Lloyds sets out new pay policy with potential for boss to land £17.7m payout

Lloyds has revealed that its boss’s pay package jumped by a fifth in 2025, and set out proposals that could mean he has the potential to earn as much as £17.7 million this year.

Total pay for group chief executive Charlie Nunn jumped to £7.4 million in 2025, from £6.2 million the prior year.

This was driven by an increase in his salary as well as a bigger annual bonus and long-term share awards.

Mr Nunn “demonstrated strong leadership throughout another challenging year for consumers”, the banking group said in its annual report, published  on Friday.

Chief finance officer William Chalmers also saw his total pay rise by 18% to £5 million for 2025.

The payouts come on the back of Lloyds reporting a 12% increase in its annual pre-tax profit to £6.7 billion, while it also upped the outlook for key performance measures in 2026.

Annual bonus awards took into account the fact that Lloyds’ financial performance was impacted by it setting aside another £800 million charge in the third quarter to compensate customers unfairly sold a car loan, bringing the group’s total bill so far for the saga to £1.95 billion.

Lloyds also set out plans to change how its top bosses are compensated, which it said would more closely align pay to the financial performance of the bank.

The proposals involve increasing the maximum annual bonus award for the chief executive from 140% to 300% of their base salary, and the maximum long-term incentive plan from 300% to 500%.

At the same time, it intends to cut fixed pay by about 44%, which means there are more consequences if the bank’s performance does not hit targets.

The policy means that if Mr Nunn hits all his performance targets, which are greater than those set in 2025, then he could earn £13.9 million this year.

Furthermore, in a scenario where Lloyds’ share price increases by 50%, his pay packet could rise to a maximum of £17.7 million.

Lloyds’ share price rose by about 75% last year.

Lloyds said the proposals, which shareholders will vote on at this year’s annual general meeting, will bring the total reward package on offer to executives closer to what similar banks are doing.

The chief executive of Barclays, CS Venkatakrishnan, was handed a £15 million pay packet for 2025, up from the £11.6 million he took home in 2024.

NatWest’s boss Paul Thwaite saw his total pay jump by a third last year to £6.6 million.

Mr Thwaite said on Friday that he recognised that senior roles in banking and financial services are “very well paid” and that he was “fortunate”.