HBOS alters bonus targets

13 March 2008

HBOS has announced that it is putting greater emphasis on short-term bonuses for its leading executives because of turmoil in the financial markets.

The bank conceded that financial uncertainty is making it more difficult to set long-term goals and a slowing in its growth prospects prompted the firm to halve the targets the firm's directors must achieve for total shareholder return (TSR) to earn their future bonuses.

Targets for TSR to grow by three per cent a year to achieve the maximum payout were "very tough" to deliver, a HBOS spokesperson said, noting that the chancellor has reduced growth target for the economy in this year's budget.

The Guardian cited HBOS' 2007 annual report, in which Karen Jones, the non-executive director, said: "The dislocation in financial markets, prompted by the sub-prime mortgage financial crisis...has created changes in many of the economies in which the group operates, particularly in the UK."

In 2007, HBOS directors did not receive their long-term incentive payouts and their short-term cash bonuses were cut to 46 per cent of their salaries, compared with 60 per cent a year ago.

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development