April 27, 2012, 10:21 am Investment
Is Heckled Over Pay
Oli Scarff/Getty Images
Demonstrators, including several dressed as Barclays’ eagle emblem,
gathered outside the bank’s shareholder meeting in London on Friday.
Facing a London concert hall packed with angry shareholders, the management
Barclays pledged on Friday to
reduce executive pay levels in favor of its investors and apologized for not
communicating enough with its shareholders.
the Royal Festival Hall in London, a venue usually reserved for music
Robert E. Diamond Jr., the
chief executive; Marcus Agius, the bank’s chairman; and the rest of
Barclays’ board answered questions from disgruntled shareholders about why
the bank paid million dollar bonuses to its senior executives while earnings
and the share price fell.
at the meeting was hostile from the start and the speeches were repeatedly
interrupted by hecklers. Mr. Diamond was booed as soon as he stepped on the
stage to take his seat, and when Mr. Agius said Barclays had “made progress”
over the last two years in accepting that “remuneration levels across the
industry have to adjust to the new reality,” the audience burst into
But Mr. Agius
defended Mr. Diamond’s £6.3 million ($10 million) pay for 2011, saying he
met almost all his targets in a difficult market environment. Alison
Carnwath, who is chairwoman of the remuneration committee on the board, also
defended the pay decisions but acknowledged that it was “clear that this
view is not shared by all shareholders.”
Carnwath said that the “committee is under no illusions that the balance of
rewards between shareholders and employees has to change in favor of
shareholders,”a heckler from the audience shouted: “Why have you only just
woken up to this?”
Diamond Jr., chief of Barclays.
struggled to justify the big pay checks,” David Pollard, a shareholder, said
after the meeting had finished. “For me, a bonus is roughly 10 percent of
the salary. What they have is just unbalanced.”
More than a
fourth of Barclays shareholders voted against the remuneration report at the
annual general meeting. The vote of 26.9 percent against the report does not
require the board to act but is still a sign that many shareholders find the
executive pay packages too big
shareholder revolt is part of a global backlash against relatively high
executive compensation at a time when economies are struggling and dividends
are under pressure. In a highly unusual step,
Citigroup shareholders voted
earlier this month against the bank’s $15 million pay package for its chief
Vikram S. Pandit.
Citigroup, Barclays tried to appease at least its large institutional
investors before the shareholder meeting by making some changes to the
remuneration packages last week. Mr. Diamond and Chris Lucas, the chief
financial officer, would now lose half of their 2011 deferred stock bonus if
the bank missed a profitability target over the next three years.
was awarded £6.3 million, including £2.7 million in deferred shares, for
2011, a year Barclays said it produced “unacceptable” returns. Barclays’
shares fell 34 percent last year. The shares are up 23 percent this year and
the bank’s first-quarter earnings, which it reported Thursday, were better
than analysts expected.
Mr. Agius said
Friday that he was sorry that some shareholders felt their views on
executive pay had not been taken into consideration. “What we’ve not done
well this year and I admit it and I apologize for it, is handle
communication,” he said. “But we don’t sit in a closed room thinking what we
could get away with.”
added that paying no bonuses at all, which some shareholders suggested at
the meeting, was “not an option.”
“We’d be so
out of line with competitors that financial consequences would be dire,” he
said. That is the “brutal reality” of competition in the industry, he said.
British counterparts, the chief executives of
Royal Bank of Scotland and
Lloyds Banking Group, two
banks that are partly owned by the government after a bailout, decided to
give up their 2011 bonuses.
The New York Times Company