Barclays 2006 Annual Report Download - page 130

•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 aligned with the interests of shareholders.
The graph below shows the value, at 31st December 2006, of £100
invested in Barclays on 31st December 2001 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 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 such as Barclays and this is why it has been chosen as a
comparator to illustrate Barclays TSR growth. The graph shows that,
at the end of 2006, a hypothetical £100 invested in Barclays on
31st December 2001 would have generated a total return of £58,
compared with a gain of £41 if invested in the FTSE 100 Index. Barclays,
therefore, outperformed the FTSE 100 Index for this period.
Source: Datastream
Schedule 7A of the Companies Act 1985 requires 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
through the Executive Share Award Scheme (ESAS);
• long-term incentives through the Performance Share Plan (PSP);
and
• pension and other benefits.
The Committee reviews the elements of reward relative to the policies
above and 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.
The component parts for each executive Director are detailed in the
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 under award through ESAS.
100
100
70
95
117 127
158
78 92 102
123
141
0201 03
Year ended 31st December
04 05 06
0
FTSE 100 Index
Barclays PLC
200
150
100
50
Value (£)
Total Shareholder Return
Corporate governance
Remuneration report
Notes
(a) Kepler Associates have given and not withdrawn 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 values. They are: Winning Together, Best People,
Client/Customer Focused, Pioneering and Trusted.
Board HR and Remuneration Committee Members
The Committee comprised the following independent non-executive
Directors during 2006:
Sir Nigel Rudd (Chairman until 31st December 2006)
Sir Richard Broadbent (Chairman from 1st January 2007)
Leigh Clifford
Sir John Sunderland
Sir David Arculus (resigned 27th April 2006)
The Committee members were 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 complies
with the Provisions on the Design of Performance Related Remuneration
in the Combined Code adopted by the Financial Reporting Council.
Marcus Agius was appointed as a member of the Committee with effect
from 1st January 2007.
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 work, as necessary, and are required to disclose to the
Committee any potential conflict of interest.
In 2006, Kepler Associates(a) were reappointed by the Committee to
provide independent advice to Committee members on remuneration
matters. Kepler Associates also supplied supporting valuation data for
Barclays share-based payments processes.
The Chairman of the Board (from 1st January 2007 a member of the
Committee itself), the Group Chief Executive, the Human Resources
Director and, as necessary, members of the 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
operations 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
Barclays policy is to use 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.
The aims of Barclays remuneration policy are to:
•incentivise excellence in and balance between both short-term
(one year) and longer-term (three years plus) performance such
that Group financial goals and the goal of achieving top quartile
total shareholder return (TSR) are 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;
•encourage behaviour consistent with Barclays Guiding Principles(b)
which leads to excellence and the appropriate balance in financial
performance, governance, controls, risk management, customer
service, people management, brand and reputation management;
Barclays PLC
Annual Report 2006
126