LONDON, April 19 Barclays said half the
long-term bonuses awarded to its top two executives will now
depend on the British bank hitting key profitability targets,
following resistance from investors to its original proposals.
Bonuses for 2011 for chief executive Bob Diamond and finance
director Chris Lucas are due to pay out in shares over three
years, a third in each year.
The new condition means half of the award that may vest in
each year will not now pay out until the bank's return on equity
(RoE) exceeds its cost of equity (CoE).
Barclays said on Thursday the change followed talks with a
number of major shareholders in recent weeks and the "strength
of opinion expressed by some shareholders" in the meetings.
Diamond was awarded a 2.7 million pound ($4.3 million) bonus
for 2011 in shares that vest over the next three years. So he
could lose 450,000 pounds in each of those years. But if the
bank's RoE tops the CoE in any of those years, he will get the
He is due to take home about 17 million pounds in salary,
bonus and share awards for last year.
Shareholder advisory service Pirc said Barclays should not
pay bonuses at all for 2011, and repeated its advice that
investors should oppose the remuneration scheme.
"The announcement does not address the fundamental issue of
rewards for failure," Pirc said in a statement. "This proposed
change acknowledges a problem with the bonus scheme, but still
keeps it in place, and the change only applies to 50 percent of
Standard Life, one of the biggest investors in the bank,
said it was pleased its "key concerns" over executive bonuses
had been addressed and it would vote for the remuneration plan
at the bank's shareholder meeting on April 27.
"The result is a much better alignment with pay for
performance than was initially proposed," said Guy Jubb, global
head of governance and stewardship.
Investors have said they want more profits to flow to them,
rather than the bank's staff, and have warned they could vote
against pay plans at this year's AGMs.
Barclays said its aim is to ensure a greater proportion of
income and profits go to shareholders.
The bank hopes to lift its RoE to 13 percent as soon as
possible, from 5.8 percent in 2011. Its cost of equity is about