Barclays 2011 Annual Report Download - page 58

Remuneration report continued
Part B: Total incentive awards for 2011
We recognise the understandable importance that all stakeholders attach
to the judgements that we must apply in managing remuneration. We
manage remuneration in a way that is consistent with protecting future
revenue flows and our ability to maximise returns to shareholders while
enhancing our customer and client service standards.
Ensuring that we have the right people, in the right roles, is vital to our
ability to generate shareholder returns by serving our customers and
clients effectively, especially in the highly competitive, global markets in
which we operate. This requires that we are competitive in the way in
which we manage remuneration.
We manage remuneration decisions on the basis of total remuneration.
An important tool in ensuring an appropriate balance between
competitiveness and responsibility is the mix between the fixed and
variable components of remuneration. We set the fixed component of
remuneration – which largely comprises salaries – at a level consistent
with market rates. We use the variable component of remuneration to
create the flexibility that allows our cost base to respond to changes in
economic and business conditions and to provide a clear and explicit link
between remuneration and current and future performance. That link
includes, in particular for senior roles, paying a substantially higher
proportion of bonuses in shares, and deferred bonuses being subject to
clawback provisions, to help ensure sustained performance over the
longer term.
We have increased the use of deferred bonuses to align better the
incentive created by the variable component of remuneration to sustained
performance. Deferred bonuses are payable only once an employee meets
certain conditions, including a specified period of service.
Table 2 sets out details of total incentive awards for 2011, including:
– Total bonus pool down 25% and total incentive awards down 26%
versus 2010, with Barclays profit before tax reducing 3%;
– Barclays Capital bonus pool down 32% and total incentive awards
down 35% versus 2010, with Barclays Capital profit before tax
reducing 32%;
– Total bonus pool as a percentage of profit before tax (pre-bonus) down
year on year from 33% to 28%;
– Average value of bonus per Barclays employee down 21% year on year
to £15,200; average value of bonus per Barclays Capital employee down
30% to £64,000;
– Current year cash bonus capped at £65,000 for Barclays Capital
employees; and
– Proportion of bonus pool that is deferred significantly exceeds the FSA’s
Remuneration Code requirements and is expected to be amongst the
highest deferral levels globally; 75% of the bonus pool in Barclays
Capital is deferred.
The balance between shareholder returns and incentive awards for
employees is a key consideration for the Committee. The Committee will
continue to focus on reaching a sustainable balance.
Table 2: Total incentive awards granted – current year and deferred
Barclays Group Barclays Capital
Year Ended
31.12.11
£m
Year Ended
31.12.10
£m % Change
Year Ended
31.12.11
£m
Year Ended
31.12.10
£m % Change
Current year cash bonus 832 1,601 (48) 381 1,139 (67)
Current year share bonus 66 73 (10) 3 57 (95)
Total current year bonus 898 1,674 (46) 384 1,196 (68)
Deferred cash bonus 618 568 9 576 530 9
Deferred share bonus 634 609 4 576 535 8
Total deferred bonus 1,252 1,177 6 1,152 1,065 8
Bonus pool 2,150 2,851 (25) 1,536 2,261 (32)
Sales commissions, commitments and other incentives 428 633 (32) 201 399 (50)
Total incentive awards granted 2,578 3,484 (26) 1,737 2,660 (35)
Bonus pool as % of profit before tax (pre bonus) 28% 33% 35% 36%
Bonus pool as % of adjusted profit before tax (pre bonus) 29% 34% 35% 36%
Proportion of bonus that is deferred 58% 41% 75% 47%
Total employees (full time equivalent) 141,100 147,500 (4) 24,000 24,800 (3)
Bonus per employee £15,237 £19,329 (21) £64,000 £91,169 (30)
Please refer to page 65 for Glossary.
56 Barclays PLC Annual Report 2011 www.barclays.com/annualreport