EXHIBIT 4(b)(ii)


 


	 	Lord Blackwell	 
	 	Chairman	 
	 	Lloyds Banking Group plc

25 Gresham Street

London EC2V 7HN




 


 


19 February 2019


 


Strictly Private and Confidential


António Horta-Osório


 


Dear António


 


Fixed Share Award and Pension Allowance


 


I am writing
to confirm that in respect of your additional accountabilities as Chief Executive of the Ring Fenced Bank entities, your Fixed
Share Award for your role has been reviewed. Effective from 1 January 2019, it will increase to £1,050,000 per annum. The
Fixed Share Award will continue to be payable quarterly in shares subject to dealing restrictions that lift pro-rata over five
years. For details of how this will operate, please find attached an updated Addendum to your Executive Service Agreement.


 


With regard to
your Pension Allowance, we seek your acceptance to amend the Heads of Terms dated 2 November 2010 (“HoT”) and your Executive
Service Agreement dated 3 November 2010 (“the ESA”) which outline your current Pension Allowance arrangements. Effective
from 1 January 2019, your Pension Allowance will be set at 33% of your annual Reference Salary (which is defined in the ESA as
being the higher of £1,220,000 and your actual annual salary) and the HoT and clause 4.1 of the ESA will be amended accordingly.


 


If, under the
terms of the Executive Service Agreement Addendum, the Group Remuneration Committee (“RemCo”) determines that
the Fixed Share Award must be adjusted or discontinued because it would be inconsistent with any legal, regulatory or tax reason,
the Group agrees, in a form to be approved by RemCo at that time, to increase your total fixed remuneration by £150,000
per annum. Should such a discontinuation of the Award be required, RemCo will consider alternative remuneration components to
ensure the overall package is commensurate with the role of the Group Chief Executive in respect of the remainder of the Award
value of £900,000.


 


Furthermore,
on termination of your employment the Group agrees that it will seek RemCo approval at their discretion, acting reasonably and
in good faith, for early release of shares under the Fixed Share Award at least to the value of the cumulative deferred impact
of the £150,000 increment in your Award provided by this letter.


 


Lloyds Banking Group
plc is registered in Scotland No. SC95000. Registered office. The Mound, Edinburgh, EH1 1YZ



    	 



    	



    

All other terms
and conditions of your employment remain unchanged including your Death in Service benefits which will remain at eight times your
annual salary and your unfunded benefit provided in pension form directly paid for by the Company. The accrued benefit is 6% of
your annual Reference Salary. Your flexible benefits allowance will remain at 4% of your salary as at 1 September of the prior
year.


 


Please countersign
a copy of this letter to confirm your agreement to the change to the Pension Allowance terms contained within this letter with
effect from 1 January 2019.


 


Should you have
any questions in relation to the above please do not hesitate to contact Matt Sinnott.


 


Best Regards,


Norman Blackwell


 


I confirm that
I have read and understood the terms set out in this letter and agree that my Executive Service Agreement and Heads of Terms shall
be varied to include these terms with effect from 1 January 2019.


 


	Signed	/s/ António Horta-Osório	 


 


	Print name	 António Horta-Osório




 


	Date	19 February 2019	 


 


Lloyds Banking Group
plc is registered in Scotland No. SC95000. Registered office. The Mound, Edinburgh, EH1 1YZ



    	 



    	



    

EXECUTIVE
SERVICE AGREEMENT ADDENDUM


 


The following clauses should be read in conjunction with your
Executive Service Agreement and the letter from the Chairman dated 19 February 2019


 


FIXED SHARE AWARD


 


The Award


 


The
Executive is entitled to receive an annual Fixed Share Award (the “Award”)
on the following terms. The Award is £1,050,000 per annum effective from 1 January 2019 and payable in respect of
the Executive’s role as Group Chief Executive.


 


The
Award is not subject to performance conditions or performance adjustment and accrues on a daily basis. It is paid in Lloyds Banking
Group plc (“Lloyds”) ordinary shares (“Shares”),
in equal instalments, quarterly in arrears. Where the Executive’s new role commences part-way through a quarter,
the corresponding instalment of the Award will be pro-rated downwards to reflect the part of the quarter during which the Executive
is in the new role. The number of shares the Executive receives will be determined by deducting income tax and national insurance
contributions from each quarterly instalment of the Award and using the net amount to buy Shares as soon as practicable at the
end of each quarter (and subject to any dealing restrictions). The Shares will be held in a brokerage account set up in the Executive’s
name with the share plan administrators, currently Equiniti. The date upon which each instalment of the Award is paid into the
Executive’s brokerage account is referred to in this agreement as the “Allocation Date”.


