Lloyds Banking Group chief executive António Horta-Osório said he will not take an annual bonus for 2011, a year in which the company's shares fell by 60%.
The CEO, who returned from two months' medical leave last week, joined Lloyds in early 2011.
He faced a difficult year as the bank came under pressure from investors concerned over its legacy assets, exposure to the UK's shaky economic recovery, and financials in general.
Horta-Osório said his bonus should reflect not just the performance of the company but also the difficult financial circumstances faced by much of the population.
"I also acknowledge that my leave of absence has had an impact both inside and outside the bank including for shareholders," he said.
On that basis, I have decided to request that the board does not consider me for a 2011 bonus.
"My goal remains to restore the bank to profitability enabling us to support the country's economic recovery sustainably and giving taxpayers the opportunity to get back their money."
Lloyds shares were up 2.4% at 29.85p in early trading today, bringing its total gain for 2012 so far to 15.3%. The group will announce preliminary 2011 results on 24 February.
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