Barclays 2004 Annual Report Download - page 29

Corporate governance
Barclays report on remuneration
27
Barclays PLC Annual Report 2004
Statement from the Chairman of the Board HR and Remuneration
Committee (the Committee)
All members of the Committee are independent non-executive
Directors. 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 also determines the aggregate level of bonus and
incentive funding throughout the Group. This includes setting the
framework for reward in Barclays Capital and Barclays Global Investors,
and approving their aggregate levels of bonus and incentive
expenditure, and strategic investment expenditure on new hires.
The Committee undertakes a periodic review of strategic human
resources matters. This includes succession for senior roles below
Board level, the longer term availability of talent within the Group,
equality and diversity policy and key employee relations issues.
This report details the current components of the remuneration policy
and details the remuneration for each person who served as a Director
during 2004.
•Executive Directors’ bonuses for 2004 reflect very strong corporate
performance for the year. Group profit before tax and Group
economic profit (EP)1are 20% and 32% higher than in 2003.
•The Committee compares Barclays total shareholder return (TSR) with
a peer group of eleven other major banks, and also against the FTSE
100 Index. Barclays TSR for 2004 was 23%, which was higher than
both the average for the peer group and the FTSE 100 index. 2004 was
the first year of a four-year performance cycle, a period during which
the primary goal is to deliver top quartile TSR relative to peers.
Barclays was ranked first for 2004.
•The main performance condition for executive Directors in the
Incentive Share Option Plan (the ISOP) 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 the peer group. The 2001
grant under the ISOP vested in 2004. Barclays was ranked fourth of
the twelve banks over the three-year period. This performance was
sufficient for 25% of the maximum number of shares under the
TSR condition to vest. The other 75% lapsed.
•As shown in the table on page 39, 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 proportion of annual bonus is made up of an award
over Barclays shares deferred for a period of at least three years.
The Committee unanimously recommends that you vote to approve
this report at the AGM.
Signed on behalf of the Board
Sir Nigel Rudd
Board HR and Remuneration Committee Chairman
Board HR and Remuneration Committee Members
The Committee comprised the following independent non-executive
Directors:
Sir Nigel Rudd, Chairman
David Arculus
Sir Richard Broadbent(a)
Sir Brian Jenkins(b)
Notes
(a) Sir Richard Broadbent joined the Board on 1st September 2003 and the
Committee on 1st April 2004.
(b) Sir Brian Jenkins ceased to be a member of both the Board and the
Committee on 1st September 2004.
The Committee members are considered by the Board to be 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 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 to the Committee any potential conflict
of interest.
During the year Towers Perrin, Mercer Human Resource Consulting
and Kepler Associates2advised the Committee on general remuneration
matters. Towers Perrin and Mercer Human Resource Consulting
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 and Barclays
Private Clients.
The Chairman of the Board, the Group Chief Executive, the Human
Resources Director and, as necessary, members of the Group Executive
Committee, also advise the Committee. They are not permitted to
participate in discussions or decisions relating to their own
remuneration. The Human Resources Director is responsible for providing
professional support to line management in HR policy and
administration and for monitoring compliance with prescribed policy
and programmes across Barclays. The Human Resources Director is not
a Board Director, and is not appointed by the Committee.
Our Remuneration Policy
We are committed to using reward to support a high-performance
culture. Executive Directors can expect outstanding reward if
performance is outstanding and below median reward for below
median performance. 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.
Barclays remuneration policy is as follows:
•to incentivise excellence and balance in both short term (one year)
and longer term (three year plus) performance such that the
primary goal of achieving top quartile TSR is met and sustained;
Notes
1The definition of economic profit (EP) is set out as footnote 1 on page 9.
2Towers Perrin, Mercer Human Resource Consulting and Kepler Associates have
given their written consent to the inclusion of references to their names in the
form and context in which they appear.