Who is eligible to attend and vote at the 2019 AGM?
All shareholders who hold shares in the Company on 14 May 2019 and whose names appear in the register of members at 6.30pm on that day are eligible to attend and vote at the 2019 AGM.
Shareholders can appoint a proxy to vote and speak at the AGM on their behalf. Proxy appointments must be received by the Company’s registrar, Equiniti Limited, no later than 11.00am on Tuesday 14 May 2019.
Resolution 14 - Following the size of the vote against the remuneration report in 2018, what steps have you taken to respond to investor feedback in this regard?
We were disappointed that our report for 2017 did not receive the high level of support from shareholders at the 2018 AGM that we had previously experienced.
We place great importance on the opinions of our shareholders and other stakeholders when considering our remuneration policy and its implementation. As a result, during 2018 the Chairman of the Remuneration Committee alongside the Group Reward Director and Investor Relations took the opportunity to meet with a broad selection of shareholders and other key stakeholders to obtain feedback on our approach. It became clear in these discussions that while disclosure levels were generally considered good, our process for determining bonus awards for Executive Directors was perceived to be too complex and we could make clearer both how the annual awards were calculated and where judgement or discretion has been applied by the Committee.
This year’s Directors’ Remuneration Report has been designed in part to respond to that feedback, increasing the transparency of the disclosure for the determination of the bonus pool at Group level, and for individual awards for Executive Directors.
For example, we have sought to provide greater clarity on the approach to determining bonus awards, with a step-by-step outline of the decision making process and explanations for where judgement or discretion were exercised by the Committee. For 2018, no discretion was exercised.
We have also focused on highlighting the ways in which Executive Directors’ annual and long-term awards reflect the performance of the Group and decided to publish additional disclosures such as the CEO pay ratio, one year ahead of our statutory obligation to do so.
While we are not seeking to make any changes to the Directors’ Remuneration Policy this year, we will review the Policy during 2019 and consult widely on policy changes, ahead of the planned cyclical approval at the 2020 AGM.
As part of this process, Group will continue to align its remuneration principles to the Group’s strategic objectives to ensure it pays for performance and ensure its approach to remuneration is aligned to the interests of its shareholders.
Resolution 15 - Who is eligible for the 2018 final dividend and when will it be paid?
The Board has proposed a final dividend payment of 2.14 pence per ordinary share in respect of the financial year ended 31 December 2018.
If approved at the AGM, this will be paid on 21 May 2019 to shareholders whose names appeared in the register of members at close of business on 5 April 2019.
Resolution 16 - When is the new auditor appointed? As announced on 22 November, 2018, following the conclusion of the formal audit review process led by the Group's Audit Committee, the Board has approved the proposed appointment of Deloitte LLP (Deloitte) as the Group’s auditor with effect from the year ending December 2021.
The appointment of Deloitte will be recommended to shareholders for approval at the 2021 Annual General Meeting. PricewaterhouseCoopers LLP (PwC) will continue to audit Lloyds until the year ending 31 December 2020, subject to reappointment by shareholders at the respective Annual General Meetings, and on completion of the 2020 audit they will stand down as required by the Companies Act 2006.
A formal handover process will be undertaken to ensure a smooth and effective migration between Deloitte and PwC.
Resolution 18 - Why is the Company seeking authority to make political donations or incur political expenditure?
This resolution will renew the authority to incur expenditure which would otherwise be prohibited under Part 14 of the Companies Act 2006.
In accordance with Group policy, the Company does not make any political donations or incur political expenditure in the UK within the ordinary meaning of those words. However, the definitions of political donations, political organisations and political expenditure used in the Companies Act 2006 are very wide and the penalties for breaching the legislation, even if inadvertent, are severe. As a result, such definitions may cover activities that form part of relationships that are an accepted part of engaging with our stakeholders.
The activities referred to above are not designed to support any political party nor to influence public support for any political party. The authority the Company is requesting is a precautionary measure to ensure that the Company can continue to support the community and put forward its views without inadvertently breaching the Companies Act 2006.
While shareholders are permitted to grant authority for up to four years, the Directors will seek shareholder authority each year in accordance with best practice.
Resolution 19 - Why is the Company seeking authority for Directors to allot shares in the Company?
In order to issue new ordinary shares which can, depending upon how the shares are issued, dilute individual shareholdings, directors require shareholder approval. It is a standard practice to seek authority at the annual general meeting to issue shares up to a certain limit to give Directors the flexibility permitted by corporate governance guidelines to respond to market developments and to enable allotments to take place to finance business opportunities as they arise.
The authority being sought is in line with standard market practice and with The Investment Association’s Share Capital Management Guidelines issued in July 2016 and renews last year’s authority.
Resolution 20 - Why is the Company seeking authority for Directors to allot shares in relation to the issue of Regulatory Capital Convertible Instruments?
The Company seeks this approval to enable it to issue financial instruments that meet the FCA's Regulatory Capital Requirements, with conversion or subscription rights to ordinary shares under certain circumstances. This enables the Company to raise additional tier one capital through the issue of Additional Tier 1 (AT1) instruments.
The authority being sought is in line with industry wide standard market practice and renews last year’s authority.
Resolution 21 and 22 – Why is the Company seeking limited disapplication of pre-emption rights?
There are two separate resolutions permitting the disapplication of pre-emption rights in limited circumstances, which are consistent with last year and reflect The Pre-Emption Group’s Statement of Principles. Shareholders have a legal right to be offered shares on a pre-emptive basis, i.e. before non-shareholders are offered them.
However, companies can ask shareholders to dis-apply this right within certain limits recommended by The Pre-Emption Group’s Statement of Principles which state that shares can be issued up to 10 per cent. This allows the Company the flexibility to offer shares to persons other than its shareholders, such as a private placing in the market for example.
Our approach is standard and in line with market guidelines, renewing last year’s authority.
Resolution 23 - Why is the Company seeking limited disapplication of pre-emption rights in relation to the issue of Regulatory Capital Convertible Instruments?
As with resolution 21 and 22, shareholders have a legal right to be offered shares on a pre-emptive basis i.e. before non-shareholders are offered them but companies can ask shareholders to dis-apply this right.
In case of resolution 23 the disapplication relates solely to any ordinary shares that may be issued in relation to the terms of the Regulatory Capital Convertible Instruments. This enables the Company to raise additional tier 1 capital without issuing new shares.
The resolution is in line with standard market practice and renews last year’s authority.
Resolution 24 - Why is the Company seeking authority to purchase ordinary shares?
This resolution provides the Company authority to purchase its own ordinary shares in the market. This usually happens as part of a return of capital. The amount that can be purchased is limited to 10 per cent of the issued share capital. The current share buy-back programme is being undertaken using the authority granted at the 2018 AGM, not the authority being sought at the 2019 AGM.
Resolution 25 - Why is the Company seeking authority to purchase preference shares?
This resolution allows the Company to purchase its own preference shares in the market with restrictions on the minimum value the Company can pay. This may be preferable to making a call on the whole of a particular stock. This resolution is in line with standard market practice and guidelines. The Company seeks this authority on an annual basis.