 


For
each quarterly Award instalment net of deductions, 20% will be released to the Executive each year for five years on or around
the annual anniversary of each Allocation Date. The Executive will be notified of the number of shares and of the specific release
dates applying to the shares after each Allocation Date.


 


Where
the Executive has a bonus opportunity stated in their offer letter and/or is eligible to be considered for a personal bonus pursuant
to paragraph 3.3 above, any bonus will be calculated as a percentage of base salary only (i.e. not the Executive’s base salary
plus the value of the Award). Neither bonus opportunity nor eligibility for a personal bonus is a contractual entitlement.


 


The
Employer will not be obliged to pay any Award (or any instalment of any Award) to the Executive if that would be inconsistent
with any legal or regulatory or tax requirement in the UK or other relevant jurisdiction. If such an inconsistency arises, the
Group Remuneration Committee (“RemCo”), acting reasonably and
in good faith, may adjust the terms of any Award or may discontinue payment of the Award. If the Executive’s Award is adjusted
or discontinued in this way, the Executive will have no right to any compensatory payment or damages in respect of such change,
however, RemCo will consider alternative remuneration components to ensure the overall package is commensurate with the role performed
by the Executive.


 


Unless
the Executive is informed otherwise in writing on any Allocation Date, the Award or any instalment will not be taken into account
in determining:


 


	•	pension entitlements under this Agreement or pursuant to any Group policy;
	 	 
	•	the Executive’s flexible benefit entitlement (“Flex”);
	 	 
	•	death-in-service benefits;
	 	 
	•	payments in lieu of notice;




    	 



    	



    

	•	a “week’s pay” or “month’s pay” for the purpose of calculating severance or redundancy payments under any of the Group’s Job Security Policies or Job Security Agreements or for the purposes of calculating any statutory redundancy entitlements; or
	 	 
	•	any “deputising payments” or “critical payment” to which the Executive may be entitled from time to time.


 


For
the avoidance of doubt, the Award does not form part of “basic salary” for the purposes of the Lloyds’ Long Term
Incentive Plans.


 


Review of the Award


 


If
the Executive’s salary is adjusted to reflect any Group leave policy, e.g. in relation to parental leave or sickness absence the
Award will be adjusted in the same proportions as the Executive’s salary.


 


Change of Role


 


The
Award relates to the Executive’s current role. If the Executive changes role, the Executive will be informed whether they
will receive a Fixed Share Award in respect of that new role, and if so, the amount of that Fixed Share Award. In the event that
the Executive is not entitled to a Fixed Share Award in such new role (or if the Fixed Share Award in such new role is less than
the Executive’s current Fixed Share Award) any instalment (or part of an instalment of the Award) accruing after the change
of role may be increased or decreased as appropriate (this may include a decrease to nil) and the Executive will have no right
to any compensatory payment or damages in respect of such change.


 


Leaving employment


 


If
the Executive’s employment terminates part-way through a quarter, the next instalment of the Award will be pro-rated downwards
to reflect the part of the quarter during which the Executive was in employment.


 


The
release dates for Shares held in the Executive’s brokerage account will normally continue to apply after the Executive has
left. However in exceptional circumstances the RemCo may allow early release of the Executive’s shares and other assets in
the brokerage account. This decision will be made within two months of the Executive leaving.


 


On
death, all Shares held in the brokerage account will be released to the Executive’s personal representatives as soon as administratively
possible.


 


On
termination of employment, if under the Group’s policies the Executive is entitled to pay in respect of any accrued but untaken
holiday, the Executive will receive payment in respect of their accrual of the Award in relation to such untaken holiday. This
payment will either be made in cash, or in Lloyds’ shares which will be held in the Executive’s brokerage account together
with the final instalment of the Award.


 


For
the purposes of the Award, the Executive’s employment will be treated as terminating when the Executive ceases to be employed
by any Group Company.


 


Brokerage account


 


The
share plan administrator will set up an individual brokerage account in the Executive’s name to manage the award. The share
plan administrator will contact the Executive with the terms and conditions of the nominee account and any action required to set
up the Executive’s account. If the Executive does not accept those terms, the Employer reserves the right to revoke the Award.



