Barclay’s rebellion against bankers’ bonuses
May 5, 2012 at 11:18 am
Small shareholders of Barclays have sparked a rebellion against bankers’ pay and bonuses. The rebellion is said to be the biggest backlash since the start of the financial crisis.
Shareholders queued in the rain last Friday (26th April) to voice their opinions at Barclays’ Annual General Meeting, held at Royal Festival Hall, London. The meeting took a negative turn when shareholders, who make up around a third of Barclays’ shares, voted against proposed pay packages.
2 billion of the votes cast protested against Barclays’ pay proposals, whilst half a billion shareholders, ranging from members of the public to large powerful corporations, abstained from voting. This made a total of 31.4% of shareholders refusing to support pay at Barclays, which included Bob Diamond’s (chief of Barclays) package with a value of £26.6 million. Furthermore, 21% of investors launched a similar revolt by refusing to re-elect Alison Carnworth, the head of Barclays’ remuneration committee, as a director.
The rebellion strikes after only £730 million was distributed to shareholders last year, whilst £2.15 billion was received in bonuses by executives. Shareholders are said to be equally outraged at Barclays paying Bob Diamond £5.75 million to cover a US tax bill. Investors complain that pay packages are not reflective of the bank’s performance. George Dallas, director of corporate governance at F&C, confirms this by saying: “We voted against the report because we do not believe the remuneration committee exercised sufficient discretion, by granting substantial bonus awards for a year in which the company’s performance was mixed.”
Despite the embarrassing backlash for Barclays, the bank does have the overall right to ignore shareholders’ complaints on the issue. This showed in Diamond’s attempt to defend the bank’s extortionate bonuses by saying “We (Barclays) need to balance the pace of change with ensuring we attract the best people.” In spite of this defensive testimonial, it is clear that Barclays need to think about taking serious action in terms of appeasing their shareholders on this matter.
