Barclays 2014 Annual Report Download - page 30

28 I Barclays PLC Annual Report 2014 barclays.com/annualreport
Running the company well
Becoming ‘Go-To’
It is the Committee’s intention that individuals who are accountable,
responsible or directly culpable for risk and conduct matters are subject
to remuneration reductions as appropriate. This will include reductions
to bonus and unvested deferred awards (i.e. malus reductions). While
investigations are ongoing, individuals who are under investigation will
be subject to suspensions of variable remuneration, in line with our
Values and the expectations of our stakeholders including regulators.
For current employees who are directly culpable, disciplinary action up
to and including dismissal may also result.
Regulatory developments
Our 2014 variable pay decisions were taken against a background of
significant regulatory developments and market pressures. Being a UK
headquartered global organisation, Barclays is subject to UK regulatory
requirements on remuneration clawback, which exceed what is required
under CRD IV. This is in addition to EU developments including the
introduction of the 2:1 maximum ratio of variable to fixed pay, as well
as the extension of the scope of Material Risk Taker (MRT) identification.
As the requirements apply to Barclays’ expanded MRT population
globally, this creates significant adverse competitive consequences.
The Committee is concerned by the challenges in attracting and
retaining key staff needed to run the bank safely in all regions.
Key remuneration changes and decisions for executive Directors in 2014
Remuneration for executive Directors continues to be tied closely to
our strategy and performance.
In considering the executive Directors’ 2014 performance against the
Financial, Balanced Scorecard and personal measures set at the
beginning of the year, the Committee has decided to award an annual
bonus to Antony Jenkins of £1,100,000 (57% of maximum bonus) and
to Tushar Morzaria of £900,000 (64% of maximum bonus). Further
details are set out on pages 87 and 88.
Based on the solid 2014 overall performance, and in particular the
considerable progress made against the Group Strategy, we regard
these bonuses as appropriate and deserved. In considering final
bonus outcomes, executive accountability for significant Group-wide
conduct issues including, for example, the ongoing Foreign Exchange
investigations was taken into account. Our decisions also demonstrate
that the principle of paying competitively and paying for performance
applies equally to our most senior executives as it does to the rest of
Barclays’ employees.
The Committee has agreed that the executive Directors’ fixed pay will
remain unchanged for, and will not be reduced during, 2015. Antony
Jenkins’ base salary will remain at £1,100,000 and he will also receive
RBP unchanged at £950,000. Tushar Morzaria’s base salary will remain
at £800,000 and he will also receive RBP unchanged at £750,000.
During the year, we also undertook a review of Barclays’ Long Term
Incentive Plan (LTIP). We reviewed the performance measures to
ensure they support our updated Strategy and align the interests
of executives and shareholders. Following engagement with our
shareholders, we have changed the financial measures for the LTIP
award to be granted in 2015 and given them an increased weighting
of 60%. The weighting of the Balanced Scorecard will be unchanged
at 30% and Loan Loss Rate will remain as a risk measure but with a
reduced weighting of 10%. Further details are set out on page 88.
The Committee decided to make awards under this LTIP cycle to both
executive Directors with a face value at grant of 120% of their
respective fixed pay at 31 December 2014.
We are not proposing any changes to the Directors’ Remuneration
Policy which was approved at the 2014 AGM. Accordingly, our 2014
executive Director remuneration decisions are consistent with that
approved Policy, which limits the maximum value of annual bonus
and LTIP awards in accordance with the CRD IV 2:1 maximum ratio
of variable to fixed pay. Clawback has been introduced with effect from
1 January 2015. Following the European Banking Authority (EBA)
Opinion on allowances, the terms of RBP may need to be revised once
further guidelines are available from the EBA.
Agenda for 2015
The Committee remains focused on controlling remuneration costs and
ensuring that pay incentivises all of our employees to deliver sustained
performance in a manner which is consistent with Barclays’ Values and
Behaviours and in the long term interests of shareholders. The alignment
of remuneration and risk will remain a priority. We expect to continue to
have to navigate through a changing regulatory landscape and will
engage constructively with regulators and shareholders as we do so.
Our remuneration report
I encourage you to read our full Remuneration report on pages 77
to 110. The Remuneration report (other than the part containing the
Directors’ Remuneration Policy) will be subject to an advisory vote
by shareholders at the 2015 AGM.
On behalf of the Board
Sir John Sunderland
Chairman, Board Remuneration Committee
2 March 2015
What did we pay in 2014?
Adjusted profit before tax increased between 2013 and 2014 by 12%,
while the absolute reduction in the Group incentive pool was 22%.
After adjusting for the introduction of RBP, the reduction in the
Group incentive pool would be 11%.
£1,860m
£2,378m
£2,168m
£2,578m
£3,484m
Group
incentive pool
Group incentive pool
2014
2013
2012
2011
2010
What earnings were distributed to shareholders in 2014?
Group compensation costs have reduced between 2013 and 2014 by
8% while dividends paid to shareholders have increased by 23%.
2014
2013
2012
2011
2010
£1,057m
£859m
£733m
£660m
£531m
Dividends
paid to
shareholders
Shareholders
Lorem ipsum