Barclays 2013 Annual Report Download - page 91

Dear Shareholders
As Chairman of the Board Remuneration Committee, I am pleased to
introduce the Directors’ Remuneration Report for 2013.
Building on the 2012 changes to our approach to remuneration, we
continued throughout 2013 to ensure remuneration decisions support
the delivery of our goal of achieving sustainable performance for all our
stakeholders. Barclays is in the process of introducing the Balanced
Scorecard (refer page 10). By the end of 2014, all employees’
performance assessments will be aligned to the Balanced Scorecard
and will be measured against both ‘what’ they achieve and ‘how’ they
achieve it.
By linking employee performance assessments and remuneration
decisions to the Balanced Scorecard, we are promoting a clear and
direct alignment between Barclays’ strategy, performance management
and remuneration.
Business context in 2013
Adjusted profit before tax was down 32% to £5,167m due to costs to
achieve Transform and a 4% reduction in income. In 2013, there was a
good performance in the UK Retail and Corporate Banking businesses,
along with continued strong growth in Barclaycard. The European,
African and Wealth businesses performed less well, and are in a
process of transition to improve returns. Within the Investment Bank,
Equities saw very good growth which continued to outperform the
market. This partially offset lower income in the Fixed Income,
Currency and Commodities business.
Remuneration Committee work in 2013
The Committee’s objective is to maximise long term value for
shareholders by ensuring that we do not pay more than is necessary
while remaining competitive.
Determining the 2013 incentive pool was an extremely difficult decision
for the Committee. We were acutely aware of public sentiment and of
the challenge of presenting shareholders with an increased pool in a
year where profits have fallen. The Committee concluded that a 2013
incentive pool of £2,378m was warranted. This was up 10% on the final
2012 incentive pool but it remains 32% below pool levels in 2010 when
we started to reposition Barclays’ remuneration. Before adjustment for
risk and conduct events the incentive pool was down 18% on 2012.
Significant progress has been made since 2010 in addressing
imbalances in remuneration. The Barclays’ incentive pool reduced by
38% between 2010 and 2012 (48% for the Investment Bank) and
bonuses for Managing Directors in the Investment Bank are fully
deferred. The dilemma faced by the Committee in 2013 was that these
actions were not matched by our peers, most notably the major US
banks who are among our primary competitors. As a result, our lack of
pay competitiveness was beginning to cause demonstrable damage to
our business, especially outside the UK. The global resignation rate for
senior staff in 2013 was significantly above that in 2012. This was
particularly marked in the Investment Bank with a near doubling of
resignations of senior staff in the US. In making our 2013 decisions on
incentives, the Committee sought to ensure the health of the franchise
in the long term interest of shareholders.
As in 2012, consideration of risk and conduct events was an important
aspect of the Committee’s work during 2013. We made total reductions
of £290m to incentives for PPI, Interest Rate Hedging Products and
other events. Of this, £176m of adjustments were made through
reductions in LTIP awards that were granted in previous years and
£114m of reductions were made to the 2013 incentive pool. This
contrasts with risk and conduct adjustments to the incentive pool of
£860m in 2012 for events including the investigation into the setting of
inter-bank offered rates.
Remuneration Committee members
Chairman
Sir John Sunderland
Members
Sir David Walker
Simon Fraser
David Booth
(until 31 December 2013)
Tim Breedon
Stephen Thieke
(from 6 February 2014)
Contents Page
Annual statement 89
Remuneration questions and answers 91
Remuneration policy for all employees 93
Remuneration and CRD IV. This section sets out our plans
for remuneration compliance with CRD IV in respect of
the CRD IV pay ratio.
95
2013 incentives 96
Directors’ remuneration policy. This sets out the
Company’s policy on Directors’ remuneration for three
years from the 2014 AGM.
100
Annual report on Directors’ remuneration. This sets out
payments and awards made to the Directors for 2013.
111
Additional remuneration disclosures 122
The tables marked ‘audited’ in the report have been audited by
PricewaterhouseCoopers LLP.
‘Our aim is to deliver a greater share of the income we
generate to shareholders while remaining competitive on
pay. Although profits for 2013 were down, the 38%
reduction in incentives in the previous two years had
begun to cause demonstrable damage to our business.
The difficult decision to address this by increasing
incentives in certain key areas is in the long term interest
of shareholders. We remain fully committed to reducing
the ratio of compensation to adjusted net operating
income over time.’
barclays.com/annualreport Barclays PLC Annual Report 2013 89
Remuneration report
Annual statement from the Chairman of the Board Remuneration Committee
The Strategic Report Governance Risk review Financial review Financial statements Shareholder informationRisk management