Lloyds CEO gives up $3.7 million bonus

Lloyds Banking Group CEO Antonio Horta Osorio poses outside the bank's headquarters on his first day back at work after taking a leave of absence due to exhaustion, in the City of London, January 9, 2012.

LONDON (Reuters) - British lender Lloyds Banking Group said chief executive Antonio Horta-Osorio had waived his bonus for 2011 due to his absence for two months, the bank's performance, and tough circumstances faced by customers.

The bonus could have been worth 2.4 million pounds for Horta-Osorio, who will get basic pay of 1.1 million and could still get 4.5 million in a long-term plan awarded over a three-year period.

"My bonus entitlement should reflect the performance of the group but also the tough financial circumstances that many people are facing," he said on Friday. "I also acknowledge that my leave of absence has had an impact both inside and outside the bank including for shareholders."

Pay for bankers, and bonuses in particular, have been politically contentious since the government had to spend 66 billion pounds bailing out Lloyds and Royal Bank of Scotland in 2008.

More broadly, Prime Minister David Cameron said recently he wanted to try to curb executive pay by making shareholder votes on remuneration packages binding, rather than advisory as is now the case.

Lloyds shares slumped 60 percent last year, one of the worst performing stocks in the FTSE 100. That has left the government, which owns 40 percent of the bank, sitting on a 12 billion pound loss on its 20 billion bailout.

Horta-Osorio joined Lloyds at the start of 2011, taking over as CEO in March since when he has implemented sweeping changes, unveiling a plan aimed at returning the bank to financial health that includes 15,000 job cuts.

The 47-year-old Portuguese shocked investors in November when he stepped down, suffering from fatigue. He returned this week.

Horta-Osorio, by his own admission a details-obsessed manager, plans to change his intensive working style and have fewer people reporting to him.

Lloyds, Britain's biggest retail bank with more than 30 million customers, made a 3.9 billion pound loss in the first nine months of last year and said it may miss financial targets due to the tough economic outlook.

Already saddled with tens of billions of pounds of losses from its takeover of troubled rival HBOS at the height of the 2008 crisis, Lloyds could report a loss for 2012 as well as for last year as bad loans remain high, analysts at Barclays Capital estimate.

Lloyds shares were up 2.7 percent at 11:15 a.m. BT.

(Reporting by Steve Slater)