Financial News

  • 17 February 2014, 12:21

Investors Warn Of Fresh Barclays Pay Revolt

Barclays is facing a battle to avert a mass revolt of its leading investors at this year's annual meeting amid fury over the 2.4bn bonus pool announced this week.

Sky News has spoken to a number of Barclays' biggest shareholders who have warned in recent days that they are unlikely to be dissuaded from voting against the bank's remuneration report or individual directors involved in setting pay.

They are furious that Antony Jenkins, the chief executive, announced this week that bonus payments for 2013 were 10% higher than the previous year despite a slump in profits from 7bn to 5.2bn.

Investors will not cast their votes until much closer to Barclays' annual meeting on April 25, but three big City institutions said a major revolt looked "inevitable".

A significant 'no' vote would be damaging to Barclays in a number of ways, not least because this year's AGM will be the first at which shareholders will possess a binding vote on the bank's planned pay policies.

Under reforms introduced by Vince Cable, the Business Secretary, shareholders in public companies will now have the chance to express their views on future and past remuneration.

"We have been made to look like fools," said one major investor.

"The pledge last year was that pay would come down. The fact that it is heading in the opposite direction means that it is impossible to trust the company."

The anger being expressed by investors is likely to be vented at meetings scheduled in the coming weeks between institutions and Barclays executives including Mr Jenkins and Tushar Morzaria, the new chief financial officer.

A number of shareholders also plan to seek talks with Sir David Walker, the chairman, and Sir Mike Rake, his deputy, who also serves as president of the CBI, the employers' body.

"The results were underwhelming with the news on the dividend a disappointment," another fund manager said.

"While shareholders are pleased to see the commitment to addressing the cost base, there is still disappointment with the split of returns between staff and shareholders."

The disappointment felt by investors could manifest itself in a vote against Sir John Sunderland, the non-executive director who chairs Barclays' remuneration committee.

Sky News revealed this week that Barclays had asked Sir John to remain on the board for a tenth year, which would breach City guidelines on corporate governance.

Barclays has a history of bust-ups with shareholders, with 35% voting against its pay report two years ago amid anger over the rewards shared among its investment bankers and the pay package of its then chief executive, Bob Diamond.

In last year's annual report, Sir John wrote that 2012 would be a "turning point" in Barclays' approach to remuneration.

"For 2012 and in future we are taking a different approach to the balance between Directors' and employees' remuneration, and returns for shareholders.

"We have been justifiably criticised for failures to engage effectively with and explain our decisions to shareholders and the wider public, as well as on some occasions being criticised for the decisions themselves."

Barclays declined to comment.

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