Barclays 2006 Annual Report Download - page 133

years the trustee considers the release of performance shares based on
the outcome of two performance conditions, EP and TSR. Note that:
•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 PSP awards made in 2005, the award depends on Barclays TSR
relative to a peer group of 11 other international banks.
•For PSP awards made in 2006, 50% of each award depends on
Barclays EP and 50% of each award depends on Barclays TSR relative
to a peer group of 11 other international banks.
•For the TSR element of the award, there is no vesting unless Barclays
is ranked above median on relative TSR.
•The performance conditions for PSP awards made in 2006 will be
measured over the three-year performance period (2006 to 2008).
•Relative TSR and EP are both considered to be good measures of
value creation to shareholders.
The peer group for the 2006 award, as for the 2005 award, is:(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 TSR element of the 2006 award is shown
in the chart below:
Award Multiple
8th 7th 6th 5th 4th 3rd 2nd 1st
1.0
1.25
1.5
2.5
Total Shareholder Return Performance Scale
2.0
3.0
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Barclays TSR ranking in the peer group
Number of shares that vest
(as a % of maximum)
33%
42%
50%
83%
67%
100%
Barclays PLC
Annual Report 2006 129
Governance
2
The performance scale for the EP element of the 2006 award is shown in
the chart below:
EP comprises profit after tax and minority interests less a capital charge.
Independent confirmation is provided to the Committee as to whether
a performance condition has been met.
ISOP
ISOP has not been used for awards to executive Directors since 2004.
Details of ISOP can be found on page 139. Awards in 2003 and 2004
under ISOP include financial metrics or thresholds. These were adjusted
where necessary to neutralise the effect of the introduction of IFRS.
The main performance condition is TSR relative to a peer group of
11 other major international banks, combined with an EP threshold.
The peer group for the 2003 and 2004 ISOP was: Abbey National, ABN
Amro, BBVA, BNP Paribas, Citigroup, Deutsche Bank, HBOS, HSBC,
Lloyds TSB, Royal Bank of Scotland and Standard Chartered.
Retained Incentive Opportunity
Robert E Diamond Jr 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. EP was chosen as this is an appropriate
measure to align the interests of the participant with those of
shareholders and is a good measure of value creation for shareholders.
Details of the award are provided on page 137.
Sharesave
All eligible employees including executive Directors may participate in
Sharesave. Sharesave is an HMRC (Her Majesty’s Revenue and Customs)
approved all-employee share option plan. HMRC does not permit
performance conditions to be attached to the exercise of Sharesave
options. Under Sharesave, participants are granted options over
Barclays shares. Each participant may save up to £250 per month to
purchase Barclays shares at a discount. For the 2006 grant, the discount
was 20% of the market value of a share at the time the option was
granted. Sharesave is also offered to employees in Spain and Ireland.
Following the 2006 invitation, a total of 41,371 employees in the UK,
Spain and Ireland were participants in Sharesave with 79 million shares
under option.
Sharepurchase
Sharepurchase was introduced in January 2002. It is an HMRC
approved all-employee share plan. Sharepurchase is open to all eligible
employees including executive Directors. Under Sharepurchase,
participants are able to purchase up to £1,500 worth of Barclays shares
each year, which, if kept in trust for five years, can be withdrawn
from Sharepurchase tax-free. Any shares in Sharepurchase will earn
dividends in the form of additional shares, which must normally be held
by the trustee on behalf of the participant for no less than three years.
EP Performance Scale
0
0.5
1.0
1.5
2.0
2.5
3.0
Cumulative 2006-2008 EP (£m)
Award multiple
5,600 6,000 6,400 6,800 7,200
Note
(a) The reserve companies for the 2005 and 2006 awards are Banco Santander, Morgan Stanley, Bank of America and Wachovia.