Barclays 2013 Annual Report Download - page 98

2013 performance headlines
The key considerations which the Committee took into account in making its remuneration decisions for 2013 are highlighted below:
 Adjusted income decreased 4% to £28,155m and adjusted profit before tax was down 32% to £5,167m
 The profits have been impacted by the reduction in income and the costs to achieve Transform including restructuring and de-risking activity
completed during the year. Profits were also impacted by the withdrawal from certain lines of business which were incompatible with Barclays’
Purpose and Values, investing to transform our operations and resolving legacy conduct and litigation issues
 The UK Retail and Corporate Banking businesses delivered good results, alongside the continued strong growth of Barclaycard
 Within the Investment Bank, an impressive performance in Equities and in Investment Banking has helped to partially offset lower income from
our Fixed Income, Currencies and Commodities business
 We have also started to make important progress in repositioning our African, European and Wealth businesses to improve returns
 CRD IV CET1 ratio fully loaded was 9.3% (30 September 2013: 8.4% or 9.6% on a pro forma post rights issue basis)
 The estimated PRA leverage ratio increased to just under 3.0% (30 June 2013: 2.2%), reflecting a reduction in the PRA leverage exposure of
£196bn and an increase in eligible PRA adjusted Tier 1 Capital to £40.5bn (30 June 2013: £34.2bn)
 Adjusted return on average shareholders’ equity decreased to 4.5% (2012: 9.0%) principally reflecting the decrease in profit before tax, a £440m
write-down of deferred tax assets relating to Spain and the £5.8bn of equity raised from the Rights Issue in Q413
 Cultural change, particularly embedding our Purpose and Values throughout the organisation, was a major Transform priority for 2013. As well
as every colleague completing a mandatory training programme, Barclays’ Purpose and Values was integrated into the day to day management
processes covering recruitment, talent management, performance assessment and reward
 In the case of our Managing Director population, their 2013 performance has been formally assessed against whether they have exhibited the
right values and behaviours, as well as producing the desired business outcomes. This criteria will apply to all employees in 2014.
2013 incentives – repositioning journey and impact of 2012 decisions
2013 compensation and incentive headlines
 Total compensation costs decreased 1% to £9,616m. Total compensation costs in the Investment Bank were slightly down at £4,634m (2012:
£4,667m)
 This reduction in compensation costs in part offset the reduction in adjusted net operating income and meant that the Group compensation to
adjusted net operating income ratio increased slightly to 38.3% (2012: 37.5%)
 Before making adjustments for risk and conduct events, the 2013 incentive awards of £2,492m had been reduced 18% from 2012. After
adjustments for risk and conduct, total incentive awards granted were £2,378m, up 10% on 2012
 While the final incentive pool is up on 2012, it is £1,106m or 32% below the 2010 outcome from when the Committee started its repositioning
journey to reduce compensation. In the Investment Bank incentive awards granted were 41% (£1,086m) below 2010
 There has been strong differentiation on the basis of individual performance to allow the Group to more effectively manage compensation costs
 Average value of incentive awards granted per Group employee is £17,000 (2012: £15,600) with the average value of incentive awards granted
per Investment Bank employee of £60,100 (2012: £54,500). Average value of incentive awards granted per Group employee excluding the
Investment Bank is £7,100 (2012: £6,800)
 Levels of deferral continue to significantly exceed the PRA Remuneration Code’s minimum requirements and are expected to remain among the
highest deferral levels globally. 2013 bonuses awarded to Managing Directors in the Investment Bank were 100% deferred.
We recognise the importance that our stakeholders attach to the judgements that we apply in managing remuneration. Remuneration must be
managed in a way which incentivises employees, ensures pay is linked to performance and is appropriately aligned to risk and conduct.
Following 2010, material reductions were made to the incentive pool, particularly in the Investment Bank. In 2011 the Investment Bank pool was
reduced by 35% from £2,660m to £1,737m and again in 2012 by a further 20% to £1,394m. Over this two-year period, incentives within the
Investment Bank were almost halved (total incentive awards granted were down 48%). From a Group perspective, the pool was down by 38% over
the same period. In making these reductions the Committee and management took measured risks with the aim of exerting further downward
pressure on remuneration.
The Committee closely monitored the impact of these decisions. The evidence suggested that similar actions were not taken by our peers, most
notably in the major US banks. This, together with uncertainty generated by CRD IV and high deferral levels (which significantly exceed regulatory
requirements and the market) meant that Barclays, in certain areas of the business, was no longer appropriately competitive on remuneration, and
this caused demonstrable damage to our business. While we remain committed to controlling pay levels, we also must seek to ensure that the
health of the franchise is protected.
This section provides details of how 2013 total incentive award decisions were made.
barclays.com/annualreport
96 Barclays PLC Annual Report 2013
Remuneration report
2013 incentives