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Barclays risks investor rebellion over Bob Diamond's £8.2m pay

Barclays shareholders are being urged to vote against an 'excessive' pay package for the bank's chief executive Bob Diamond.

 
Barclays risks investor rebellion over Bob Diamond's £8.2m pay

Barclays (BARC.L) faces a rebellion at its annual general meeting in two weeks’ time after investor groups and leading shareholders expressed their opposition to chief executive Bob Diamond’s £8.2 million pay package.

Diamond, 59, was paid a total salary, bonus and cash of just under £2.5 million last year, according to Barclays’ annual report. This was up from £2.3 million in 2010 despite a 3% fall in pre-tax profits and a share price that has fallen 23% in the past 12 months.

What has really infuriated critics is a £5.7 million ‘tax equalisation’ payment Barclays made to pay tax liabilities generated by Diamond’s move from the US to the UK when he became chief executive.

This payment could breach guidelines set out last year by the Association of British Insurers (ABI). If so, this could spell trouble for Barclays, as the ABI wields a lot of influence over how institutional investors vote at company AGMs.

The ABI has not commented on whether it will issue a ‘red’ or ‘amber’ guidance alert to its members before Barclays’ AGM on 27 April. The bank has said it does not think the tax payment breaks the ABI code.

Meanwhile, Pensions & Investment Research Consultants (Pirc) has urged institutional shareholders to vote down Barclays’ remuneration report at the AGM. Pirc estimates Diamond’s total package could be worth as much as £17.7 million when share options and long-term incentive plans are included. It says such payments are inappropriate given that Barclays' shares are trading well below the bank’s net asset value.

Pirc says Barclays should consider clawing back some of the payments as Diamond, the former head of Barclays Capital, its investment bank, has been part of the bank’s management team for some years. Lloyds (LLOY.L) clawed back some of the bonus paid to its former boss Eric Daniels in response to the mis-selling of payment protection insurance which cost that bank over £3 billion.

ShareSoc, the private shareholders action group, has also expressed its anger at Diamond’s pay package. Its chairman Roger Lawson said: ‘Our stance is that the aggressive bonus arrangements at all banks should be restrained as they were one cause of the financial difficulties that consumed the banking sector in recent years.’

On the tax equalisation payment, Lawson added: ‘It should not be the responsibility of any company to pay an employee's additional tax charges as a result of relocation from one tax jurisdiction to another.’

These calls may not go unheeded. Leading investors such as Standard Life, Fidelity, Aviva and Scottish Widows are reportedly preparing to protest against Diamond’s pay at the AGM. They account for around 6.5% of the bank’s shares.

Barclays argues that it does not deserve the same scrutiny on bonuses as its taxpayer-backed rivals Lloyds and Royal Bank of Scotland (RBS.L). However, with a share price that is still suffering the after affects of the financial crisis, it is hardly arguing from a position of strength.

Further reading:

Barclays: the figures to make you – but not Bob Diamond – weep

11 comments so far. Why not have your say?

Franco

Apr 10, 2012 at 12:19

Are you not afraid he will emigrate to Zimbabwe if you pay him less? He already pays 2% tax here.

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Adam Murza-Murzicz

Apr 10, 2012 at 12:42

Managers of banks, are they not really just bank tellers who have managed to climb up the ladder? What does Diamond bring to the party? Does he personally bring in more business or is he just a pretty face which glad hands and then passes the hard work on to his minnions?

Diamond was appointed to control a bank which already eaxisted and was quite successful. Even without him it would have continued to grow. Consequently, is his remuneration justified - for just being the head of that bank. I think not.

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DaveT

Apr 10, 2012 at 12:43

As his job is to bring value to the business, perhaps he can demonstrate, say, 10* times the wages that HE has brought to the business which would not have otherwise materialised.

* I was going to use 100 times but I don't believe that anyone could contribute that much to any business. I would have been happy with 1% of what I added to my business.

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Keith Snell

Apr 10, 2012 at 13:40

They just leave themselves wide open to justified criticsm, if the City fails to realise how damaging this is to their reputation there is likely to be a considerable fall in the level of trust in their services which will cost us all yet again. When the torygraph prints articles on the subject of tax paid or more correctly not paid by the multimillionaires presumably at least a few of them will wake up to the damage it is creating to the entire country.

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Rob Walker

Apr 10, 2012 at 13:45

At the start of the financial crisis, Barclays did a Houdini act by getting huge financial support from the middle east. I'm not saying that was all down to Bob Diamond, but someone certainly pulled some very clever strings to keep Barclays afloat. I'm sure Bob Diamond's value is recognised within Barclays and a recovery of share price from 51p to over 200p looks pretty good. Certainly better than the Lloyds rights issue price after the crash which was somewhat more than their share value today.

Plenty of large corporation leaders get as much and more than Bob Diamond (Phil Green et al - just look at the Sunday Times rich list) but for some who can't 'get over it' Bankers are still getting it in the kneck. If all large bonuses are immoral, lets start hearing about a few fat cats outside of the Banking sector.

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Anonymous 1 needed this 'off the record'

Apr 10, 2012 at 14:16

A Directors remuneration should only be dependant on 2 results, EPS and Div. payout, it has to be tied to these....... what is happening above is correct?..... a fall in pre tax profits and the share price decimated over the last 12 months..... the man should be paying Barclays not the other way round.

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metin mentesh

Apr 10, 2012 at 14:19

Nonsense If they dont bust the bank they reap it like a chicken

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Anthony Tinslay

Apr 10, 2012 at 17:13

To put matters in perspective, the man who 'controls' the finances of the whole of the United Kingdom - well at least for all in England - has a salary of under £150,000 and NO BONUS however well or badly he does. His emplyment is only guaranteed for a maximum of five years at the start. Yes it is our boy George who comes in for so much stick. On the question of salary comparisons, quite a number of premiership football playes receive more than ten times the Chancellor. A funny old world is it not?

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Peter Wilkinson

Apr 10, 2012 at 17:15

But hey, wait a minute, you cannot have a CEO of a bank earning less than a person who kicks a football around a field for a living!!

Mind you having said that, the Prime Minister earns less than a footballer - crazy world?

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J Reid

Apr 10, 2012 at 22:15

Philip Green is not answerable to shareholders as it is not a listed company, Diamond is, and has possibly never worked a day in a retail bank in his life,

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Geoff Harrop

Apr 14, 2012 at 10:59

I wonder what a man on this absurd rate of pay does all day. Are his decisions 10 times more onerous than those the Prime Minister has to make ? Pull the other one.

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