Bumper year lifts Crosby's pay at HBOS 40 per cent

HBOS, the banking group, paid three of its executive directors more than £1m last year, awarding James Crosby, the chief executive, a near-40 per cent pay rise and a large boost to his pension.

Mr Crosby's total pay package rose to £1.48m from £1.072m in 2003. On top of his £808,000 salary, he received a £534,000 cash bonus and £117,000 in deferred shares. He also saw the transfer value of his pension jump by £1.6m to £7.4m, which would equate to an annual pension of £494,000 when he retires.

Andy Hornby, the head of retail, was the second-best-paid executive with £1.078m after a cash bonus of £395,000. He will also receive 260,000 shares in April - worth £2.1m at the current price - under a three-year incentive plan. The shares were granted to reward him for turning around the retail division and to prevent him quitting the bank.

HBOS announced record profits of £4.6bn last year, up 23 per cent on the previous year. Its shares climbed 17 per cent, making it the second-best performing stock after Barclays on the FTSE 350 Banks index, which rose 6.8 per cent last year.

Mark Tucker, who is leaving to run Prudential, was paid £744,000 by HBOS last year for his three-month stint as finance director. Almost half his pay - £362,000 - came in the form of a cash bonus, a measure of how much HBOS valued him, and on top of his £375,000 salary. He was not part of the bank's final-salary pension scheme and will not receive a pay-off when he leaves next month.

Mr Tucker, 41, quit the Pru two years ago but was lured back last week when the insurer's board ousted its chief executive, Jonathan Bloomer. Mr Tucker joined the HBOS board last April and worked alongside Mike Ellis, the finance director, until taking over from him in October. Mr Ellis's pay jumped to £1.02m last year, from £757,000 the year before. He received the same cash bonus as Mr Tucker, £362,000, as well as £88,000 in deferred shares. Mr Ellis retired at the end of the year without a pay-off but HBOS pumped an extra £1.35m into his pension pot, giving him a pension of £368,000.

Sir Dennis Stevenson, who chairs HBOS and Pearson, saw his annual fees from HBOS rise to £538,000 from £510,000.

Mr Crosby's pay compares with £3.65m paid to John Bond, the chairman of HSBC, £2.5m earned by Sir Fred Goodwin, the chief executive of Royal Bank of Scotland, and £2.07m paid to John Varley, the chief executive of Barclays.