George Culmer's pay award will include almost £2m in shares by way of compensation for the cash bonus he forfeited at RSA
George Culmer, the new finance director of part-nationalised Lloyds Banking Group, is in line for a salary and perks package worth up to £6m after three years, it has emerged.
His total remuneration includes compensation of close to £2m for forfeiting a bonus at his previous employer, the insurance company RSA.
The pay of senior executives at Lloyds and rival Royal Bank of Scotland has come under intense political and public scrutiny since the government bailed out both banks to the tune of £66bn during the 2008 financial crisis.
RBS boss Stephen Hester agreed to forgo his bonus after an outcry that led to heated exchanges in the House of Commons and tensions in the RBS boardroom.
Lloyds, which is 40% owned by the taxpayer, said Culmer, 49, would take up his position on 16 May and receive an annual salary of £720,000, as well as a discretionary annual bonus worth up to a maximum of 200% of his salary.
The appointment brings to an end a drawn-out process in trying to agree a start date for Culmer, who was required to work a 12-month notice period for RSA.
In addition, Culmer is eligible for a long-term performance share award of up to 225% of his salary for 2012, which would vest in full in three years' time if he meets his targets.
He will also get an allowance to fund personal pension arrangements worth 25% of his salary, taking his potential annual pay, bonus and benefits to £4m.
On top of that, Lloyds will compensate Culmer for deferred awards and a cash bonus he will forfeit after quitting RSA by giving him £1.9m worth of shares, which vest in 2013 and 2014.
Culmer agreed to join Lloyds at the end of last year but has been involved in difficult negotiations with RSA over when he could legally begin his new role.
The previous finance boss at Lloyds, Tim Tookey, left the company last week to take on the same role at insurer Resolution, leaving Lloyds with a gaping hole in its boardroom in March and April.
But Lloyds said members of chief executive António Horta-Osório's finance team would plug the gap until Culmer's arrival in mid-May.
"We look forward to him joining us in time for our annual meeting on 17 May," said Lloyds chairman Win Bischoff.
Horta-Osório returned to work last month after a two-month absence brought on in October when he could not sleep for five days and was diagnosed as suffering from exhaustion.
But after unveiling Lloyds figures last week that showed a loss in 2011 of £3.5bn, he joked he was now sleeping "like a baby", and was looking forward to returning the bank to rude financial health.
Horta-Osório asked not to be considered for a bonus for 2011 partly because of his absence but also, he said, because of "the tough financial circumstances that many people are facing".
On Friday, he said the prolonged low interest rate environment would mean some key targets would not be met on time, but that the bank would benefit from a faster than expected reduction in impairment charges in 2012. The outlook was "not a profit warning", just "realistic" about the economy, where he expects house prices to be "broadly flat" for the next two years, with "fairly modest" growth in the economy in the second half of 2012.