Senior executives at HBOS saw their annual bonuses shrink after the 2007 results at Britain's biggest mortgage bank were hit by the global credit crunch.

It revealed yesterday that it would not pay any cash from its long-term incentive plan (LTIP), while the annual bonus pool for last year fell from 69 per cent of executives' salaries to 46 per cent.

The bank will ease the terms of the LTIP in the future to reflect the economic downturn.

Pre-tax profit fell 4 per cent to £5.4 billion in the 12 months to December 31. Andy Hornby, HBOS's chief executive, took home a £1.9 million pay packet for the year, including an annual bonus of £449,000.

Peter Cummings, chief executive of HBOS's corporate business, was paid £2.6 million, after picking up a £300,000 bonus from the executive bonus scheme and a further £1.3 million from a separate bonus plan run by the corporate division. The division's underlying profit rose 31 per cent to £2.3 billion.

Benny Higgins, who was ousted last year as head of HBOS's retail banking business, was paid £2.3 million, including his full annual salary and benefits of £900,000 and the same amount again as a payout.

Dennis Stevenson, the chairman, was paid £821,000, including £113,000 in benefits. Jo Dawson and Dan Watkins, the new joint heads of the retail business, were paid £1 million and £329,000 respectively.

The LTIP will not pay out for 2005 to 2007 because the bank did not exceed the sector's average total shareholder return (TSR).

To receive a bonus of 100 per cent of their salary, HBOS's executives must deliver TSR of 3 percentage points above an average of their peers. To receive 200 per cent, they must beat the average by 6 points.

From this year, HBOS will change these hurdles to 1.5 points for 100 per cent of salary and 3 points for 200 per cent. A spokesman denied that the bank's new targets would make it easier for executives to win substantial bonuses.

“Banks will deliver more modest earnings growth in future than over the last three years,” the spokesman said. “These targets are just as stretching as before, they simply recognise that earnings growth will be more modest.”

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax