EXHIBIT 4(b)(xiv) 


	
  

 	
  

 	
  

 
	
  

 	
 Sir
 Winfried Bischoff
Chairman

 	
 

 
	
 25 February 2013


 	
  

 
	
  

 	
  

 
	
  

 	
  

 






	
  

 	
  

 
	
 Mr N Luff 

 	
  

 
	
  

 	
 Lloyds Banking Group plc 

 
	
  

 	
 25 Gresham Street

 
	
  

 	
 London EC2V 7HN

 
	
  

 	
  

 
	
  

 	
 020 7356 1390 telephone 

 
	
  

 	
 020 7356 2323 facsimile

 



Dear Nick,


Non executive director appointment - Lloyds Banking Group plc


Following our recent discussions, I am pleased to confirm my invitation
for you to join the board of Lloyds Banking Group plc (“the company”), as a
non-executive director and Chair of the Audit Committee. Subject to Board and
FSA approval, the appointment is expected to commence early in March 2013.


All
directors of the company also serve on the principal subsidiary boards of
Lloyds TSB Bank plc, HBOS Plc and BOS plc. This letter also covers your
appointment as non executive director of those companies. The boards generally
meet simultaneously.


Your
appointment is subject to the terms and conditions set out in this letter.


	
  

 	
  

 
	
  

 	
 1. Appointment

 
	
  

 	
  

 
	
  

 	
 Your appointment will commence
 on 5 March 2013 (or, if later, the day after the 2012 accounts are signed),
 and is for an initial term of three years, terminating at the AGM 2015.
 Appointments are reviewable annually. Subject to satisfactory performance and
 Board approval, you will be invited to stand for annual re-election by
 shareholders. 

 
	
  

 	
  

 
	
  

 	
 Subject to a review of
 performance and the requirements of the board at the time, non executive
 directors may be invited to serve for a further term of three years. 

 
	
  

 	
  

 
	
  

 	
 Continuation of your appointment
 is subject to:

 






	
  

 	
  

 	
  

 
	
  

 	
 §

 	
 confirmation
 by the Financial Services Authority (FSA) (or successor organization) that your
 application to carry out the non executive director controlled function as an
 approved person has been approved and to this (or equivalent) status being
 maintained throughout your tenure. All directors are required to adhere to
 the standards set by the regulator in relation to approved persons. Current
 requirements are set out in the Statements of Principle and Code of Practice
 for Approved Persons (APER), a copy of which is included in your
 appointment pack. Directors are
 reminded that they must inform the FSA and the company of any
 significant changes in their personal circumstances which may have an impact
 on their status as approved persons/director;

 
	
  

 	
 §

 	
 satisfactory
 performance and contribution to the Board and any Board committees on which
 you serve;

 
	
  

 	
 §

 	
 election
 and re-election as a director by the company’s shareholders in general
 meeting as required by the company’s articles of association and codes to
 which 

 


 


Lloyds Banking
Group plc is registered in Scotland no. 95000. Registered office: The Mound, Edinburgh
EH1 1YZ


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 the company subscribes, in particular, the
 Financial Reporting Council’s UK Corporate Governance Code (formerly the
 Combined Code).

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2. Termination 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 You will cease to hold the office of
 director if:

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 (i)

 	
 you resign from your appointment or choose
 not to stand for re-election;

 
	
  

 	
  

 	
  

 	
  

 	
 (ii)

 	
 the company terminates your appointment or
 chooses not to propose you for re-election;

 
	
  

 	
  

 	
  

 	
  

 	
 (iii)

 	
 shareholders fail to elect or re-elect you;

 
	
  

 	
  

 	
  

 	
  

 	
 (iv)

 	
 you fail to meet on an ongoing basis the
 standards expected of an approved person; or

 
	
  

 	
  

 	
  

 	
  

