April 15, 2024

DealBook: Fewer Barclays Employees Made More Than $1.5 Million in 2012

A branch of Barclays in London.Andy Rain/European Pressphoto AgencyA branch of Barclays in London.

LONDON – Barclays said Friday that 428 employees earned more than £1 million, or $1.5 million, each last year, but the number was down from 2011 as the British bank has been under fire over several scandals.

Barclays said 45 fewer people earned more than £1 million in 2012 than year earlier. Rival HSBC said Monday that 204 members of its staff fell into that pay bracket. Barclays paid five bankers more than £5 million each last year, down from 17 in 2011, according to the bank’s annual report published Friday.

Last year was financially difficult for Barclays as it recorded a loss for 2012 and found itself embroiled in several investigations that have dented its reputation. At a time when banks are under pressure to curb pay after disappointing earnings, Barclays said it was cutting remuneration and changing the criteria for awarding bonuses. Staff members will be evaluated against a set of standards, including integrity, put together by the bank’s chief executive, Antony Jenkins.

At a recent meeting with investors, Mr. Jenkins, who took over as chief executive in August, also hinted that more job cuts could be in store for Barclays. Talking about his priority to reduce costs and use more computer programs and technology to do so, he said that the bank could be looking for a way to operate with as few as 100,000 staff members over the next decade or so, according to a person with direct knowledge of his comments, who declined to be identified because the comments were not made in public. Barclays currently employs about 140,000.

“We have been justifiably criticized for failures to engage effectively with and explain our decisions to shareholders and the wider public,” John Sunderland, chairman of the board remuneration committee, wrote in the latest annual report. “We must also ensure that we pay no more than necessary to achieve Barclays objectives, and that we eliminate undeserved remuneration.”

Barclays' chief, Antony Jenkins, recently hinted that more job cuts could be in store for the bank.Luke Macgregor/ReutersBarclays’ chief, Antony Jenkins, recently hinted that more job cuts could be in store for the bank.

Barclays started a wide-ranging cost reduction program that includes cutting 3,700 jobs and closing some business units and branches. The bank reported a net loss last month of £1 billion for last year, compared with a £3 billion profit for 2011, because of provisions to cover legal costs related to the rate-rigging scandal and other improper activities.

Barclays has also recently clawed back £300 million of deferred bonuses because of the bank’s involvement in the scandals that also led to the resignation of Robert E. Diamond Jr. as chief executive. Barclays was forced to compensate customers for selling some insurance products they did not need or ask for and was fined $450 million in June for its role in the manipulation of the London interbank offered rate, or Libor.

Barclays said it paid executive directors in total in 2012 less than half of what they received a year earlier. Mr. Jenkins bowed to public pressure and announced earlier that he would not take an annual bonus for 2012. His total remuneration was £2.6 million for last year, including £833,000 in salary and £1.5 million as part of a long-term incentive plan. Mr. Diamond earned £6.3 million in 2011, according to the report.

Article source: http://dealbook.nytimes.com/2013/03/08/fewer-barclays-employees-made-more-than-1-million/?partner=rss&emc=rss

DealBook: Executive Pay Rises 10% in Britain, Adding to Debate

Martin Sorrell, chief executive of WPP, has responded to criticisms on pay packages.Simon Dawson/Bloomberg NewsMartin Sorrell, chief executive of WPP, has responded to criticisms on pay packages.
Robert Diamond of Barclays was the highest-paid executive among FTSE 100 companies.Simon Dawson/Bloomberg NewsRobert Diamond of Barclays was the highest-paid executive among FTSE 100 companies.

LONDON – Pay for top managers in Britain rose 10 percent last year, a report released on Tuesday showed, providing fresh ammunition for critics who argue that executive pay has become excessive.

