Lloyds CEO Antonio Horta-Osorio, who took a two month leave of absence from the bank due to ill health, has declined to take his bonus for 2011.
Horta-Osorio returned to work this week, having left on a temporary break in November to treat fatigue, and said in an statement on Friday that he had asked the board not to consider him for a bonus.
“As Chief Executive, I believe my bonus entitlement should reflect the performance of the Group but also the tough financial circumstances that many people are facing," he said in a statement to the press.
"I also acknowledge that my leave of absence has had an impact both inside and outside the bank including for shareholders. On that basis, I have decided to request that the Board does not consider me for a 2011 bonus.”
The bank, which is more than 40% state-owned, posted a £3.25bn loss in the first three quarters of 2011, warning that it may miss its financial targets. The company is in the process of selling off 632 retail outlets, with the Co-operative Bank the preferred bidder, and has taken a £3.3bn provision for compensation claims over the mis-selling of payment protection insurance (PPI).
However, the Portuguese-born CEO has been widely praised for his work at the bank since taking the helm in March 2011, rationalising its assets - albeit at the cost of 15,000 jobs - and addressing structural issues within the company.
Horta-Osorio's stance solves the difficult problem for Lloyds of how to reward its top executives in a climate of hostility for so-called "fat cats", particularly amongst companies that have received aid from the taxpayer.
The news on Thursday that the Royal Bank of Scotland (RBS), which was bailed out with £40bn of government money, was to award John Hourican, the head of its Global Banking and Markets arm, a £4m incentive package, was met with opprobrium from unions, particularly as the bank cut an additional 3,500 jobs on the same day.
Other FTSE-100 companies have been criticised for the growing disparity in pay between the boardroom and the shop floor. In November, the High Pay Commission concluded that the upward flow of rewards in corporations was "corrosive" to the economy and to society at large.
Even investors and shareholder groups have begun to focus on the issue, demanding more say over executive remuneration. Both the government and the opposition have publicly discussed formalising rules to ensure this happens.
Lloyds reports its preliminary results at the end of February.