Barclays 2013 Annual Report Download - page 351

Note 35: Staff costs continued
2012
Total staff costs reduced 7% to £11,467m, principally reflecting a 4% reduction in salaries, a 27% reduction in post-retirement benefits and
reduction in redundancy and retirement costs. Salaries reduced by 4% to £5,254m reflecting a moderately declining average headcount. The
post-retirement benefits charge decreased 27% to £612m, primarily reflecting scheme closures and benefit changes in the US and Spain, and
lower interest cost for the UK Retirement Fund. The post-retirement benefits charge includes £311m (2011: £318m; 2010: £297m) in respect of
defined contribution schemes and £301m (2011: £518m; 2010: £297m) in respect of defined benefit schemes.
Performance costs reduced 4% to £2,425m, reflecting a 22% reduction in charges for current year cash and share bonuses and sales
commissions, commitments and other incentives of £1,202m, partially offset by a 23% increase in the charge for deferred bonuses from prior
years to £1,223m.
The Group incentive awards granted (which exclude charges relating to prior year deferrals but include current year awards vesting in future
years) were down 16% to £2.2bn. Investment Bank incentive awards were down 20% to £1.4bn. Redundancy and restructuring cost decreased
77% to £68m due to significant restructuring in 2011.
The UK Government applied a bank payroll tax of 50% to all discretionary bonuses over £25,000 awarded to UK bank employees between
9 December 2009 and 5 April 2010. The total bank payroll tax paid was £437m, of which £397m was recognised between 2009 and 2011.
For 2012, a charge of £34m has been recognised in relation to prior year deferrals, with the remaining £6m recognised in 2013.
The average total number of persons employed by the Group was 143,700 (2011: 149,700).
Note 36: Share based payments
Accounting for share based payments
The Group applies IFRS 2 Share Based Payments in accounting for employee remuneration in the form of shares.
Employee incentives include awards in the form of shares and share options, as well as offering employees the opportunity to purchase shares
on favourable terms. The cost of the employee services received in respect of the shares or share options granted is recognised in the income
statement over the period that employees provide services, generally the period in which the award is granted or notified and the vesting date
of the shares or options. The overall cost of the award is calculated using the number of shares and options expected to vest and the fair value
of the shares or options at the date of grant.
The number of shares and options expected to vest takes into account the likelihood that performance and service conditions included in the
terms of the awards will be met. Failure to meet the non-vesting condition is treated as a cancellation, resulting in an acceleration of
recognition of the cost of the employee services.
The fair value of shares is the market price ruling on the grant date, in some cases adjusted to reflect restrictions on transferability. The fair
value of options granted is determined using option pricing models to estimate the numbers of shares likely to vest. These take into account
the exercise price of the option, the current share price, the risk-free interest rate, the expected volatility of the share price over the life of the
option and other relevant factors. Market conditions that must be met in order for the award to vest are also reflected in the fair value of the
award, as are any other non-vesting conditions – such as continuing to make payments into a share based savings scheme.
The charge for the year arising from share based payment schemes was as follows:
Charge for the year
2013
£m
2012
£m
2011
£m
Share Value Plan 576 610 634
Executive Share Award Scheme 72 115 101
Others 54 58 137
Total equity settled 702 783 872
Cash settled 25 35 34
Total share based payments 727 818 906
The terms of the main current plans are as follows:
Share Value Plan (SVP)
The SVP was introduced in March 2010 and approved by shareholders (for Executive Director participation and use of new issue shares) at the
AGM in April 2011. SVP awards are granted to participants in the form of a conditional right to receive Barclays PLC shares or provisional
allocations of Barclays PLC shares which vest or are considered for release over a period of three years in equal annual tranches. Participants do
not pay to receive an award or to receive a release of shares. The grantor may also make a dividend equivalent payment to participants on release
of a SVP award. SVP awards are also made to eligible employees for recruitment purposes under schedule 1 to the SVP. All awards are subject to
potential forfeiture in certain leaver scenarios.
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