 	
 (v)

 	
 the articles of association or any law or
 regulation prevents you from continuing in office.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 In the case of (i) and (ii) above, there is
 no entitlement to notice or to compensation for loss office. However, the
 company will endeavour to give you reasonable notice where appropriate. In
 most circumstances, this will be not less than three months. You are
 requested to make the Chairman aware of any intention not to seek re-election
 so that the board can plan for orderly succession. Where appropriate, a
 minimum of three months’ notice is requested.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 In the case of termination under (iii),
 (iv) or (v) above, your appointment will terminate automatically with
 immediate effect and without compensation.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3. Board Committees 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 In addition to your appointment as a non
 executive director you will be required to serve on at least two Board
 Committees which may subject to rotation. Initially, you will serve on the
 following:

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 •

 	
 Chair, Audit Committee

 
	
  

 	
  

 	
 •

 	
 Member, Risk Committee

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 You may also be required to serve on ad hoc Board Committees established from time to time for a specific purpose. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4. Role 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Your duties will be those required of a
 non-executive director and Chair of the Audit Committee.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Non-executive directors have the same legal
 responsibilities as any other director. The Board as a whole is collectively
 responsible for promoting the success of the company by directing the
 company’s affairs. As members of the unitary board, all directors are
 required to:

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 •

 	
 provide sound leadership of the company
 within a framework of prudent and effective controls which enable risk to be
 assessed and managed;

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 •

 	
 set the company’s strategy having regard to
 its risk appetite, ensuring that the necessary financial and human resources
 are in place for the company to meet its objectives, and review management
 performance; and

 



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 •

 	
 set the company’s values and standards and ensure that its
 obligations to its shareholders and others are met and understood.

 
	
  

 	
  

 
	
 -

 	
 As Chair of the Audit Committee you
 are responsible for overseeing the effectiveness and transparency of
 arrangements applicable to corporate reporting, risk management and internal
 control principles and for maintaining an appropriate relationship with the
 company’s auditors. This includes but is not limited to: ensuring that the
 Committee carries out its responsibilities effectively, in accordance with
 its terms of reference and consistent with evolving best practice
 standards;

 
	
 -

 	
 reporting to the Board as required;

 
	
 -

 	
 representing the Group as required at
 industry events and/or at meetings with shareholders.

 



At Lloyds
Banking Group, the Chair of the Audit Committee is also required to fulfil the role of financial expert for SEC purposes.


5. Key accountabilities


Non executive
directors are expected to focus on the following key areas:


	
  

 	
  

 
	
 §

 	
 Strategy. Non-executive directors should constructively
 challenge management and help to develop proposals on
 strategy by bringing a different and external perspective to Board
 discussions.

 
	
 §

 	
 Performance. Non-executive directors should support and
 scrutinise the performance of management in meeting agreed goals and
 objectives and monitor the reporting of performance.

 
	
 §

 	
 Risk. Non-executive directors should satisfy themselves that
 Board discussion and decision making on risk matters is based on accurate and appropriately
 comprehensive information and draws, as far
 as they believe it to be relevant or necessary, on external analysis and
 input. In particular, non-executive directors should satisfy
 themselves on the integrity of financial information and that financial controls and systems of risk management are
 robust, adequate and effective.

 
	
 §

 	
 People. Through membership of Board Committees,
 non-executive directors are responsible for determining
 appropriate policies, structure and levels of remuneration for
 executive directors and senior executive management and ensuring appropriate
 arrangements are in place for Board appointments and executive and
 non-executive succession planning.

 



6. Time Commitment


As
a non-executive director, you are required to devote such time as is necessary
for the effective discharge of your duties. The minimum estimated time
commitment for your role is 40 – 50 days
per annum which is made up as follows:


	
  

 	
  

 	
  

 	
  

 
	
 -

 	
 Base time commitment for LBG non
 executive directors:

 	
  

 	
 20- 24 days per annum

 
	
 -

 	
 Additional time for Chairmanship of
 Audit Committee

 	
  

 	
 15-18 days per annum

 
	
 -

 	
 Additional time for membership of
 Risk Committee

 	
  

 	
 5 - 8 days per annum

 



In the first
year of your appointment, you will be required to attend induction sessions in addition to the time spent at meetings.


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The
estimated time commitment includes scheduled Board and Committee
meetings relevant to your role, plus strategy sessions,
attendance at the AGM and preparation for meetings. A schedule of Board
and committee meetings for 2013 is attached.


The above time
commitment is based on planned events. From time to time, however, you may be required to attend meetings at short notice. You will be
required to make yourself available
as appropriate. Where appropriate, you may be expected to relinquish other
appointments to ensure that you can meet the time commitments of the company.


In your capacity as a director of Lloyds
Banking Group plc, you may be required to attend or represent the Group at meetings with the
regulator, the Government, investors or other third parties as appropriate.


By
accepting this appointment, you confirm that you are able to allocate
sufficient time to meet the expectations of your role to the
satisfaction of the board.


The agreement of
the Chairman should be sought before accepting additional commitments that might
affect your ability to meet the time commitments necessary to discharge your duties.


7. Fees and Expenses


The following
fees are payable in respect of your appointment:


	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 

 	
 Non executive base fee:

 	
  

 	
 £

 	
 65,000

 
	
  

 	
 § 

 	
 Additional fee for Chairmanship of
 Audit Committee:

 	
  

 	
 £

 	
 50,000

 
	
  

 	
 § 

 	
 Additional fee for
 membership of Risk Committee:

 	
  

 	
 £

 	
 15,000

 
	
  

 	
  

 	
  

 	
  

 
	
 Total fees payable: 

 	
  

 	
 £

 	
 130,000

 


Fees
are reviewable annually; at present, we expect to review fees in the middle of
2013.


Fees
are payable monthly and will be paid to a Lloyds TSB bank account held in your name. If you do not hold a Lloyds
TSB account, you will be required to open one for this purpose. Please
contact the Company Secretary who will be happy to make the necessary
arrangements.


The
company will reimburse you for all reasonable and properly documented expenses incurred by you
in the performance of your duties.


Under
the FSA Remuneration Code, the Group has various responsibilities to the regulator in
respect of ‘Code Staff’. This includes the requirement to provide evidence to the regulator
that remuneration of those holding significant influence and other functions, is consistent with, and promotes,
effective risk management. You have been approved by the regulator as a CF2 -
non executive director and as such are classed as ‘Code Staff’. We are required to disclose to the regulator details or all
remuneration paid to Code Staff.


8. Outside Interests


It is accepted and
acknowledged that you have business interests other than those of the company.
As a condition of your appointment you are required to declare any such
directorships, appointments and interests to the board in writing on
appointment as well as when relinquishing any of them.


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 If you take on any additional
 business interests or become aware of any potential conflicts of interest,
 these must be disclosed to the board as soon as they arise or become known to you. If at any time you are
 considering acquiring any new interest which might give rise to a conflict of interest with the company you
 must first discuss the matter with the senior independent director and
 obtain a resolution of the board authorising
 such acquisition. Regardless of any approval given in relation to outside interests, it is your responsibility to ensure
 that you can meet the time commitment required by the role.

 
	
  

 	
  

 
	
  

 	
 9. Confidentiality

 
	
  

 	
  

 
	
  

 	
 You will not
 use or disclose to any person, firm or organisation (except as required by law or to
 carry out your duties under this letter) any trade secrets, know-how,
 business information or other private or confidential information relating to
 the business, finances or affairs of the company, or any customer of the
 company or any other information provided on the basis that it
 is confidential. You will use your best endeavours to prevent the
 unauthorised use or disclosure of any such information. This restriction will
 continue to apply after your appointment ends without limit in time but will
 not apply to information which becomes public, unless
 through unauthorised disclosure by you. After your appointment
 ends you will return all documents and information (whether written, visual or
 electronic) under your control which belong to the company or any member of
 the Lloyds Banking Group.

 
	
  

 	
  

 
	
  

 	
 Your
 attention is also drawn to the requirements under both legislation and
 regulation relating to the disclosure of price sensitive
 information. You should avoid making any statements or engaging in any
 dealings that might contravene these requirements. The Company
 Secretary can provide further information and advice on these matters if
 required.

