Barclays 2005 Annual Report Download - page 36

Barclays PLC
Annual Report 2005
34
The component parts for each executive Director are detailed in tables
accompanying this report.
All the executive Directors meet the Committee’s guideline that, as a
minimum, they should hold the equivalent of 1x their base salary in
Barclays shares, including shares held on their behalf in ESAS.
Base Salary
The annual base salaries for the current executive Directors are shown
in the table below:
Date of
As at As at previous
31st Dec 2005 1st April 2006 increase
John Varley £850,000 £900,000 1st Sep 2004
Robert E Diamond Jr £250,000 £250,000 1st Mar1999
Gary Hoffman £500,000 £625,000 1st Jan 2004
Naguib Kheraj £500,000 £700,000 1st Jan 2004
David Roberts £500,000 £600,000 1st Jan 2004
With effect from 1st January 2005, the start of his first financial year
as Chairman, Matthew W Barrett’s salary reduced from £1.1m to
£650,000. Also, with effect from 1st January 2005, he is not eligible
for a performance bonus, pension contributions or further long-term
incentive awards. His salary will not increase on 1st April 2006.
Annual Bonus Including Executive Share Award Scheme (ESAS)
75% of annual bonus is delivered as cash. The remaining 25% is
delivered as a provisional allocation of shares under ESAS, which will
normally not be released for at least three years and are subject to
potential forfeit if the individual resigns and commences employment
with a competitor business. See page 40 for details of the Scheme.
The maximum bonus opportunity is tailored to the relevant market;
this is typically 250% of base salary.
Performance Share Plan (PSP)
The Performance Share Plan (PSP) was approved by shareholders at
the 2005 AGM. Performance shares are ‘free’ Barclays shares for which
no exercise price is payable and which qualify for dividends.
Performance share awards are communicated to participants as an
initial allocation. This initial allocation is the ‘expected value’ of the
award and is up to the higher of 150% of base salary or 75% of
base salary and target annual bonus. Barclays performance over a
three-year period determines the final number of shares that may
be released to participants. After three years the trustee considers
the release of performance shares based on the outcome of two
performance conditions:
•Before any shares are released, Barclays cumulative EP over the
performance period must normally be greater than the total for the
previous three-year period.
•For 2005 awards, a multiplier applies to the initial allocation based
on Barclays total shareholder return compared to a peer group of
major international banks, measured over the three-year
performance period (2005 to 2007).
For 2006 awards, 50% of each award will be subject to a relative
TSR metric and 50% subject to an EP metric. Relative TSR and
EP are both considered to be good measures of value creation
to shareholders.
The comparator banks for the 2005 and 2006 awards are:(a)
UK Mainland Europe US
HBOS ABN Amro Citigroup
HSBC BBVA JP Morgan Chase
Lloyds TSB BNP Paribas
Royal Bank of Scotland Deutsche Bank
UBS
The performance scale for the 2005 allocation is:(b)
Multiplier
Barclays TSR applying to Number of shares Example based on
ranking in the the initial that vest (as a initial allocation of
peer group of 12 allocation % of maximum) 75,000 shares
1st 3 x 100% 225,000
2nd 2.5 x 83% 187,500
3rd 2 x 67% 150,000
4th 1.5 x 50% 112,500
5th 1.25 x 42% 93,750
6th 1 x 33% 75,000
7th or below 0 0 0
Notes
(a) The reserve companies for the 2005 and 2006 awards are Banco Santander,
Morgan Stanley, Bank of America and Wachovia.
(b) The estimated ‘expected value’ is 33% of the maximum vesting level.
There is no vesting unless Barclays is ranked above median on relative
TSR. This is also the scale for the TSR element of the 2006 awards.
The vesting scale is illustrated in the chart below.
Retained Incentive Opportunity
Mr Diamond retains an opportunity to be considered for an award
in February 2008 up to a maximum value of £14.85m, subject to
performance criteria based on the delivery of EP at Barclays Capital over
the period 2005 to 2007. Details of the award are provided on page 41.
Incentive Share Option Plan (ISOP)
The plan was not used for awards to executive Directors in 2005.
Details of the plan can be found on page 43. Awards in 2003 and 2004
under the ISOP include financial metrics or thresholds. These have
been adjusted where necessary to neutralise the effect of the
introduction of the International Financial Reporting Standards.
1112 10 9 8 1654327
0
Total Shareholder Return in Peer Group
100
60
80
40
20
% of Maximum
Barclays TSR Ranking in Peer Group of 12
3 X
2.5 X
2 X
1.5 X
1.25 X
1 X
Corporate governance
Barclays report on remuneration