Barclays 2013 Annual Report Download - page 105

Remuneration policy for executive Directors continued
Element and purpose Operation Maximum value and performance measures
B. Variable Pay continued
Long Term Incentive
Plan (LTIP) award
To reward execution of
Barclays’ strategy and
growth in shareholder
value over a multi-year
period
Long-term performance
measurement, holding
periods and the malus
provisions discourage
excessive risk-taking and
inappropriate behaviours,
encourage a long-term
view and align executive
Directors’ interests with
those of shareholders
Performance measures
balance incentivising
management to deliver
strong risk-adjusted
financial returns, and
delivery of strategic
progress as measured by
the Balanced Scorecard.
Delivery in shares with a
further two-year holding
period increases
alignment with
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 other
executive Directors’ LTIP awards).
Delivery structure
LTIP awards are granted subject to the plan rules and are satisfied in
Barclays’ shares (although they may be satisfied in other instruments
as may be required by regulation).
For each award, performance measures are set at grant and there is no
retesting allowed of those conditions. The Committee has, within the
parameters set out opposite, the flexibility to vary the weighting of
performance measures and calibration for each award prior to its grant.
The Committee has discretion, and in line with the plan rules approved
by shareholders, in exceptional circumstances to amend targets,
measures, or number of awards if an event happens (for example, a
major transaction) that, in the opinion of the Committee, causes the
original targets or measures to be no longer appropriate or such
adjustment to be reasonable. The Committee also has the discretion
to reduce the vesting of any award if it deems that the outcome is not
consistent with performance delivered, including to zero.
Participants may, at the Committee’s discretion, also receive the
benefit of any dividends paid between the award date and the relevant
release date in the form of dividend equivalents (cash or securities).
Operation of risk adjustment and malus
The achievement of performance measures determines the extent to
which LTIP awards will vest. Awards are also subject to malus
provisions (as explained in the Annual bonus paragraphs above)
which enable the Committee to reduce the vesting level of awards
(including to nil).
Timing of receipt
Barclays LTIP awards have a five-year period in total from grant to
when all restrictions are lifted. This will include a minimum three-year
vesting period and an additional two-year holding period once vested
(after payment of tax).
The maximum annual LTIP award is
120% of fixed pay. For these purposes,
fixed pay is as set out in the charts on
page 100.
Vesting is dependent on performance
measures and service.
Following determination of the financial
measures applicable to an LTIP cycle, if
the Committee is satisfied with the
underlying financial health of the
Barclays Group (based on profit before
tax) it may, at its discretion, adjust the
percentage of shares considered for
release up or down by up to 10%
(subject to the maximum % for the
award calibrated against financial
performance measures).
Performance measures will be based on
financial performance (e.g. measured
on return on risk weighted assets), risk
metrics (e.g. measured by loan loss
rate) and the Balanced Scorecard which
also includes financial measures. The
Committee has discretion to change
the weightings but financial measures
will be at least 50% and the Balanced
Scorecard will be a maximum of 30%.
The threshold level of performance for
each performance measure will be
disclosed annually as part of the
implementation of remuneration
report. Straight line vesting applies
between threshold and maximum for
the financial and risk measures.
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