Barclays 2015 Annual Report Download - page 112

110 I Barclays PLC Annual Report 2015 home.barclays/annualreport
Governance: Remuneration report
Directors’ remuneration policy (abridged)
Remuneration policy for executive Directors continued
Element and purpose Operation Maximum value and performance measures
B. Variable Pay continued
Long Term Incentive Plan
(LTIP) award
To reward execution of
Barclays’ strategy and growth
in shareholder value over a
multi-year period
Long-term performance
measurement, holding
periods and the malus
provisions discourage
excessive risk-taking and
inappropriate behaviours,
encourage a long-term view
and align executive Directors’
interests with those of
shareholders
Performance measures
balance incentivising
management to deliver
strong risk-adjusted financial
returns, and delivery of
strategic progress as
measured by the Balanced
Scorecard. Delivery in shares
with a further two-year
holding period increases
alignment with shareholders
Determination of LTIP award
LTIP awards are made by the Committee following discussion
of recommendations made by the Chairman (for the Group
Chief Executive’s LTIP award) and by the Group Chief
Executive (for other executive Directors’ LTIP awards).
Delivery structure
LTIP awards are granted subject to the plan rules and are
satisfied in Barclays’ shares (although they may be satisfied in
other instruments as may be required by regulation).
For each award, performance measures are set at grant and
there is no retesting allowed of those conditions. The
Committee has, within the parameters set out opposite, the
flexibility to vary the weighting of performance measures and
calibration for each award prior to its grant.
The Committee has discretion, and in line with the plan rules
approved by shareholders, in exceptional circumstances to
amend targets, measures, or number of awards if an event
happens (for example, a major transaction) that, in the
opinion of the Committee, causes the original targets or
measures to be no longer appropriate or such adjustment to
be reasonable. The Committee also has the discretion to
reduce the vesting of any award if it deems that the outcome
is not consistent with performance delivered, including
to zero.
Participants may, at the Committee’s discretion, also receive
the benefit of any dividends paid between the award date and
the relevant release date in the form of dividend equivalents
(cash or securities).
Operation of risk adjustment and malus
The achievement of performance measures determines the
extent to which LTIP awards will vest. Awards are also subject
to malus provisions (as explained in the Annual bonus
paragraphs above) which enable the Committee to reduce
the vesting level of awards (including to nil).
Timing of receipt
Barclays LTIP awards have a five-year period in total from
grant to when all restrictions are lifted. This will include a
minimum three-year vesting period and an additional
two-year holding period once vested (after payment of tax)
The maximum annual LTIP award is 120% of
fixed pay.
Vesting is dependent on performance
measures and service.
Following determination of the financial
measures applicable to an LTIP cycle, if the
Committee is satisfied with the underlying
financial health of the Barclays Group (based
on profit before tax) it may, at its discretion,
adjust the percentage of shares considered
for release up or down by up to 10% (subject
to the maximum % for the award calibrated
against financial performance measures).
Performance measures will be based on
financial performance (e.g. measured on
return on risk weighted assets), risk metrics
(e.g. measured by loan loss rate) and the
Balanced Scorecard which also includes
financial measures. The Committee has
discretion to change the weightings but
financial measures will be at least 50% and
the Balanced Scorecard will be a maximum of
30%. The threshold level of performance for
each performance measure will be disclosed
annually as part of the implementation of
remuneration report.
Straight line vesting applies between
threshold and maximum for the financial and
risk measures.