The 2013 bonus pot proposed was £2.4bn, up 10% on 2012 despite falling profits and a steady slide in the share price through the past year.
Shares in Barclays were trading at 294p on 25 April 2013 and today are down at 252p, a fall of nearly 15% versus a FTSE 100 gain of 3.8% for the same period.
Around a third of Barclays shareholders opposed the proposals at yesterday’s AGM due to dissatisfaction with how the bank has performed over the past year.
“We are unconvinced that the amount of the 2013 bonus pool was in the best interest of shareholders,” said Standard Life’s governance and stewardship director Alison Kennedy.
F&C were more explicit in their public comments. “We cannot support the implementation of the remuneration plan in 2013 because we believe that aggregate rewards to staff were excessive relative to performance,” Eugenia Jackson, head of corporate governance said.
Barclays appears unrepentant however and fired back with Chairman David Walker turning to the familiar argument that the bank needs to pay bonuses and salaries in line with its competitors or key staff will leave for more lucrative roles elsewhere.
Walker said the bank had lost large numbers of senior employees recently and had had limited success in hiring bankers it had targeted therefore the proposals are necessary to protect the prospects of the business going forward.
To add to investors’ ire, the bank also announced a profit warning for its investment bank, due largely to poor performance in fixed income as has been the case with a number of other banks.
The argument on retention of staff does have weight however, according to some neutral observers. “Barclays felt they had no choice, the chairman Sir David Walker noted at the AGM that Barclays’ business was targeted aggressively by competitors keen to poach Barclays’ best staff," said Professor John Thanassoulis of Warwick Business School.
He added that research published by Warwick Business School has identified aggressive poaching as the key driver of high bankers’ pay. Thanassoulis proposes that a cap on total remuneration for investment bankers in proportion to risk-weighted assets be applied to all banks to counter this effect.
Barclays other major shareholders include the Qatar Investment Authority, Credit Suisse, BlackRock, Legal & General, Norges Bank, Scottish Widows and the Vanguard Group.