 
	
  

 	
  

 
	
  

 	
 10. Induction

 
	
  

 	
  

 
	
  

 	
 Following
 appointment, the company will provide a tailored induction programme. You are entitled to request any additional
 information or briefings to assist you in the execution of your duties.

 
	
  

 	
  

 	
  

 
	
  

 	
 11. Evaluation and review of performance

 
	
  

 	
  

 	
  

 
	
  

 	
 The
 performance of individual directors and the board and its committees is
 evaluated annually. In the interim, if there are any matters which you wish to discuss in relation to your role, please feel free to contact me.

 
	
  

 	
  

 	
  

 
	
  

 	
 12. Directors’ Liability Indemnity and Insurance

 
	
  

 	
  

 	
  

 
	
  

 	
 To the extent permitted by law, directors are
 entitled to be indemnified by the company against all costs and liabilities
 incurred by them in execution of their duties. A deed of indemnity is
 included in your appointment pack for signature and return.

 
	
  

 	
  

 	
  

 
	
  

 	
 You will also have the benefit of
 any directors’ and officers’ insurance cover maintained from time to time by
 the company (but this shall not oblige the company to maintain any such cover
 either at all, or on current terms).

 


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 13. Independent Professional Advice

 
	
  

 	
  

 	
  

 
	
  

 	
 Occasions
 may arise when you consider that you need professional advice in the furtherance
 of your duties as a director and it will be appropriate for you to consult
 independent advisers at the company’s expense. The company will reimburse the
 full cost of expenditure incurred in accordance with the company’s policy,
 details of which are set out in the appointment pack.

 
	
  

 	
  

 
	
  

 	
 14. Disclosure and Dealings in Shares

 
	
  

 	
  

 	
  

 
	
  

 	
 The company
 may be required to include in its annual accounts a note of any material interest
 that a director may have in any transaction or arrangement that the company
 has entered into. You must disclose any such interest as soon as possible
 but no later than the board meeting at which the transaction or arrangement
 is first discussed so that the Board can note your interest
 and, if appropriate, approve any conflicts. A general notice that you are
 interested in any contracts with a particular person, firm or company is acceptable.

 
	
  

 	
  

 
	
  

 	
 During the
 continuation of your appointment you will be expected to comply (and to procure that
 your spouse and any connected persons comply) where relevant with any rule of law
 or regulation of any competent authority or of the company from time to time in force in
 relation to dealings in shares, debentures and other securities of the
 company and the unpublished price sensitive information
 affecting the shares, debentures and other securities of the
 company.

 
	
  

 	
  

 
	
  

 	
 Details of
 the procedure for dealing in shares, together with explanatory notes on the code of
 market conduct/model code, will be included in your appointment pack.

 
	
  

 	
  

 
	
  

 	
 15. Shareholdings

 
	
  

 	
  

 	
  

 
	
  

 	
 All
 directors are encouraged to hold shares in the company. If you would like to
 receive whole or part of your monthly fee in shares, we would be happy to
 make the necessary arrangements for you.

 
	
  

 	
  

 
	
  

 	
 The Group
 owes legal and regulatory duties of disclosure in respect of its directors, including in
 relation to fees and shareholdings of directors and their connected persons.
 In accepting these terms, you consent to the Group making such disclosures
 and/or releasing information
 to the authorities as required.

 



Please
acknowledge receipt and acceptance of the above terms by signing and returning
the enclosed copy of this letter.


6





Please do not
hesitate to contact me for any assistance in any matters during the term of your
appointment. I look forward to welcoming you to the Board.




Sir Winfried
Bischoff
Chairman
Lloyds Banking Group plc


I acknowledge
receipt of the letter dated 25 February 2013 of which this is a copy and accept the
terms of appointment.


	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Signed 

 	
  

 	
  

 	
  

 
	
  

 
	
 Date 

 	
  

 	
  

 	
  

 



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