    	 



    	



    

Instalments
will be paid into the brokerage account at the end of each quarter.


 


Rights and dividends


 


Shares
will be held as restricted stock until each release date and the Executive will not be able to sell, pledge, charge, transfer or
in any way dispose of the Shares (or any interest in the Shares). After each release date, the Shares will show as unrestricted
stock and the Executive will be able to ask for the relevant Shares to be sold or transferred. There may be costs involved in such
a sale or transfer, which will be advised at the time by the share plan administrator.


 


Apart
from the restriction set out above, the Executive will be entitled to all rights of a shareholder in respect of the Shares held
in the brokerage account from the time they are transferred to that account.


 


Dividends
accruing in respect of your Shares will be automatically reinvested in additional Lloyds’ shares (“Dividend Shares”)
unless you wish to receive the dividends in cash and obtain all necessary approvals to do so. Dividend Shares will be held in your
brokerage account but you can ask for them to be sold or transferred at any time and you are entitled to all rights of a shareholder
in respect of them.


 


Corporate events


 


This
section applies where there is a Corporate Event and is without prejudice to the Executive’s continuing right to an Award
if employment continues following the Corporate Event (albeit that in the event of a Change of Control future Awards will be paid
in shares in the acquiring company or other relevant company).


 


Where
a Change of Control occurs part-way through a quarter, the instalment of the Award due to be payable at the end of the quarter
will become immediately payable and will be pro-rated downwards to reflect the shorter accrual period. The appropriate number of
Shares will then be transferred to the brokerage account.


 


Unless
the RemCo determines otherwise, all Shares held in the brokerage account will be released to the Executive and they may participate
in the Corporate Event in the same way as other shareholders. However, the RemCo may instead decide that the Shares held in the
brokerage account will be exchanged for shares or other securities in any acquiring company or other relevant company. If so, this
new holding will be held in the brokerage account until the release date applying to the Shares to which the new holding relates,
on such terms determined at the time. “RemCo” here means the individuals who were members of the Group Remuneration
Committee immediately before any Corporate Event. “Corporate Event” means:


 


	 	•	a Change of Control;
	 	 	 
	 	•	a resolution for the voluntary winding up of Lloyds;
	 	 	 
	 	•	a demerger, delisting, distribution (other than an ordinary dividend) or other transaction, which, in the opinion of the Remco, might affect the current or future value of any Award; or
	 	 	 
	 	•	a reverse takeover, merger by way of a dual listed company or other significant corporate event, as determined by the RemCo,
	 	 	 
	 	“Change of Control” means:
	 	 	 
	 	•	when a general offer to acquire shares made by a person (or a group of persons acting in concert) becomes wholly unconditional;




    	 



    	



    

	 	•	when, under Section 895 of the Companies Act 2006 or equivalent procedure under local legislation, a court sanctions a compromise or arrangement in connection with the acquisition of shares; or
	 	 	 
	 	•	when a person (or a group of persons acting in concert) obtains control (within the meaning of Section 995 of the Income Tax Act 2007) of Lloyds in any other way.


 


Tax matters


 


Each
Award is taxable at each Allocation Date. The number of Shares that will be purchased on the Executive’s behalf will be determined
by deducting income tax and national insurance contributions from each quarterly instalment through payroll and using the net amount
to buy the Shares. The Executive will be liable for any subsequent capital gains tax on the Shares. The Employer will provide the
Executive with an election form under section 431 of the Income Tax (Earnings & Pensions) Act 2003 which the Executive will
be required to sign and return within the 14 day period stipulated at the time of receipt of the election form. If the Employer
does not receive a signed copy of the enclosed election under section 431 of the Income Tax (Earnings & Pensions) Act 2003
within such 14 day period, they may revoke the Award.


 


Data protection


 


Unless
the Executive expressly objects to the arrangements outlined in this Agreement, they are deemed to consent to the processing of
personal data provided by them to any member of the Group, trustee or third party service provider for all purposes relating to
the operation Award including, but not limited to, administering the Awards and Shares and maintaining records.


 


The
Executive agrees that their personal data may be transferred to any member of the Group, trustee of any employee benefit trust,
registrars, brokers, third party administrators and any future purchasers of the Group or the business in which the Executive works.