Barclays deserves some credit for coming clean on pay bands

By 13.03.13BlogSeptember 2nd, 2020No Comments

The bank has created 428 new millionaires. But the new bosses have started a process of pay reform, which is important to follow through

By Deborah Hargreaves

After Bob Diamond, former boss of Barclays, became the poster child for excessive pay last year, the new management team is trying to shake off the fat cat image.Sir David Walker, chairman, and Antony Jenkins, chief executive, have said they want to reward those who adhere to Barclays’ values rather than just chase short-term profits.

The bank has changed its remuneration policy and reduced bonuses for top bankers, albeit by small amounts. The bank says it reduced variable remuneration by 16 per cent and fixed pay by 7 per cent in 2012.

As Nils Pratley, the Guardian’s financial editor, says Barclays is still mugging its shareholders and pay reform is painfully slow.  But it has at least made a start.

In the bank’s new-style remuneration report, Sir John Sunderland, head of Barclays’ pay committee, says: “We will not sanction paying more than is necessary, and will take appropriate risk, supported by our shareholders, in exerting further downward pressure on remuneration.”

Leaving aside the fact that we are five years on from the financial crisis and pay levels in banks have remained astonishingly high, Barclays should be given some credit for its intentions.

Its new remuneration report introduces a single figure for Jenkins along the lines required by new government rules to be introduced in October.

The bank also ties some of the top management’s incentive plans to a so-called “balanced scorecard.” This includes longer term measures of performance, not just financial outcomes, against which many share plans are marked.

The bank will only pay out for results that are made in line with Barclays’ new values of: respect, integrity, service, excellence and stewardship. Barclays will look at “how” money has been made and whether behaviour has been consistent with the bank’s values.

It will be important to watch whether these values continue to be applied once Barclays is out of the headlines.

The bank should also be applauded for its transparency in publishing pay bands for the first time. It has received some flak for this in the media. Indeed, the pay disparities across the bank are huge.

It is hard to imagine when you are on a starting salary of £13,000 in a branch that your morale is not affected by learning that 428 of your colleagues have taken home more in a year than you can imagine earning in your lifetime.

According to the Unite union, some branch staff are eligible for claiming tax credits while the bank has paid more than £1 million to 428 of its top bankers. Barclays also employs more than 70,000 people who earn less than £25,000.

However, this level of detail is instructive in building up a clearer view of what is going on inside the bank and how remuneration is divided.

The publication of top pay in bands was one of Sir David Walker’s recommendations in a government-commissioned report on governance in banks in 2009. It is good to see him follow through with that at Barclays.

At the end of last year, he told the parliamentary commission on banking standards, that “the pre-occupation with short-term revenues in the investment banks has been hugely damaging.” Let’s see if he can change that focus where it counts.

Barclays has also produced an interesting chart on the change in dividends (going up), compensation costs (going down slightly) and profits (going up) since 2009, although it would be more interesting if it went back further.

Mr Jenkins and Chris Lucas, finance director, are also required to hold shares equal to four years’ of salary – vested share awards count towards this total, but not unvested ones.

Barclays remuneration report covers 30 pages of the annual report from page 72 to 103. The 2012 annual report can be downloaded here: