Shareholders vote down Barclay's remuneration package
LONDON - Global financial services major Barclays faced a major shareholders revolt Friday with nearly one third of them rejecting the proposed remuneration package for its executives.
Barclay's senior executives including the chairman Marcus Agius were heckled as came on the stage to present the company's annual results at the AGM, shortly before around 32 per cent of shareholders voted or withheld votes against the proposed executive pay package, confirming the fears of management that pay and bonuses might have to be curtailed.
Protesters from the World Development Movement had gathered outside the Royal Festival Hall ahead of Agius arrival.
In an understatement, Agius remarked in a speech that "remuneration continues to be an issue of considerable debate - not just in the banking sector but across businesses more generally."
The Barclays Chairman added that the board accepts that remuneration levels across the banking industry have to adjust to what he called "the new reality of higher capital and lower returns for the sector".
Conceding that the bank had not done a good enough job in explaining why it had paid out so much in bonuses in a year in which profits fell, Agius stressed that the structure of awards to its senior employees had become more complex in recent years.
This he attributed to the "regulatory pressure to deliver greater alignment between the interests of shareholders and employees."
The shareholders anger was over CEO Bob Diamond's increased salary (around 17million pounds inclusive of all perks) despite the bank's lacklustre performance, and the falling share price.
Diamond earned a 1.35 million pounds salary and a 2.7 million pounds bonus for 2011, criticised at the time as being too large a salary for the boss of an under-performing bank.
The US' Citigroup witnessed a similar revolt some weeks back while Credit Suisse Group AG (CS) shareholders also voiced their dissent Friday with a third voting against accepting the company's compensation report.
In an attempt to quell shareholder anger at their pay packages Diamond and finance director Chris Lucas have voluntarily agreed to have the release and payment of their 2011 bonuses subject to a further performance condition.
"This means that half of their award would be forfeited if Barclays' Return on Equity is below its cost of equity," Agius explained.
The gesture went down well with insurance firm Standard Life, which released a statement saying Barclays had "responded positively" to its concerns over last year's executive bonuses, and indicated it would now vote in favour of the remuneration report at the AGM.
Alison Carnwath, who chairs the Board Remuneration Committee, said the group's total incentive awards for 2011 were down 26% on 2010; the investment banking total incentive awards were down 35%; bonuses for executive directors and the group's eight highest paid senior executive officers were down 48%.
"We will continue to seek to push down remuneration levels in the context of the competitive environment," Carnwath pledged.
She added that the Remuneration Committee was "under no illusions that the balance of rewards between shareholders and employees has to change in favour of shareholders."
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