UPDATE 2-Barclays pay chief clashed with board on Diamond bonus
* Carnwath said Diamond should not have got any bonus for 2011
* Some "obscene" levels of pay awards -Carnwath
* Barclays demanded "too much patience" from shareholders
By Steve Slater and Matt Scuffham
LONDON, Jan 30 (Reuters) - The former head of remuneration at Barclays said she clashed with the British bank's board over former boss Bob Diamond's pay package and described some bonus awards in banking as "obscene".
Alison Carnwath, who quit in July at a time of turmoil for the bank following its fine for rigging Libor interest rates, said Diamond had been reluctant to accept that pay at Barclays was high and was "overly protective of his investment banking franchise".
Carnwath, who cited personal reasons for her departure, told UK lawmakers on Wednesday she was "amazed" Diamond was being offered any bonus for 2011 because the bank's returns were weak.
"It was for this reason that I disagreed with the board chairman's recommendation on Mr Diamond's annual bonus for 2011. I recommended zero.
"I was alone in my view both on the committee which I chaired and on the board," she said in a written submission prior to appearing before the UK Banking Inquiry.
Carnwath said Marcus Agius, then chairman, would be in a better position to explain how the bonus award had been reached.
Diamond, who declined to respond to Carnwath's statements, was paid 6.3 million pounds ($9.95 million) for 2011, including a deferred share bonus of 2.7 million pounds and a long-term incentive award of 2.25 million.
"OBSCENE LEVELS OF AWARD"
Investors have called for banks to cut pay in recent years to try to lift depressed returns, but Carnwath said Barclays was slow to act and Diamond was reluctant to take a lead.
"Vocal shareholders were quite clear on the need to reduce pay at Barclays and this message was communicated in no uncertain terms to the chairman, the company secretary, the HR personnel, myself and Mr Diamond."
Carnwath, a 20-year veteran of investment banking who joined the Barclays board in August 2010, said the remuneration committee knew pay was "at the top end of the scale" and asked Diamond to take a leadership position when he took over as CEO at the start of 2011, but he was reluctant to do so.
She added: "Barclays were demanding too much patience from their shareholders and were insufficiently sensitive to the political and economic environment and the hostile attitude to banks generally."
Carnwath said "a culture of entitlement" had emerged in banking that had "resulted in the fear of losing good people, obscene levels of award in a minority of cases and excessive reward in many cases for the investment banking community".
Diamond and Agius quit after the Libor scandal erupted in June. Carnwath was criticised for allowing the final pay awards to them, but she denied at the time there had been any tensions between her and Agius despite reports of a clash.
John Sunderland, who replaced Carnwath as head of the pay committee, told the inquiry he thought Diamond deserved a bonus for 2011.
Andrew Tyrie, head of the inquiry, accused him of being "unrepentant" in a bad tempered exchange.
Sunderland said there had been closer consultation with shareholders on upcoming bonus awards at the bank.