Barclays 2011 Annual Report Download - page 56

Remuneration report
Statement from the Chairman of the Board Remuneration Committee
We recognise that executive remuneration generally, and bank
remuneration in particular, is an important issue. Barclays needs to work
with the acceptance of the communities in which we operate and
balance the competing demands of our many stakeholders. This includes
a close and continuous engagement with the Financial Services
Authority and with our shareholders.
In 2011 Barclays delivered a solid set of results, achieved in challenging
market and economic conditions. This included:
– Total income up 3% (adjusted income excluding own credit and debt
buy-backs down 8%);
– Profit before tax down 3% (adjusted profit before tax down 2%);
– Credit impairment charge improved 33%, with an annualised loan loss
rate of 77bps (2010: 118bps);
– Operating expenses, excluding PPI provision, goodwill impairment and
UK bank levy, down 4%. Cost saving targets have been exceeded;
– Core Tier 1 ratio strengthened to 11.0% (2010: 10.8%) and risk
weighted assets reduced;
– Liquidity pool remained strong;
– Net asset value per share increased 9% and net tangible asset value
per share increased 13%;
– Universal banking model helped to deliver broadly balanced adjusted
profit before tax across the retail and investment banking businesses;
– Sovereign exposure to Spain, Italy, Portugal, Ireland and Greece reduced;
– Improving performance against our Citizenship execution priority,
including delivery of £43.6bn of gross new lending to UK businesses,
including £14.7bn to SMEs, exceeding Project Merlin lending targets;
and
– Final dividend of 3.0p per share for the fourth quarter, making 6.0p for
the year, an increase of 9%.
The results were reflected in the remuneration decisions across Barclays
including those for Bob Diamond and Chris Lucas. 2011 total incentive
awards were down 26% across the Group compared with a 3% reduction
in profit.
Remuneration decisions for all of our employees, including for Bob
Diamond and Chris Lucas, reflect performance and in making these
decisions we are mindful of current economic conditions. Bonuses for
our executive Directors and our eight highest paid senior executive
officers were down 48% versus 2010 on a "like-for-like" basis (being the
reduction for individuals in service in both 2010 and 2011).
Barclays needs to operate commercially and that includes setting
remuneration for our executive Directors appropriately. Key factors that
were taken into account in deciding on Bob Diamond's bonus were
Barclays profit before tax and adjusted profit before tax; the relative
performance of Barclays versus its peers; progress in delivering the four
strategic priorities of capital, returns, income and Citizenship; progress in
delivering the £1bn cost reduction target; Bob Diamond's leadership of
the Executive Committee; and progress in delivering the return on equity
target of 13%. In assessing the return on equity target, the Committee
took into account the fall in return on equity during the year and the
increased levels of capital being held. Barclays made progress in
executing a thorough portfolio review designed to ensure that the
business can achieve its return on equity target in the future. The
Committee also took into account the PPI redress and progress against
the Project Merlin lending targets.
The Board and the Committee recognise that our return on equity has to
improve. In order to achieve this, our operating costs need to be reduced.
Remuneration has its part to play in that. We fully recognise that higher
capital requirements and a challenging economic environment mean
that remuneration levels in the industry have to adjust. That journey will
take time and we have taken important steps in the right direction in
2011. Total incentive awards for Barclays Capital were down 35% on
2010 with Barclays Capital profit before tax reducing 32%. The
Committee will continue to focus on reaching a sustainable balance
between shareholder returns and employee remuneration.
In determining 2011 total incentive awards, the Committee made
appropriate adjustments to reflect material events in 2011. This included
adjusting total incentive awards for the impact of the PPI redress and
reviewing financial performance excluding own credit. The Committee
also considered material events in 2011 for individual decisions, which
resulted in reductions to incentive awards and the clawback of unvested
deferred awards in a number of cases.
This report provides the following information:
– Part A (page 55): an overview of executive remuneration for 2011;
– Part B (page 56): details of the total incentive awards for 2011; and
– Part C (pages 57 to 65): additional disclosures to comply with legal
and regulatory requirements for remuneration disclosure. Barclays
auditors, PricewaterhouseCoopers LLP, have audited the information
in Tables 4, 6, 7, 8, 9, 10, 11, 19, 23 and 24.
Additional information on Barclays approach to remuneration can be
found at www.barclays.com/investorrelations. This includes:
– Details relating to Barclays Remuneration Policy;
– How regulatory requirements are factored into decision making;
– The key elements of Barclays remuneration arrangements; and
– A summary of the principal share and cash plans and long term
incentive plans used for the 2011 performance year.
I trust the remuneration report provides you with a clear picture of how
the Committee has discharged its responsibilities in 2011.
On behalf of the Board
Alison Carnwath
Chairman, Board Remuneration Committee
7 March 2012
54 Barclays PLC Annual Report 2011 www.barclays.com/annualreport