Barclays To Apologise To Shareholders For CEO Pay Fiasco
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Barclays PLC’s Chief Executive Bob Diamond may lose up to half of his bonus this year, said a report by The Telegraph, after the bank’s financial results revealed that he was likely to miss a new performance target set by shareholders.
On Thursday, The bank reported nearly £2.45 billion in underlying pre-tax profits, which it had hoped was able to sooth investor concerns and justify Diamond’s high pay and bonuses.
Barclays PLC’s Chief Executive Bob Diamond may lose up to half of his bonus this year, said a report by The Telegraph, after the bank’s financial results revealed that he was likely to miss a new performance target set by shareholders.
On Thursday, The bank reported nearly £2.45 billion in underlying pre-tax profits, which it had hoped was able to sooth investor concerns and justify Diamond’s high pay and bonuses.
However, the underlying profit figure neglected to mention a £2.62 billion “mark”, which the sum designed to account for the bank’s own debt, as well as a fresh £300 million provision on payment protection insurance (PPI) claims, which meant that the Bank actually made a pre-tax loss for the first three months of the year of £475 million.
Furthermore though the bank reported a 12.2 percent in its return on equity for the first quarter of 2012, the figure is lower than Diamond’s own target of 13 percent.
As a result, many analysts believe that Barclays’ shareholders may launch a massive protest vote against Diamond’s pay package at the company’s annual general meeting on Friday, with BBC’s business editor Robert Peston expecting a 30 percent vote against all executives’ pay and a 20 percent vote against the re-appointment of Alison Carnwarth, who chairs the remuneration committee.
Barclays’ Chariman Marcus Agius is also said to be ready to take the unprecedented step of apologising to shareholders for the bank’s mishandling of top executives’ pay.
According to The Telegraph, Agius’s speech will contain the following remarks:
“Evidently, we have not done a good enough job in articulating our case: on some matters we should have communicated earlier and more clearly.”
[quote]”For this I apologise and I assure you that in the future we will be engaging differently and more purposefully with shareholders in order to ensure that we obtain a broader level of support on remuneration policy and practice.”[/quote]“Your Board recognises and accepts that remuneration levels across the industry have to adjust to the new reality of higher capital and lower returns for the sector.”
“Your Board is committed to continuing to make progress in realigning distribution of income and profits in favour of shareholders as returns improve,” Agius is expected to say.
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The AGM will begin at London’s Royal Festival Hall at 11:00 BST. The key vote will be on resolution two, which calls for investors to approve the bank’s remuneration report. If the resolution does not pass, Barclays will be forced to revise its report to appease shareholders.
[quote]“Bankers have to understand there has been a paradigm shift and recognise the realities of the new economic environment we face. The music has stopped, when will the bankers?” said Ian Richards, head of governance at Threadneedle Investments, which holds a 0.4pc stake in Barclays, who plans to vote against the bank’s pay proposals.[/quote]
