Barclays under fire over executive pay

Heavy criticism of high bonuses from business and political figures has been directed again at the UK’s Barclays Bank – where chief executive Antony Jenkins has attempted to shine up the institution’s image after the Libor scandal and the reign of his predecessor Bob Diamond.

The attacks began when Barclays announced pre-tax profits were down last year by 32%, from £7.6bn ($12.6bn, €9.2bn) to £5.17bn, and 12,000 jobs were to go, but overall staff bonuses were to rise 10% to £2.38bn, compared with shareholder dividends of £856m. Bonuses in the investment part of Barclays rose by 13%.

The Institute of Directors, the UK business leaders’ organisation, questioned how Barclays could justify bonuses almost three times as big as shareholders’ payouts.

Roger Barker, the body’s corporate governance director, asked: “For whom is this institution being run?”
He believed shareholders should challenge Barclays: “Their approach to the banks continues to be supine. We would like to see shareholders take a more aggressive role in the governance of the bank, and in light of Barclays’ fragile reputational recovery we would urge the bank to ensure that the chairman of its remuneration committee remains an independent director.”

Criticism by the institute was “significant”, said Pension & Investment Consultants, the pension lobby group.
Analyst Andrew Coombs at the global bank Citigroup said: “The higher investment bank compensation figure appears to have disappointed shareholders, who thought they would get a better piece of the pie.”

Frances O’Grady, general secretary of the TUC, the unions’ alliance, complained: “While many at Barclays are celebrating their bonus bonanza, hard-pressed families still experiencing the financial pain of the recession – a recession caused in part by the reckless actions of the banks – will be struggling to make sense of it all.”

Jenkins, who has waived his bonus for a second time, said in justification: “We employ people from Singapore to San Francisco and need the best people in the bank to drive sustained returns to shareholders.”

Many MPs have dismissed his claim that high remuneration is needed to “compete in the global market for talent”.  

Picture credit: © Grondin Franck Olivier | Dreamstime.com