Here's Why Lloyds Banking Group plc's (LON:LLOY) CEO Compensation Is The Least Of Shareholders' Concerns

Key Insights

• Lloyds Banking Group will host its Annual General Meeting on 15th of May
• Total pay for CEO Charlie Nunn includes UK£1.17m salary
• Total compensation is similar to the industry average
• Lloyds Banking Group's total shareholder return over the past three years was 96% while its EPS was down 3.0% over the past three years

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The share price of Lloyds Banking Group plc (LON:LLOY) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. The upcoming AGM on 15th of May may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

View our latest analysis for Lloyds Banking Group

Comparing Lloyds Banking Group plc's CEO Compensation With The Industry

At the time of writing, our data shows that Lloyds Banking Group plc has a market capitalization of UK£43b, and reported total annual CEO compensation of UK£5.6m for the year to December 2024. Notably, that's an increase of 53% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at UK£1.2m.

On comparing similar companies in the British Banks industry with market capitalizations above UK£6.0b, we found that the median total CEO compensation was UK£5.6m. This suggests that Lloyds Banking Group remunerates its CEO largely in line with the industry average. What's more, Charlie Nunn holds UK£6.3m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2023	Proportion (2024)
Salary	UK£1.2m	UK£1.1m	21%
Other	UK£4.4m	UK£2.5m	79%
Total Compensation	UK£5.6m	UK£3.7m	100%

On an industry level, around 30% of total compensation represents salary and 70% is other remuneration. Lloyds Banking Group sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Lloyds Banking Group plc's Growth

Over the last three years, Lloyds Banking Group plc has shrunk its earnings per share by 3.0% per year. In the last year, its revenue is down 3.4%.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Lloyds Banking Group plc Been A Good Investment?

Boasting a total shareholder return of 96% over three years, Lloyds Banking Group plc has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for Lloyds Banking Group that investors should look into moving forward.

Switching gears from Lloyds Banking Group, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.