Investors Deliver New Barclays Pay Warning

Written By Unknown on Rabu, 24 April 2013 | 11.46

By Mark Kleinman, City Editor

Leading shareholders in Barclays have delivered a warning that its new management team must accelerate reform of the bank's lavish pay practices or risk a fresh public revolt on the issue.

I have learnt that Aviva Investors and F&C Investments, two of the City's biggest investment institutions, have told Sir David Walker, Barclays' new chairman, that he has only earned their qualified support after his first six months in the job.

While Thursday's annual meeting will not play host to a repeat of last year's widespread rebellion over Barclays' pay policies, the stance of several major investors will fire a renewed warning shot across the bank's bows.

F&C is understood to have decided to abstain on the motion relating to Barclays' remuneration report, reflecting unhappiness about recent disclosures such as the decision to pay more than 400 staff packages of at least £1m in 2012, a year in which Barclays was fined £290m for manipulating the interbank borrowing rate, Libor.

Aviva has decided to support the remuneration report motion at Thursday's AGM but said continued momentum in reforming employees' pay was essential if that backing was to continue.

Speaking to Sky News, David Lis, a senior fund manager at Aviva, said he had met Sir David in recent weeks to discuss the fund manager's ongoing concerns about pay at Barclays, which remains among the most generous payers in the City.

"Under normal circumstances we would have voted against the pay arrangements but we agreed at the meeting with Sir David that if we were to support the pay arrangements we would have to explain to our clients that it was on the basis that we are supportive of the direction that the company is taking on pay and that they would continue to improve," he said.

"If we feel the progress has stalled by the next AGM we would have to review our voting stance. Sir David agreed that this was a reasonable approach."

Last month, Barclays sparked fresh anger when it announced on the day of the Budget that nine top executives were receiving deferred share awards totalling approximately £40m.

Of the recipients, Tom Kalaris, the head of Barclays' wealth management business, and Rich Ricci, boss of its investment bank, were last week ousted by Antony Jenkins, the group's new chief executive.

Chris Lucas, the finance director and another member of the nine-strong group, is also leaving Barclays later this year.

Last year's AGM was one of the key flashpoints of the so-called shareholder spring, which saw revolts over pay at a string of FTSE-100 companies.

Almost one-third of shareholders refused to back the remuneration report, with the equivalent number expected to be much lower this year.

Several leading investors said Sir David, a leading advocate of pay and governance reforms in the banking sector, deserved "the benefit of the doubt" because he had been in the job for such a short period.


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