Chief executives of Britain’s 100 largest publicly traded companies received a median pay increase of 10 percent last year, according to a report by Manifest, a proxy voting agency, and MMK, which advises on remuneration. That is higher than Britain’s inflation rate of 3 percent, and the median executive package was about 200 times more than the average pay of employees in the private sector.

Shareholders are increasingly fighting back against pay packages that they consider to be too excessive at a time of economic turmoil and a volatile stock market environment. Firms in the United States and Europe, including Citigroup, UBS, Credit Suisse and Barclays, have faced shareholder revolts against their pay practices this year.

In Britain, the insurance firm Aviva and the oil company Cairn Energy had their remuneration reports rejected this year by shareholders in a nonbinding vote. Aviva’s chief executive later resigned over the controversy.

Anthony Watson, chairman of the remuneration committee of the British lender Lloyds Banking Group, conceded to a parliamentary committee on Tuesday that when it came to executive pay, not “everything in the garden is rosy.”

“Have individuals got paid too much in the past? Yes, because a lot of variable pay has morphed into fixed pay,” he said as part of a government inquiry into corporate compensation.

WPP, one of the largest advertising companies, is expected to face strong shareholder opposition for its pay packages at the annual shareholder meeting on Wednesday. Martin Sorrell, the firm’s chief executive, received £11.6 million ($18.1 million) last year, making him Britain’s second-highest paid executive among FTSE 100 companies, according to the Manifest report.

Robert E. Diamond Jr. of Barclays, who made £21 million, was the highest-paid executive in the survey, while David Brennan of the pharmaceutical company AstraZeneca ranked third, with a pay package of £11.3 million.

Median base salaries for FTSE 100 chief executives rose 2.5 percent last year, but packages were lifted by larger long-term incentive pay and deferred bonuses, according to the report. The median total pay of an executive rose 10 percent, to £3.7 million, even as the value of stocks in the FTSE 100 index dropped 5 percent.

Some chief executives, including Mr. Sorrell, have responded to criticisms over their pay. In an editorial titled “Mea culpa – I act like the owner I am” in The Financial Times on June 5, Mr. Sorrell wrote: “I find the controversy over my compensation deeply disturbing.” He continued: “The most wounding comment, made anonymously, is that I deserve a ‘bloody nose’ because I have been behaving as an owner, rather than as a ‘highly paid manager.’ If that is so, mea culpa. I thought that was the object of the exercise, to behave like an owner and entrepreneur and not a bureaucrat, who loads up with ‘heads I win, tails you lose’ options by just being there.”

His comments won support last week from Ivan Glasenberg, chief executive of the mining giant Glencore International. Mr. Glasenberg is also embroiled in a pay controversy because shareholders criticized awards for the head of Xstrata, the company he is in the process of merging with Glencore.

“If you want a good C.E.O., you have to pay for it,” Mr. Glasenberg said, adding that shareholders have to decide whether they want a “caretaker manager” or someone who behaves like an owner of the company.

Apart from the size of the pay checks, shareholder criticism has focused on the lack of transparency in executive pay, which now often includes bonuses paid in shares and deferred for several years. Some investors also complained about the lack of independence of remuneration committees, saying they did not consult enough with shareholders.

John Lee, managing partner at FIT Remuneration Consultants, told the parliamentary inquiry that pay needed to become more transparent and simple but that investors also needed to build greater trust in remuneration committees. “We’ve all hidden behind formulae” to calculate the level of remuneration instead of having “enough faith in remuneration committee members to apply their judgment,” Mr. Lee said.

Mr. Watson of Lloyds said he met about twice with each of the bank’s large shareholders to discuss pay, including with officials of the British government, which bailed out the bank in 2008.

He told the inquiry that he usually asked for their input before calculating pay, but added: “What we wouldn’t do is say ‘We’re thinking of paying this person this. Do you think that’s O.K.?’”

Article source: http://dealbook.nytimes.com/2012/06/12/executive-pay-rises-10-in-britain-adding-to-debate/?partner=rss&emc=rss