Barclays 2014 Annual Report Download - page 105

barclays.com/annualreport Barclays PLC Annual Report 2014 I 103
Remuneration policy for executive Directors continued
Element and purpose Operation Maximum value and performance measures
B. Variable Pay
Annual bonus
To reward delivery of
short-term financial targets
set each year, the individual
performance of the executive
Directors in achieving those
targets, and their
contribution to delivering
Barclays’ strategic objectives
While financial objectives are
important, the Balanced
Scorecard (which also
includes Group financial
targets) plays a significant
role in bonus determination,
to ensure alignment with
Barclays’ strategy
Deferred bonuses encourage
long-term focus and
retention. Delivery
substantially or fully in shares
with a holding period
increases alignment with
shareholders. Deferred
bonuses are granted by the
Committee (or an authorised
sub-committee) at its
discretion, subject to the
relevant plan rules
Determination of annual bonus
Individual bonuses are discretionary and decisions are based
on the Committee’s judgement of executive Directors’
performance in the year, measured against Group and
personal objectives.
Delivery structure
Executive Directors are Code Staff and their bonuses are
therefore subject to deferral of at least the level applicable to
all Code Staff, currently 40% (for bonuses of no more than
£500,000) or 60% (for bonuses of more than £500,000).
The Committee may choose to defer a greater proportion of
any bonus awarded to an executive Director than the
minimum required by the PRA Remuneration Code. At least
half the non-deferred bonus is delivered in shares or
share-linked instruments.
Deferred bonuses for executive Directors may be delivered in
a combination of shares or other deferral instruments.
Participants may, at the Committee’s discretion, also receive
the benefit of any dividends paid between the award date
and the relevant release date in the form of dividend shares.
Operation of risk and conduct adjustment and malus
Any bonus awarded will reflect appropriate reductions made
to incentive pools in relation to risk events. Individual bonus
decisions may also reflect appropriate reductions in relation
to specific risk and conduct events.
All unvested deferred bonuses are subject to malus
provisions which enable the Committee to reduce the
vesting level of deferred bonuses (including to nil) for any
reason. These include, but are not limited to:
Q A participant deliberately misleading Barclays, the market
and/or shareholders in relation to the financial
performance of the Barclays Group
Q A participant causing harm to Barclays’ reputation or
where his/her actions have amounted to misconduct,
incompetence or negligence
Q A material restatement of the financial statements of the
Barclays Group or the Group or any business unit suffering
a material down turn in its financial performance
Q A material failure of risk management in the Barclays
Group
Q A significant deterioration in the financial health of the
Barclays Group
Timing of receipt
Non-deferred cash components of any bonus are paid
following the performance year to which they relate,
normally in February. Non-deferred share bonuses are
awarded normally in March and are subject to a six-month
holding period.
Deferred share bonuses normally vest in three equal portions
over a minimum three-year period, subject to the provisions
of the plan rules including continued employment and the
malus provisions (as explained above). Should the deferred
awards vest, the shares are subject to an additional
six-month holding period (after payment of tax).
The maximum annual bonus opportunity is
80% of fixed pay.
The performance measures by which any
executive Director bonuses are assessed
include Group, business and personal
measures, both financial and non-financial.
Financial measures may include, but are not
restricted to such measures as net income,
adjusted profit before tax, return on equity,
CET1 ratio and return on risk weighted
assets. Non-financial measures are based on
the Balanced Scorecard. Personal objectives
may include key initiatives relating to the role
of the Director or in support of Barclays’
strategic objectives. The Balanced Scorecard
may be updated from time to time in line
with the Group’s strategy. In making its
assessment of any bonus, the Committee
will consider financial factors to guide 50%
of the bonus opportunity, the Balanced
Scorecard 35%, and personal objectives
15%. Any bonus is discretionary and any
amount may be awarded from zero to the
maximum value.
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