Barclays’ Bob Diamond agrees to bonus move to head off investor rebellion
Ahead of the bank’s annual meeting next week, Diamond and group finance director Chris Lucas have agreed not to receive half of their all-shares bonus award for 2011 if certain performance targets are not met within three years.
The concession comes amid growing concerns over Diamond’s bumper pay deal. But the move, which threatens to reduce his overall pay for last year by £1.35m, does not address previously-awarded long-term incentives which push the total pay package up to some £17.7m.
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Hide AdThe banking giant said Diamond and Lucas “volunteered” to subject their bonuses to new conditions in recognition of the “strength of opinion expressed by some shareholders”.
The executives agreed that 50 per cent of their deferred bonus awards, £2.7m for Diamond and £1.8m for Lucas, will not pay out until Barclays’ return on equity exceeds its cost of equity. The return on equity was 6.6 per cent in 2011, while cost of equity was 11.5 per cent.
Barclays said if that condition is not met, the potential pay-out will be subject to lapse if it is not met within three years from the date of the award. The bank added it “was fully committed to ensuring that a greater proportion of income and profits flow to shareholders”.
The shareholder rebellion over Barclays pay gathered pace earlier this month after leading investor group Pensions and Investment Research Consultants (Pirc) said Diamond should not receive “any bonus at all”.
Pirc advised its members to vote against the remuneration report, while Aviva, Fidelity, Scottish Widows and Standard Life, which together account for 6.45 per cent of the shares, are expected to do the same.