Barclays PLC was hit by an investor protest over pay as 27 percent of shareholders voted against chief executive officer Robert Diamond’s ￡12 million (US$19.5 million) compensation package.
Those opposed failed to block the bank’s remuneration plans as more than 73 percent of investors who voted supported it, London-based Barclays said in a statement after its annual investors’ meeting on Friday. About 10 percent voted down Barclays’ pay plans last year.
The bank triggered criticism from investors that it was enriching employees at the expense of shareholders while failing to meet its own profitability targets.
“At a time when share price performance is poor, dividend payouts are weak and management itself is saying that performance isn’t acceptable, for the CEO to be getting paid such large sums of money is hard for shareholders to stomach,” said Gary Greenwood, an analyst at Shore Capital in Liverpool, who rates Barclays a “hold.” “Shareholder activism has clearly been increasing of late and, particularly in the banking sector, there’s a demand that pay is aligned with performance.”
The Barclays vote came less than 10 days after Citigroup Inc shareholders rejected its executive pay plan amid criticism it let CEO Vikram Pandit collect millions of dollars too easily. About a third of Credit Suisse Group AG investors who voted yesterday opposed the bank’s remuneration report.
“The balance of rewards between shareholders and employees has to change in favor of shareholders, Alison Carnwath, chairman of the board committee responsible for pay at Barclays, said at the meeting yesterday. “We will continue to seek to push down remuneration levels in the context of the competitive environment.”
About 21 percent of investors who took part opposed Carnwath’s reappointment as a director, the second-biggest vote to go against Barclays yesterday.
Pensions Investment Research Consultants Ltd, the UK corporate governance advisers, urged Barclays shareholders on April 10 to oppose the pay package because it provided “rewards for failure.” Barclays said in February it may fail to hit its 13 percent target for ROE by next year after it fell to 6.6 percent last year.
“This vote is humiliating for Barclays and will cement its reputation as a bank that just doesn’t get it when it comes to concerns about excessive pay,” Alan MacDougall, managing director of PIRC, said in a statement after the result. PIRC advises investors with about ￡1.5 trillion of assets.
Diamond and finance director Chris Lucas last week agreed to cut their deferred bonuses for last year until the bank improves profitability in an effort appease investors. The concession is worth about 11 percent of Diamond’s ￡12 million compensation for last year.
Diamond got as much as ￡L6.3 million pounds in salary, bonuses and stock awards for last year as well as a ￡5.75 million contribution toward his personal tax bill.