds paid out £395m (€481m, $657m) to bankers and extra incentive rewards to Antonio Horta-Osorio, in a bid to send a signal that it was trying to change its tarnished image.
"Paying Horta-Osorio a £1.7m bonus is as much about image management as it is about rewarding performance," said Spicer.
"Lloyds desperately wants 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."
Lloyds boosted its annual banker bonus pool by 10% year-on-year after the group more than doubled its underlying profit to £6.2bn.
Horta-Osorio's bonus came in the form of five year deferred shares, which is also subject to conditions.
His contract entitles him to a maximum annual award of 225% of his £1.061m basic salary which some criticised unjustly noted Spicer:
"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," said Spicer.
"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."
In response to Lloyds' profit and bonus announcements David Hillman, spokesperson for the Robin Hood Tax campaign, said:
"It's disgraceful that a bailed out bank gets fined billions for ripping off its customers but still pays out lottery-sized sums to its top staff. In what other industry would this be allowed to happen?
"The government should stop pussyfooting around the City and ensure it contributes more positively to the society it should be serving."
Recently the campaign group produced research that found a total of £81.7bn had been paid in bonuses to bankers since 2008.