Lloyds Banking Group will increase the size of the bonus paid to its chief executive.
The bank has said it plans to pay Eric Daniels up to £2.83m in shares as a long-term bonus.
These shares are the equivalent to 275% of Daniel’s £1.03m salary – an increase from the previous cap of 200% of his salary.
The bank said this increase was necessary to keep its pay packages competitive, the BBC has reported.
The shares will be on top of Daniels’ £2.3m annual bonus, but earlier this year the chief executive said he would not be claiming his bonus for 2009.
The new payments mean the bank’s boss could see a total pay packet valued at more than £6m.
But the awards will depend on the long-term performance of Lloyds, including a rise in the bank’s share price above 114 pence.
The arrangements include deferring the payment of bonuses until 2012.