Barclays 2010 Annual Report Download - page 169

The commitments that Barclays made to the UK Government under
Project Merlin include commitments on remuneration. These are
important and I set out here how we have met those commitments:
– We committed to showing responsibility in pay in 2010 and beyond.
Our decisions for 2010 reflect this, and our robust governance processes
will ensure this continues for 2011 and beyond
– We committed that aggregate UK bonuses for 2010 would be lower
than 2009. We have confirmed to the FSA that this was the case
– We committed to greater shareholder engagement regarding
remuneration. We have consulted with our key shareholders and
representative bodies during 2010, and we will continue this
throughout 2011
– We committed to disclosing the remuneration of the five highest
paid senior executive officers (in addition to the executive Directors).
These disclosures are shown on page 179. In addition to our
commitment to disclosure through Project Merlin, in accordance with
the FSA’s disclosure rules we have also disclosed in aggregate the
2010 remuneration of our Code Staff. This is also shown on page 179
– The Committee reviewed the remuneration proposals for at least
the ten highest paid staff in each of the Group’s principal businesses.
In practice we review many more than this in each business
Key Committee decisions in 2010 - quantum
The Committee’s work in 2010 included reviewing and (except for Absa)
approving the proposed 2010 performance awards for each of the
Group’s businesses:
– Barclays Group - 2010 performance awards down 7% on 2009, with
profit before tax up 32%
– Global Retail Banking – 2010 performance awards up 2% on 2009,
which was in line with Global Retail Banking’s profit performance
for 2010
– Absa – 2010 performance awards up 12% on 2009, which was in line
with Absa’s profit performance for 2010
– Barclays Capital - 2010 performance awards down 12% on 2009,
despite profit before tax increasing year on year. Performance awards
were reduced for 2010 whilst in our view maintaining them at a level
within acceptable commercial limits that permitted the business to
reward outperformance appropriately
– Barclays Corporate – 2010 performance awards up 36% on 2009.
Performance awards reflected the improvement in profitability of the
UK & Ireland business, and the need to maintain a minimum level of
performance awards in Continental Europe and investment in senior
hires. The Committee will monitor this closely in 2011
– Barclays Wealth – 2010 performance awards up 11% on 2009, less
than the increase in profits
Key Committee decisions in 2010 - structure
– For executive Directors, 60% of annual performance incentives is
deferred (72% for Bob Diamond). For Code Staff, up to 60% of annual
performance incentives is deferred. For both executive Directors and
Code Staff, 50% of non-deferred incentives for 2010 is delivered in
Barclays shares subject to a six month holding period (100% of
non-deferred incentives for Bob Diamond). Executive Directors and
Code Staff are also subject to minimum Barclays shareholding
guidelines. The 60% deferral rate was also applied to the annual
performance incentives of a significant number of senior executives
beyond those required by the FSA’s Remuneration Code
– For executive Directors (subject to shareholder approval), Code Staff
and senior management, deferred incentive awards for 2010 are made
under the Share Value Plan (SVP) in the form of Barclays shares and
under the Contingent Capital Plan (CCP) in the form of contingent
capital awards. Vesting of contingent capital awards is linked to the
Group’s core capital position at the time of vesting. Further details
on the SVP and CCP are given in Tables 24 and 25
– Deferred incentive awards and long term incentive awards include
malus and prudent financial control provisions that are in accordance
with the FSA's Remuneration Code that may reduce the vesting level
of awards (to nil if appropriate). Malus provisions may apply, for
example, if the Committee determines there is evidence of serious
employee misconduct or where a business has suffered a material
failure of risk management. Prudent financial control provisions may
apply if the financial health of the Group has significantly deteriorated
over the vesting period
– Executive Directors and other senior executives will also participate in
a new long term incentive plan: the Barclays Long Term Incentive Plan
(subject to shareholder approval). Vesting of the proposed 2011 awards
is linked to a scorecard of metrics focused closely on the execution
of Barclays strategy which gives primacy to return on equity. Further
details of the proposed Barclays LTIP and its performance condition
are given on pages 172 and 173 and in Table 25
Bob Diamond took over as Chief Executive from 1st January 2011. The
Committee decides the remuneration arrangements for all executive
Directors. The Chief Executive role is benchmarked against other leading
global banks and financial services organisations and other companies
of a similar size in the FTSE100 index. Bob Diamond’s remuneration for
2010 was unaffected by the changes announced for 2011 and in 2010
he worked under his 2010 contractual and remuneration arrangements.
Bob Diamond’s 2010 remuneration was considered carefully by the
Committee as part of the annual remuneration review and his
remuneration is disclosed, together with the remuneration of the other
executive Directors, on pages 172 and 173.
The Committee will actively review remuneration throughout the year
and will remain focused on internal and external perspectives, including
regulatory developments. Remuneration regulation is expected to evolve
further in 2011 and we will maintain a close dialogue with our key external
stakeholders and our shareholders throughout 2011.
The Remuneration Report
The following report of the Committee provides further explanation of
current remuneration governance and arrangements. It is divided into
the following sections:
– Committee remit, membership, advisors and activities in 2010
– Remuneration policy, decisions, governance and regulation
– Employees' annual remuneration
– Executive Directors’, non-executive Directors' and former Directors’
remuneration
– 2010 remuneration of the five highest paid senior executive officers
(excluding executive Directors) and aggregate Code Staff remuneration
– Share plan and long term incentive plan descriptions
As required by Schedule 8 of the Large and Medium-sized Companies and
Groups (Accounts and Reports) Regulations 2008, the Group’s auditors,
PricewaterhouseCoopers LLP, have audited the information contained in
Tables 5, 7, 9, 13, 14 and 17.
The Committee unanimously recommends that you vote at the 2011 AGM
to approve the Remuneration Report as all Directors will be doing with their
own Barclays shares.
On behalf of the Board
Sir Richard Broadbent
Chairman, Board Remuneration Committee
7th March 2011
Barclays PLC Annual Report 2010 www.barclays.com/annualreport10 167
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