Barclays 2013 Annual Report Download - page 94

How was profit distributed between shareholders and employee
remuneration in 2013?
The charts opposite detail how the earnings generated by our
businesses have been distributed to a number of key stakeholders
including shareholders (in the form of dividends) and employees.
Ensuring that Barclays has the right people in the right roles serving our
customers and clients effectively in a highly competitive global
banking environment is vital to our ability to generate sustainable
shareholder returns.
Why is the compensation ratio 38% when your stated commitment is
to a ratio in the mid-30s in the medium term?
The Committee remains committed to continuing its repositioning
journey and in achieving a Group compensation to adjusted net
operating income ratio in the mid-30s over the medium term. However,
the Committee believes this can only be achieved once we have
completed the changes that are under way as part of the strategic
Transform programme. This includes material initial investments that
will help transform the bank, providing an improved proposition for
customers and clients and also enabling significant and sustainable
cost reduction over the next few years. This includes material
reductions in headcount and compensation costs but these will not be
achieved just through cutting pay levels. These reductions are now
underway and these changes will enable a sustainable repositioning of
the compensation to net adjusted operating income ratio.
Barclays’ plans for remuneration compliance with CRD IV mean senior
executives are just getting more fixed remuneration. Is this appropriate?
The CRD IV pay ratio impacts Barclays globally. This is not the case for
Barclays’ non-EU headquartered competitors, for example, US financial
services firms. For these firms, the CRD IV pay ratio only applies to their
EU operations and not to their non-EU operations. 60% of Barclays'
2014 Code Staff are expected to be based outside the EU. To remain
globally competitive, Barclays has had to change its pay structure,
increasing the level of fixed pay.
Our approach to the remuneration requirements of CRD IV is a new
class of fixed pay called Role Based Pay (RBP). Before implementing we
discussed our approach with the PRA and consulted with some of our
major shareholders. RBP will enable Barclays to deliver competitive
total remuneration to those staff impacted by CRD IV in a way that is
more flexible than salary. Although it is similar to salary, the key
differences are (save for where required under local law): (i) RBP will
not add to our pensions and benefits expense; and (ii) it can, in certain
circumstances, be adjusted down as well as up. Salary can typically
only be increased. RBP will be paid in shares for executive Directors and
members of the Group Executive Committee. Certain other senior
employees will be paid RBP partly in shares and partly in cash.
Distribution of earnings
We believe that the best way to support our stakeholders is
by operating a strong, profitable and growing business, which
creates jobs and contributes to the economic success of the
communities in which we live and work. The charts below detail
how the earnings generated by our businesses are distributed to
a number of key stakeholders.
2013
2012
2011
6.5p
6.5p
6.0p
39%
18%
24%
Dividend per share
Dividend payout ratioa
Shareholders
2013
2012
2011
£3,374m
£3,234m
£3,341m
£3,044m
£2,856m
£3,078m
Taxes borneb
Taxes collectedc
Government
2013
2012
2011
38.3%
37.5%
42.6%
Compensation to adjusted
net operating income
Employees
Notes
a Calculated as dividend per share divided by adjusted EPS.
b Taxes borne are the Company’s own tax contribution, representing taxes paid
by the Company in the year.
c Taxes collected are those collected from employees and customers on behalf
of governments.
barclays.com/annualreport
92 Barclays PLC Annual Report 2013
Remuneration report
Remuneration questions and answers continued