Bloomberg News

Barclays Cuts Diamond’s Pay as Lloyds, RBS Award CEOs Stock

March 09, 2012

Barclays Plc (BARC) cut Chief Executive Officer Robert Diamond’s remuneration by almost a third last year and froze his salary for 2012 after the lender missed its profitability target.

Diamond received 6.3 million pounds ($9.9 million) in salary, bonuses and stock last year, down from 9 million pounds the previous year, the London-based lender said in its annual report today. Barclays said last month it may fail to hit the 13 percent target for return-on-equity by 2013 after it fell to what Diamond said was an “unacceptable” 6.6 percent in 2011.

“The board and the committee recognize that our return on equity has to improve,” Alison Carnwath, chairman of the board’s remuneration panel, said in the report. “In order to achieve this, our operating costs need to be reduced. Remuneration has its part to play in that.”

Diamond is Britain’s second-best paid bank CEO after HSBC Holdings Plc (HSBA)’s Stuart Gulliver, who received 7.16 million pounds. Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc, Britain’s two government-owned banks, today gave their CEOs about 7 million pounds in stock vesting in 2015 after they declined cash bonuses for 2011 amid political criticism.

Prime Minister David Cameron in January urged banks to show “proper regard” in limiting bonuses and demonstrate how pay is related to performance as the government executes the tightest fiscal squeeze since World War II.

Barclays Capital

Diamond, the former head of Barclays Capital, is now only the third highest-paid executive after two unidentified bankers received 6.7 million pounds and 6.5 million pounds respectively. Officials at Barclays declined to identify the two individuals.

Pretax profit at Barclays Capital, the investment banking arm led by Rich Ricci and Jerry Del Missier, fell 32 percent to 2.97 billion pounds in 2011, the lender said last month. The bank reduced bonuses for the 24,000 employees at the investment banking unit by 30 percent to 64,000 pounds a person.

Diamond’s package includes a 2.7 million-pound stock bonus and a further 2.25 million pounds depending on how the bank performs in future years. His base salary will remain at 1.35 million pounds. He won’t receive a cash bonus.

Barclays made a 5.75 million-pound so-called tax equalization payment on Diamond’s behalf to tax authorities after he relocated to the U.K. from the U.S., the company said. He also received 675,000 pounds in cash instead of a pension contribution and received benefits worth 474,000 pounds including medical insurance, a company car and tax advice.

Deferred Bonus

In 2011, Diamond also took 3.71 million pounds from a 2008 performance share plan award, based on shareholder returns, and 1.08 million pounds from part of a 2010 performance share plan award. He also took 7.81 million pounds from his executive share award plan, another deferred bonus. The awards vested in March, the bank said in the annual report.

Separately, Lloyds gave Chief Executive Officer Antonio Horta-Osorio shares valued at about 3.4 million pounds as part of his long-term incentive plan, the lender said in a statement today. His counterpart at RBS, Stephen Hester, will receive shares valued at as much as 3.6 million pounds under a similar plan, the bank said in its annual report today.

Lloyds said it paid its eight top executives a combined 16.2 million pounds last year. The bank gave nine executives a total of 3.89 million pounds of shares vesting over the next three years. Horta-Osorio and the nine executives, including consumer banking chief Alison Brittain and Chief Risk Officer Juan Colombas, will also share in 14.4 million pounds of shares vesting in 2015.

U.K. bank executives’ pay is still lower than for their U.S. competitors: JPMorgan Chase & Co. (JPM) CEO Jamie Dimon is likely to receive about $23 million for 2011, people familiar with the plans said in January. Citigroup Inc., the third-biggest U.S. bank, awarded CEO Vikram Pandit $14.9 million.

To contact the reporter on this story: Howard Mustoe in London at hmustoe@bloomberg.net. STRQ

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net


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