Barclays 2003 Annual Report Download - page 25

Barclays PLC Annual Report 2003 23
Barclays Report on Remuneration
Statement from the Chairman of the Board Remuneration Committee
(the Committee)
The primary purpose of the Committee is to determine the Group’s
policy on the remuneration of executive Directors and their specific
remuneration packages. The Committee is made up exclusively of
non-executive Directors.
This report describes the current components of the remuneration
policy and details the remuneration for each person who served as a
Director during 2003.
Barclays emphasis on reward for performance, and alignment with
shareholders’ interests, is illustrated by the following points:
• Executive Directors’ bonuses for 2003 reflect strong corporate
performance for the year. Group profit before tax and Group economic
profit1are 20% and 15% higher than in 2002. The Committee
compares Barclays total shareholder return with a peer group of
eleven other major banks, and also against the FTSE 100 Index.
Barclays total shareholder return (TSR) for 2003 was 37%, which was
higher than both the average for the peer group and the FTSE 100
Index. 2003 was also the end of a four-year performance cycle, a
period during which the primary goal was to deliver top quartile TSR
relative to peers. Barclays met this goal, being ranked third of twelve
major banks with a TSR of 31%, which was almost double the 16%
average of the peer group.
• The main performance condition for executive Directors in the
Incentive Share Option Plan is TSR relative to a peer group of eleven
other major banks. This performance condition is very challenging.
The maximum number of shares under option vests only if Barclays is
ranked first in this peer group. The 2000 grant under the ISOP vested
in 2003. Although Barclays was ranked third of the twelve banks and
therefore in the top quartile, this performance was sufficient only for
50% of the maximum number of shares under the TSR condition to
vest. The other 50% lapsed.
• As shown in the table on page 34, the executive Directors each
have a personal interest in Barclays shares, through shares they own,
and shares and options held in employee share plans on their behalf.
A significant percentage of annual bonus was delivered in Barclays
shares and payment of the shares element was deferred for at least
three years.
The Committee unanimously recommend that you vote in favour of this
report at the AGM.
Sir Nigel Rudd
Board Remuneration Committee Chairman
Notes
1Economic profit (EP) is defined as profit after tax and minority interests plus
certain gains (and losses) reported within the statement of total recognised
gains and losses where they arise from the Group’s business activities and
are in respect of transactions with third parties, less a charge for the cost
of average shareholders’ funds (which includes purchased goodwill).
2Towers Perrin and Mercer have given their written consent to the inclusion of
references to their names in the form and context in which they appear.
Board Remuneration Committee Members
The Committee comprised the following independent non-executive
Directors:
Sir Nigel Rudd, Chairman
David Arculus
Sir Brian Jenkins
Sir Nigel Mobbs(a)
Graham Wallace(b)
Notes
(a) Sir Nigel Mobbs retired from the Board on 24th April 2003.
(b) Graham Wallace resigned from the Board on 2nd April 2003.
The Committee members are independent of management and free
from any business or other relationship which could materially affect the
exercise of their independent judgement.
The constitution and operation of the Committee comply with the Best
Practice Provisions on Directors’ Remuneration in the Combined Code
adopted by the UK Listing Authority.
Advisers to the Committee
The Committee has access to executive remuneration consultants to
ensure that it receives the best independent advice. The selection of
advisers is entirely at the discretion of the Committee Chairman.
Advisers are appointed by the Committee for specific pieces of work, as
necessary, and are required to disclose any potential conflict of interest
to the Committee.
Towers Perrin and Mercer2advised the Committee on latest
developments in market compensation. Both companies have advised
the Company on other human resource related issues including advice in
such areas as employee reward, pensions and employee communication.
In addition, Towers Perrin gave actuarial and other advice to the Barclays
UK life assurance companies.
The Chairman of the Board, Group Chief Executive and Group Human
Resources Director also advise the Committee, but are not permitted
to participate in discussions or decisions relating to their own
remuneration. The Group Human Resources Director is responsible for
personnel within Barclays, is not a Board Director, and is not appointed
by the Committee.
Our Remuneration Policy
We are committed to using reward to support a performance-oriented
culture. Executive Directors can expect outstanding reward if
performance is outstanding. This philosophy applies to reward policies
and practices for all employees in the Group. The Committee considers
reward levels across the Group when determining remuneration for
executive Directors.
The remuneration policy is:
• to align the interests of executive Directors with those of the
shareholders to create value;
• to recognise excellent performance of the Group, business
and individual;
• to encourage the right behaviours to achieve excellent performance;
• that reward is to be commercially competitive; and
• that reward is to be transparent, well communicated and
easily understood.
Corporate Governance
Barclays Report on Remuneration