Horta-Osório buys stake in Lloyds Bank

Lloyds Banking Group has had difficulty staying out of the news recently, certainly in City circles. Ever since it smashed profit forecasts for 2016 back in February, analysts and other experts have been queuing up to heap praise on the reformed high street lender.

And in recent weeks, since Lloyds repeated the trick in an impressive set of first-quarter results, fund managers are rediscovering their interest in this low-growth, but high-yielding stock.

We reported recently that Mark Slater has loaded up on Lloyds shares, and this week star manager Neil Woodford admitted he'd had a change of heart and built a holding in Lloyds, the first bank share he's owned since selling HSBC in 2014.

On Monday, Deutsche Bank's David Lock upgraded Lloyds to 'buy' and hiked his price target by 20% from 66p to 79p. 

Now, insiders are at it, too.

With the dust still settling after the government sold the last of its Lloyds shares this week, the bank's chief executive António Horta-Osório celebrated yesterday by picking up 50,000 Lloyds shares at 72.31p.

That's nice to hear, of course, but the £36,000 outlay is chicken feed for the wealthy Portuguese banker, already loaded with Lloyds shares as reward for overseeing the bank's recovery.

Alongside full-year results published in February, we heard that Horta-Osório was awarded 956,416 shares as part of the 2016 annual bonus scheme. He'll also receive nearly 1.1 million shares deferred from 2013, and has been granted 176,745 for 2017 to be released over the next five years.

In March, Horta-Osório and a bunch of directors received millions of shares as part of the long-term incentive awards made in March 2014. The top dog alone bagged over 1.4 million. This year's “group ownership” scheme could see him pocket another 5.4 million.

The boss also received his first salary increase since 2011 last year. Horta-Osório was paid over £5.5 million by Lloyds in 2016, mainly share bonuses, but his base salary rose by 6% to £1.125 million. Of that raise, 2% was in cash and 4% was in shares, which he could not sell until the government had sold its entire stake. Now it has, he's free to do so.

He also received another 8% raise on his 2017 salary, putting him on £1.22 million a year. Again, 2% of that increase will be in cash and the rest in shares.

It's in the rules that Horta-Osório must own Lloyds Banking Group shares of value equal to 200% of his base salary. But there's no problem here. As at the end of March 2017, he was estimated to own almost 20.6 million shares, which at today's prices are worth well over £14 million.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.