Barclays 2005 Annual Report Download - page 34

Barclays PLC
Annual Report 2005
32
Corporate governance
Barclays report on remuneration
Note
(a) Kepler Associates have given their written consent to the inclusion of
references to their name in the form and context in which it appears.
(b) Barclays Guiding Principles were introduced during 2005 and provide all parts
of the Group with a unifying set of priorities. They are: Winning Together,
Best People, Client/Customer Focused, Pioneering and Trusted.
(c) The PSP has replaced the Incentive Share Option Plan (ISOP) as the principal
long-term incentive plan. Awards made in 2004 were made under the ISOP;
awards made in 2005 were made under the PSP.
•encourage behaviour consistent with Barclays Guiding Principles(b)
which leads to excellence and the appropriate balance in: financial
performance, governance and controls, customer service, human
resource management, brand and reputation management, and risk
management;
•promote attention to maximising personal contribution,
contribution to the business in which the individual works, and
contribution to the Group overall; and
•ensure, both internally and externally, that remuneration policies
and programmes are transparent, well communicated, easily
understood and serve well the interests of shareholders.
The graph below shows the TSR for the FTSE 100 Index and Barclays
since 31st December 2000. The FTSE 100 Index is the index of the
100 largest UK quoted companies by market capitalisation. It is a widely
recognised performance comparison for large UK companies. It shows
that, at the end of 2005, a hypothetical £100 invested in Barclays on
31st December 2000 would have generated a total return of £43,
compared with a gain of £6 if invested in the FTSE 100 Index. Barclays
therefore outperformed the FTSE 100 Index for this period.
Source: Thomson Financial
This graph shows the value, at 31st December 2005, of £100 invested in Barclays
on 31st December 2000 compared with the value of £100 invested in the
FTSE 100 Index. The other points plotted are the values at intervening financial
year ends. The Directors’ Remuneration Report Regulations 2002 require that the
graph shows TSR for the five years ending with the relevant financial year.
Reward for executive Directors
Reward for the executive Directors and other senior executives
comprises:
• base salary;
• annual bonus including mandatory deferral into Barclays shares
(the Executive Share Award Scheme (ESAS));
• the Performance Share Plan (PSP)(c); and
• pension and other benefits.
The Committee reviews the elements of reward relative to the practice
of other comparable organisations. Reward is benchmarked against the
markets in which we compete for talent. This includes benchmarking
against other leading international banks and financial services
organisations, and other companies of similar size to Barclays in the
FTSE 100 Index.
20012000 2002 2003 2004 2005
0
FTSE
100 Index
Barclays
PLC
Total Shareholder Return
200
100
100
86
67 79 88
106
113
79
107
132 143
150
100
50
Value (£)
Board HR and Remuneration Committee Members
The Committee comprises the following independent non-executive
Directors:
Sir Nigel Rudd, Chairman
Sir David Arculus
Sir Richard Broadbent
Leigh Clifford (appointed 1st July 2005)
John Sunderland (appointed 1st July 2005)
The Committee members are considered by the Board to be independent
of management and free from any business or other relationship that
could materially affect the exercise of their independent judgement.
The constitution and operation of the Committee comply with the
Provisions on the Design of Performance Related Remuneration in the
Combined Code adopted by the Financial Reporting Council.
The Chairman of the Committee presents a report of each meeting to
the full Board.
Advisers to the Committee
The Committee has access to independent consultants to ensure that
it receives independent advice. 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.
In 2005, Kepler Associates(a) were appointed to provide independent
advice to Committee members on remuneration matters.
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, supported by their teams.
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.
Remuneration Policy
We are committed to using reward to drive 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 to:
•incentivise excellence and balance in both short term (one year)
and longer term (three years plus) performance such that the goal
of achieving top quartile TSR is met and sustained;
•enable the Group to attract and retain people of proven ability,
experience and skills in the pools in which we compete for talent;