Barclays 2013 Annual Report Download - page 92

When determining the incentive pool we looked at it on a pre- and
post-adjustment basis for risk and conduct events. The Committee
concluded that an incentive pool for 2013 of £2,492m on a pre-
adjustment basis was appropriate. This is 18% down on the equivalent
pre-adjustment pool in 2012. After applying an adjustment for risk and
conduct events of £114m, the final 2013 incentive pool is £2,378m, up
10% on 2012 reflecting the lower level of risk and conduct adjustment
for 2013.
Overall compensation costs for 2013 are down on 2012. This in part
offsets the reduction in income and means that the Group
compensation to adjusted net operating income ratio increases only
slightly from 37.5% in 2012 to 38.3% in 2013. The Committee remains
strongly focused on its overall repositioning journey and is still
committed to a compensation to adjusted net operating income ratio
in the mid-30s in the medium term. However, the Committee believes
that this can only be achieved once we have completed the changes
that are under way as part of the strategic Transform programme.
These changes will enable significant and sustainable cost reductions
over the next few years including material reductions in headcount and
compensation costs. These reductions are already underway and these
changes will enable a sustainable repositioning of the compensation to
adjusted net operating income ratio.
The Committee has also focused on remuneration compliance with
new EU regulation, the Capital Requirements Directive IV (CRD IV) and,
in particular, the capped ratio of variable to fixed pay (CRD IV pay ratio).
The Committee considered this very carefully because it impacts
Barclays’ competitiveness in the global market for talent. Further
information on our intended approach to ensure compliance with the
CRD IV pay ratio is provided on page 95.
The Committee continued to consider the recommendations of the
Salz Review in respect of remuneration. Key actions taken included the
adoption of a new remuneration policy, a new performance assessment
process, the removal of sales incentives for UK retail colleagues and
enhancing the risk adjustment processes. The process for reviewing
risk and conduct adjustments to the incentive pool was strengthened
in 2013 by the formation of the Remuneration Review Panel (Panel)
which reports to the Committee. Further details on the Panel are
provided on page 129.
Outside the Committee’s formal meetings, we continued to meet and
engage with shareholders frequently. Matters discussed with
shareholders include the aggregate spend on remuneration, senior
executive remuneration levels, our new forward looking Directors'
remuneration policy and our plans for remuneration compliance with
CRD IV. We have also continued to work with regulators on our
remuneration arrangements during 2013, in particular in the UK and
the US.
Key executive Directors’ remuneration decisions during 2013
The Committee has agreed that Antony Jenkins’ base salary will be
unchanged for 2014 at £1,100,000. On 3 February 2014, Antony Jenkins
announced that he would decline any 2013 bonus offered to him by the
Board, citing the rights issue, restructuring costs and costs associated
with legacy issues as the reasons for his decision.
Chris Lucas stepped down from the Board due to ill health with effect
from 16 August 2013. Further details can be found on page 115. The
Committee approved a pro-rated 2013 bonus award of £500,000 to
Chris Lucas which will be fully deferred in shares.
Tushar Morzaria was appointed as Group Finance Director on a salary
of £800,000 commensurate with market pay levels and being the same
as his predecessor. The rest of his pay is in line with Barclays’ policy for
executive Directors. The Committee also approved a 2013 bonus of
£1,200,000 recognising that he forfeited any right to participate in the
JP Morgan incentive arrangement for 2013 and his contribution to
Barclays in 2013. The long-term/deferred awards which Tushar had
held at JP Morgan were replaced with Barclays’ awards. The terms of
these awards are no more generous than those that they replaced and
the awards are in the form of Barclays’ shares to align with
shareholders.
As our key measure of strategic delivery, the Balanced Scorecard has
been introduced as one of the measures on the Long Term Incentive
Plan (LTIP) with effect from the 2013 award. The Balanced Scorecard
will also be used alongside other performance measures for annual
bonus and LTIP awards over the term of the Directors’ remuneration
policy. From 2014, for annual bonus the weightings will be 50% for
financial measures, 35% for the Balanced Scorecard and 15% for
personal objectives. For LTIP awards, financial measures will guide at
least 50% of the maximum opportunity and the Balanced Scorecard
measure will be no more than 30%. Risk measures will also be
incorporated.
A significant part of the Committee’s work in 2013 was reviewing how
to restructure executive Director and senior executive remuneration for
compliance with the CRD IV pay ratio. Our approach is based on a new
class of fixed pay called Role Based Pay (RBP). We are seeking
shareholder approval for a maximum ratio of variable to fixed pay of
2:1 in order to limit the increase in fixed costs to a minimum. For
executive Directors, the level of RBP will be capped for the term of
the policy and will be delivered in shares which will be subject
to a holding period of up to five years to ensure alignment with
shareholders. The Committee has recognised that in return for greater
certainty there should be a reduced total remuneration opportunity for
the executive Directors.
Focus in 2014
The Committee will continue to focus on the need to pay at levels
required to attract, retain and motivate our people. While not paying
more than we judge to be necessary, we will ensure that we can
continue to pay our people competitively and simultaneously seek to
deliver a greater share of the income we generate to shareholders. We
will be informed in this work by a continuing constructive engagement
and dialogue with our shareholders and our other stakeholders.
Our remuneration report
We have adopted in this report the remuneration disclosures required
by the Large and Medium-sized Companies and Groups (Accounts and
Reports) (Amendment) Regulations 2013. We are seeking shareholder
approval at the 2014 AGM for:
 our Directors’ remuneration policy;
 our 2013 annual report on Directors’ remuneration; and
 our approach to compliance on the CRD IV pay ratio.
On behalf of the Board
Sir John Sunderland
Chairman, Board Remuneration Committee
3 March 2014
barclays.com/annualreport
90 Barclays PLC Annual Report 2013
Remuneration report
Annual statement from the Chairman of the Board Remuneration Committee continued