This is radical. This is personal sacrifice. This is the executive team at Barclays belatedly waking up to the fact that a very public humiliation awaited John Varley and Bob Diamond in particular on November 24, when shareholders are due to vote on selling much of the bank to Middle East investors.
The awkward duo on the Barclays register, Legal & General and Aviva, have now been offered £250m apiece of the juicy Reserve Capital Instruments, paying a 14 per cent coupon for a decade — although they do not get the warrants granted to the sheikhs from Qatar and Abu Dhabi.
All members of the Barclays board will offer themselves for re-election in April next year. And, for the current year, executives have waived their bonuses.
So how much of sacrifice is this?
How long have you got?
Go here to the remuneration report, which begins on page 144 of Barclays’ annual report, and then keep going for about 14 pages.
The short facts are these: Mr Diamond’s base salary is a paltry £250,000, compared with £1.1m drawn down by Mr Varley. Indeed, in 2007, “salary” accounted for just 1.4 per cent of Bob’s “arrangements.” And Bob hasn’t got a rise for the past nine years – base salary wise.
Now, on top of salary Barc execs are usually eligible for an annual performance bonus and an Executive Share Award Scheme, split 75/25 per cent. Then comes the Performance Share Plan – a discretionary, performance related award, where the stock vests after three years. Oh, and then there’s the pension benefits.
So last year Mr Diamond picked up a case bonus of £6.5m, ESAS stock of £11.4m, and an award under the PSP of £3m. But then there was also something called a Retained Incentive Opportunity, a now-discontinued award based of the specific performance of Barclays Capital, and which was worth £14.8m to Bob in 2007, half in cash, half in shares.
In aggregate, Mr Diamond had an interest in 10.7m Barclays shares at the end of last year.
This is where get a proper sense of how Bob is sharing everyone else’s pain. At the last annual report, a “fair value” of £7.33 was placed on Barclays shares. Even after a small bump up in the price to 160p on Tuesday, the value of Mr Diamond’s stock holding has fallen from £78m to £17m.
We hasten to add here that the climbdown statement from Barclays says nothing about ESASs or PSPs, or even RIOs. It just said that executives had offered to forego their “annual bonuses” and that the board had accepted this.
But then the key metric for boardroom pay at Barclays – like most other listed entities – is total shareholder return. Here’s last year’s depiction of this from the annual report; below we have brought the numbers have been brought up to date.
Bottom line: Bob and his colleagues have waived something that wasn’t even coming their way. Was it?!
Barclays bows to investor pressure on capital raising – FT.com
Barclays’ capital raising