Barclays 2007 Annual Report Download - page 152

Corporate governance
Remuneration report
150 Barclays PLC Annual Report 2007
The table below contains information on the number of shares in BGI
Holdings over which options were granted, outstanding and exercised in
2006 and 2007:
Number Number
granted outstanding Number
during year at year end exercised
Year (000s) (000s) (000s)
2006 3,973 6,929 2,188
2007 2,599 7,502 1,632
In 2007 BGI employees exercised options over 1.6m (2006: 2.2m) shares
for consideration of £57m (2006: £44m); Barclays Bank PLC purchased
4.9m (2006: 4.9m) shares offered for sale by shareholders for consideration
of £488m (2006: £410m). As at 31st December 2007, employees own
5.9% of BGI Holdings (2006: 9.4%).
BGI EOP – Accounting and disclosure
The BGI EOP is accounted for as an equity settled share-based payment
in accordance with IFRS 2 ‘Share-based Payment’. The fair value of the
services received from the employees is measured by reference to the fair
value of the share options granted on the date of the grant. The cost of
the employee services received in respect of the share options granted is
recognised in the income statement over the period that the services are
received. The cost for 2007 of £54.8m (2006: £37.4m, 2005: £14.9m) is
included in staff costs in Note 8 to the accounts. In accordance with IFRS 2,
details of share options granted and exercised, together with weighted
average fair values at grant date and weighted average exercise prices are
set out in Note 44 to the accounts. In accordance with IAS 33 ‘Earnings
per Share’, unexercised options are taken into account in the calculation
of diluted earnings per share as set out in Note 11 to the accounts.
For Group reporting, the exercise of options by employees is treated as a
deemed disposal of interests in a subsidiary, as its holding in the subsidiary
has been reduced for the consideration represented by the exercise price.
Any subsequent purchase of shares offered for sale by employees is
treated as a purchase of an additional investment in a subsidiary entity.
The cash flows relating to these capital transactions are included in the
consolidated cash flow statement and disclosed, along with other disposals
and acquisitions, in Note 38 to the accounts and related movements in
goodwill and minority interests are included in Notes 21 and 33 to the
accounts respectively.
Replacement of the BGI EOP
The Group will introduce a new BGI employee share plan in 2008, under
which awards will be made using Barclays PLC shares purchased in the
market. The quantum of awards will be linked to BGI business performance.
Executive Directors will not be eligible to participate in the new BGI plan.
It is intended that no further options will be granted under the BGI EOP
and that the BGI EOP will not be renewed in 2010 when it comes to the
end of its life.
Non-executive Directors
The Board determines the fees of non-executive Directors and the fees
are reviewed annually. The fee structure as at 31st December 2007 is
shown below.
Base fee £65,000
Plus:
Chairman of Board Audit Committee £50,000
Chairman of the Board HR and Remuneration Committee £40,000
Chairman of Board Risk Committee £30,000
Members of the Board Audit Committee £20,000
Members of the following Board Committees:
Risk, HR and Remuneration and
Corporate Governance and Nominations £15,000
As Deputy Chairman, Sir Nigel Rudd receives £200,000. Sir Nigel Rudd
did not receive any additional fees for serving as a member of the Board
Corporate Governance and Nominations Committee. Sir Richard Broadbent
receives an additional £30,000 in respect of his role as Senior Independent
Director. Marcus Agius serves as a member of the Board HR and
Remuneration Committee and is Chairman of the Corporate Governance
and Nominations Board Committee. He does not receive any fees in relation
to these appointments.
David Booth was appointed as non-executive Director with effect from
1st May 2007.
The Board’s policy is that fees should reflect individual responsibilities and
membership of Board Committees. Barclays encourages its non-executive
Directors to build up a holding in Barclays shares. £20,000 of each Director’s
base fee of £65,000 is used to buy Barclays shares. These shares, together
with reinvested dividends, are retained on behalf of the non-executive
Directors until they retire from the Board. They are included in the table of
Directors’ interests in Barclays shares on page 158. Non-executive Directors
do not receive awards under share plans for employees, nor do they
accrue pension benefits from Barclays for their non-executive services.
Non-executive Directors do not have service contracts but each has a
letter of appointment. For each non-executive Director who served during
2007, the effective date of their appointment, notice period and the Group’s
liability in the event of early termination are shown in the following table.
Effective Group
date of liability in the
Non-executive letter of Notice event of early
Directors aappointment period termination
David Booth 1st May 2007 6 months 6 months’
fees
Sir Richard Broadbent 1st Sep 2003 " "
Leigh Clifford 1st Oct 2004 " "
Fulvio Conti 1st Apr 2006 " "
Dr Danie Cronjé 1st Sep 2005 " "
Professor Dame
Sandra Dawson 1st Mar 2003 " "
Sir Andrew Likierman 1st Sep 2004 " "
Sir Nigel Rudd 1st Feb 1996 " "
Stephen Russell 25th Oct 2000 " "
Sir John Sunderland 1st Jun 2005 " "
Sir Michael Rake and Patience Wheatcroft were appointed as non-executive
Directors with effect from 1st January 2008.
Each appointment is for an initial six-year term, renewable for a single term
of three years thereafter, with the exception of Sir Nigel Rudd, whose
appointment as Deputy Chairman is reviewed annually. Details of non-
executive Directors standing for re-election at the 2008 AGM are set out
on page 130.
Future Policy
The Committee will keep the existing remuneration arrangements, as
detailed in this Report, under review during 2008 and ensure that Barclays
programmes remain competitive and provide appropriate incentive for
performance. As usual, there will be individual reviews of base salary, annual
bonus (including ESAS) and awards under the long-term incentive plans.
Audited Information
As required by Part 3 of Schedule 7A of the Companies Act 1985, the Group’s
auditors, PricewaterhouseCoopers LLP, have audited the information
contained on pages 151 to 157.
Note
aMarcus Agius was a non-executive Director during 2006 and became Group Chairman
on 1st January 2007. Details of his letter of appointment are set out on page 146.