Barclays 2012 Annual Report Download - page 7

Your Chairman’s view
The Chairman’s primary role is to provide leadership to the Board,
creating the conditions for overall Board effectiveness and ensuring
that Barclays satisfies its legal and regulatory responsibilities.
Here, Sir David Walker – who became Chairman in 2012 – takes
the opportunity to provide his views on the performance of
Barclays, the Board, and his priorities for the future.
The right culture
Changing Barclays culture is a critical component in rebuilding trust
and real change is required. The Board and management have an
essential role to play in promoting a culture that embeds appropriate
and consistent values throughout the whole of the organisation,
irrespective of location or seniority. We have already started work
on changing the culture with the launch in January of Barclays new
Purpose and Values. We have defined our Purpose as ‘Helping people
achieve their ambitions – in the right way’. This is underpinned by
five core values: Respect, Integrity, Service, Excellence and
Stewardship. Antony Jenkins provides more detail on this work and
the overall Transform Programme – designed to position Barclays as
the ‘Go-To’ bank – in his CEO’s Review. Embedding the new Purpose
and Values will take time but we are already changing the way we
pay people to help accelerate that journey. Remuneration structures
are being amended to ensure they take into account how results are
delivered as well as the actual delivery of those results. We have
already removed all sales commission for branch-based staff with
performance now being measured against customer service metrics.
Running Barclays the right way
Changes will be made to the way Barclays is governed in order to
reflect the new environment in which we are operating and reinforce
the cultural change that we are putting in place. We were one of the
first banks to create a Board Risk Committee and this served Barclays
well during the financial crisis. It has primarily focused on financial
risks, such as credit, market, capital and funding risk. However, we
now need to ensure an equal focus on conduct and reputation risk.
We have accordingly created a new Board Committee to scrutinise
these areas of risk, including operational risk. The creation of such
a committee will ensure that the existing Board Risk Committee can
focus its attention on financial risk, while the new Board Conduct,
Reputation and Operational Risk Committee can focus on ensuring
that our business practices and culture appropriately reflect the
needs of all of our stakeholders, especially our customers, in addition
to focusing on other areas of non-financial risk.
Remuneration has been a key governance concern for many of our
stakeholders. There is no doubt that pay in some parts of the industry
became excessive in the years leading up to the financial crisis. We are
determined to ensure that shareholders receive an increased share of the
income and pre-compensation profits earned by the Group. Significant
progress was made in 2012 – incentive awards reduced by 16% overall
and 20% in the Investment Bank, despite a material increase in adjusted
profit before tax. We are determined to continue making progress in
improving critical compensation ratios such as compensation to net
operating income to the benefit of our shareholders.
The Barclays Board responded swiftly following the resignations of
Marcus Agius and Bob Diamond as Chairman and CEO respectively
in order to ensure stability was restored as quickly as possible, with
Marcus Agius agreeing to act as full-time Chairman until a new
Chairman and CEO had been appointed. It has also worked diligently to
ensure Barclays survived during one of the most serious financial crises
the world has faced. The Board and management deserve credit for
Barclays profitable track record during this period.
Criticism has, however, been levied at both the Board and senior
management for their role in the events which resulted in the
resignations last July. With the benefit of hindsight, there was a failure
to recognise sufficiently that the environment in which banks operate
had changed. A key lesson from the events of last summer is to
underline the need for the Board to step back periodically from the
detail and to take stock of the changing external strategic and
operating environment. The Board will be assisted in this by the
addition of two new Directors who have recently been appointed: Tim
Breedon, the former Chief Executive of Legal & General Group plc, and
Diane de Saint Victor, the General Counsel of ABB Limited. Tim brings
to the Board deep financial services experience and a shareholder
perspective, while Diane brings specific experience of legal and
compliance issues in a global business and in helping to embed
cultural change. Further Board appointments will be made during
2013. Marcus Agius and Alison Carnwath both left the Board last year.
I want to thank Marcus for his dedicated contribution as Barclays
Chairman through an extraordinarily difficult 5-year period for the
banking sector between 2007-2012 and, in particular, for the
effectiveness and dignity of his leadership in the demanding phase of
transition after Bob Diamond stepped down and before I became
Chairman later in the year. I want also to thank Bob Diamond for the
very significant positive contribution that he made during his 16 years
with Barclays. Sir Andrew Likierman will be retiring from the Board at
the AGM having served nine years as a Director. I would like to thank
Andrew for his contribution to the Board over this period, particularly
as a member of the Board Audit and Risk Committees. I would also
like to thank Alison Carnwath for her contribution to the Board.
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