Barclays 2012 Annual Report Download - page 81

Barclays total incentive awards granted - current year and deferred (audited)
Barclays Group Investment Bank
Year ended
31.12.12
£m
Year ended
31.12.11
£m
%
Change
Year ended
31.12.12
£m
Year ended
31.12.11
£m
%
Change
Current year cash bonus 852 832 2 399 381 5
Current year share bonus 15 66 (77) 63 100
Total current year bonus 867 898 (3) 405 384 5
Deferred cash bonus 489 618 (21) 447 576 (22)
Deferred share bonus 498 634 (21) 446 576 (23)
Total deferred bonus 987 1,252 (21) 893 1,152 (22)
Bonus pool 1,854 2,150 (14) 1,298 1,536 (15)
Other incentives 314 428 (27) 96 201 (52)
Total incentive awards granted 2,168 2,578 (16) 1,394 1,737 (20)
Adjusted profit before tax 7,048 5,590 26 4,063 2,965 37
Bonus pool as % of adjusted profit before tax
(pre bonus)a20% 29% 23% 35%
Proportion of bonus that is deferred 53% 58% 69% 75%
Total employees (full time equivalent) 139,200 141,100 (1) 24,000 23,600 2
Bonus per employee £13,300 £15,237 (13) £54,100 £65,085 (17)
Deferred bonuses are payable only once an employee meets certain conditions, including a specified period of service. This creates a timing difference
between the communication of the bonus pool and the charges that appear in the income statement which are reconciled in the table on page 81.
a Calculated as bonus awards divided by adjusted profit before tax excluding the income statement charge for bonus awards.
Compensation ratio trends and benchmark against peers
The reduction in compensation in 2012 moves Barclays from being at
the median pay-performance level compared to competitors over the
last two years to below the lower quartile level. This is a major shift
which the Committee recognised would require strong management to
achieve in a single year. Although it exposes the Group to some
retention risk, the Committee determined that it was a necessary step
on the multi-year journey to reposition Barclays remuneration. Major
shareholders and their representative bodies were consulted as part of
the process for deciding to take this change of approach.
Antony Jenkins said in the 2012 Results Announcement on 12 February
2013:
“We committed last year to a journey to bring down our compensation
ratio and have made good progress this year, with the Group
compensation to net income ratio declining to 38% (2011: 42%). While
this is progress, not the destination, we believe a ratio in the mid-30s is
a sustainable position in the medium term which will ensure that we
can continue to pay our people competitively for performance while
also enabling us to deliver a greater share of the income we generate
to shareholders.”
2012 incentives pool determination process
We recognise the importance that our stakeholders attach to the
judgements that we apply in managing remuneration. Reduced
remuneration costs, and increasingly robust risk-adjustments and
performance conditions will continue to be a focus in how we achieve
the right balance between the priorities of our various stakeholders.
Remuneration must be managed in a way which incentivises
employees, ensures pay is linked to performance and is appropriately
aligned to risk. Material progress has been made in reducing absolute
levels of remuneration. Variable remuneration has been reduced by
16% year on year.
2010 2011 2012
55%
50%
45%
40%
35%
Barclays Group compensation as a percentage of adjusted net operating income
Peer group 75th percentile
Peer group median
Barclays Group
Peer group 25th percentile
44%
44% 44%
43%
42%
38%
49%
52%
48%
38% 39%
40%
Basis of calculation
The following peer group companies were used to
compare Barclays compensation ratio (where FY 2012
ratios were unavailable as at 28 February 2013, data for
Q3 2012 was used): BBVA, BNP Paribas, Bank of
America, Citigroup, Credit Suisse, Deutsche Bank, HSBC,
JP Morgan, Lloyds, Morgan Stanley, RBS, Santander,
Societe Generale, UBS and Unicredit. The impact of own
credit is excluded.
barclays.com/annualreport Barclays PLC Annual Report 2012 I 79
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