London Barclays Plc Chief Executive Officer Robert Diamond will forgo about 11 per cent of his total compensation until the bank improves profitability in a bid to placate investors opposed to his pay package.
Diamond and Finance Director Chris Lucas will lose 50 per cent of their deferred bonuses for 2011 if the company's return on equity fails to exceed the cost of equity within three years, London-based Barclays said in a statement yesterday. Lucas received a £1.8 million (Dh10.7 million) deferred bonus in stock and Diamond £2.7 million, part of his £12 million total compensation for the year.
Assuaging opposition
Barclays is trying to assuage opposition from shareholders who will vote on the bank's pay plans on April 27. Diamond, 60, described the lender's profitability as "unacceptable" in February and pledged to improve it. Citigroup Inc. investors this week rejected the New York-based bank's executive pay plan. "This move will hopefully get shareholders off their back," said Gary Greenwood, an analyst at Shore Capital Group in Liverpool. "Their remuneration is high when you compare it with other domestic UK banks."
Barclays said in February it may fail to hit its 13 per cent target for ROE (return on equity) by 2013 after it fell to 6.6 per cent in 2011. The bank's cost of equity was 11.5 per cent for 2011.
Pensions Investment Research Consultants Ltd. this month urged investors to vote down Diamond's pay, saying the bank is an "investment failure." The Association of British Insurers, whose members own between 15 per cent and 20 per cent of all Britain's publicly traded companies, said Barclays' pay plans should be scrutinised before shareholders vote on the awards.
The bank made the changes "recognising the strength of opinion expressed by some shareholders," Barclays said in today's statement.
