Barclays 2012 Annual Report Download - page 86

2013 remuneration policy for executive Directors continued
Purpose Operation Value and applicable performance metrics
Annual bonus
Rewards delivery of the
near term business targets
set each year, the individual
performance of the
executive Directors in
achieving those targets, and
contribution to delivering
Barclays strategic objectives
Deferred bonuses
encourage long term focus
and retention and the malus
conditions that apply to
them discourage excessive
risk-taking and
inappropriate behaviours
and encourage a long term
view. Deferred share
bonuses encourage long
term shareholding and align
executive Directors’
interests with those of
shareholders
Determination of annual bonus
Individual bonus decisions are based on executive Directors’
performance in the year, measured against Group and personal
objectives. Performance measures are both quantitative and
qualitative, and both financial and non-financial. Bonus awards are
made by the Committee following discussion of recommendations
made by the Chairman (for the Group Chief Executive’s bonus)
and by the Group Chief Executive (for the Group Finance Director’s
bonus).
Operation of risk adjustment and malus
Bonuses awarded reflect reductions made to incentive pools in
relation to risk events. Individual bonus decisions may also reflect
reductions in relation to specific risk and compliance events. Once
awarded, deferred bonuses are subject to malus conditions which
enable the Committee to reduce the vesting level of deferred bonuses
(including to nil) in the event of, for example, employee negligence or
inappropriate conduct, or a material failure of risk management.
Delivery mechanism
Bonuses paid to executive Directors are generally delivered in a
combination of cash and shares which may be either immediate or
deferred. Deferred share bonuses are delivered in the form of awards
under the Share Value Plan (SVP).
Deferral structure
Executive Directors are Code Staff and their bonuses are therefore
subject to deferral of at least the level applicable to all Code Staff,
currently 40% (for bonuses of no more than £500,000) or 60% (for
bonuses of more than £500,000). The Committee may choose to
defer a greater proportion of any bonus awarded to an executive
Director than the minimum required by the FSA’s Remuneration Code.
Timing of receipt
Non-deferred cash components of any bonus are received following
the performance year to which they relate, typically in February.
Non-deferred share bonuses are subject to a six month holding
period. Deferred share bonuses are awarded under the SVP. They vest
over a three year period in thirds each year, subject to continued
service and the malus conditions. Once SVP awards made from 2013
have vested, the shares are (after payment of tax) subject to an
additional six month holding period.
The value of any annual bonus is
limited to a percentage of salary.
The current maximum
percentage is 250% for both the
Group Chief Executive and for the
Group Finance Director.
The performance objectives by
which executive Director bonuses
for 2013 will be assessed include
Group and individual measures,
both financial and non-financial.
At the Group level, performance
of each of the executive Directors
will include measurement against
progress in delivering the
Transform commitments. This
includes the 2015 financial targets
including return on equity, cost to
income ratio, core capital ratio
and dividend payout ratio. Further
details of each executive
Director’s 2013 objectives are
provided on pages 89 and 91.
Long Term Incentive
Plan (‘LTIP’) award
Rewards execution of
Barclays strategy and
growth in shareholder value
over a multi-year period
Long term performance
measurement, holding
periods and the malus
conditions discourage
excessive risk-taking and
inappropriate behaviours,
encourage a long term view
and align executive
Directors’ interests with
those of shareholders
Determination of LTIP award
LTIP awards are made by the Committee following discussion of
recommendations made by the Chairman (for the Group Chief
Executive’s LTIP award) and by the Group Chief Executive (for the
Group Finance Director’s LTIP award).
Operation of risk adjustment and malus
The achievement of performance conditions is the primary indicator
of whether and to what extent LTIP awards will vest. Awards are also
subject to malus conditions similar to those applicable to deferred
bonuses. The malus conditions enable the Committee to reduce
awards (including to nil).
Delivery mechanism
Barclays LTIP awards vest three years from the date of award. At
vesting LTIP awards are satisfied in Barclays shares.
Timing of receipt
For 2013 Barclays LTIP awards, a further holding period of two years
has been introduced which applies to the shares on vesting (after
payment of tax), making the plan cycle five years in total.
The value of any LTIP award is
limited to percentage of salary.
The maximum potential payout
value of an award is 400%
of salary (based on the value of
shares and salary at the start of
the LTIP performance period).
A summary of the performance
metrics that apply to the LTIP
awards for the 2010-2012,
2011-2013 and 2012-2014
performance periods is provided
on page 102. The performance
condition for the 2013-2015 LTIP
is based on financial performance
(RoRWA), risk (loan loss rate) and
a balanced scorecard.
Directors’ remuneration policy continued
barclays.com/annualreport84 I Barclays PLC Annual Report 2012