Barclays 2015 Annual Report Download - page 91

home.barclays/annualreport Barclays PLC Annual Report 2015 I 89
What have you done in terms of conduct adjustments in 2015?
A key feature of our revised remuneration philosophy is the alignment of remuneration with risk appetite and with the conduct expectations of
Barclays, our regulators and stakeholders. The Committee takes risk and conduct events very seriously and ensures that there are appropriate
adjustments to individual remuneration and, where necessary, the incentive pool.
The Remuneration Review Panel, which reports to the Committee, supports the Committee in this process. The Panel is chaired by the Chief Risk
Officer and includes senior representatives from the key control functions of Risk, Compliance, Internal Audit, Legal and HR. It sets the policy and
processes and is responsible for assessing and recommending to the Committee compensation adjustments for risk and conduct events.
We have a robust process for considering risk and conduct as part of individual performance management reviews with outcomes reflected in
individual incentive decisions. When considering individual responsibility, a variety of factors are taken into account such as:
 whether the individual was solely responsible for the event or whether others were also responsible, if not directly involved,
 whether the individual was aware (or could reasonably have been expected to be aware) of the failure,
 whether the individual took or missed opportunities to take adequate steps to address the failure, and
 whether the individual, by virtue of seniority, could be deemed indirectly responsible, including staff who drive the Group’s culture and set its strategy.
Individuals who were directly or indirectly accountable for an event have had their remuneration adjusted as appropriate. This includes reductions in
current year bonus levels and reductions in vesting amounts of deferred awards through the application of malus. In addition, a number of employees
have been terminated for responsibility and accountability for risk and conduct events resolved during the year. The Committee fully acknowledges
the impact such risk and conduct events have on shareholders and believes it is wholly appropriate that this should be reflected in incentive decisions
for those whose performance and conduct falls short of Barclays’ standards.
The Committee recognises that conduct events continue to weigh on Group performance, impacting profitability and returns, so in addition to reductions
to individuals’ incentive outcomes, material adjustments have also been made to the incentive pool for conduct. These included, but were not limited to,
the settlement reached with the New York State Department of Financial Services in respect of its investigation into electronic trading of Foreign
Exchange, the settlements reached with the US Securities and Exchange Commission and New York State Attorney General in respect of those agencies’
investigations relating to the operation of LX (an alternative trading system), and the settlement reached with the FCA following an investigation into
whether Barclays carried out the appropriate due diligence in connection with a transaction it executed in 2012.
The Committee also made a further adjustment in respect of the settlements reached with a number of authorities in May 2015 in relation to
investigations into certain sales and trading practices in the Foreign Exchange market and the setting of the US Dollar ISDAFIX benchmark, over and
above the substantial adjustments made in 2014 as part of the Committee’s prudent approach towards incentive funding. The Committee took a similar
prudent approach in determining 2015 incentive funding.
The overall impact on the incentive pool resulting from both the direct financial impact on performance and the additional adjustments applied by the
Committee is a reduction in excess of £600m.
We have also, in addition to the adjustment for specific risk and conduct issues, adjusted the incentive pool to take account of an overall assessment
of a wide range of future risks (including Conduct), non-financial factors that can support the delivery of a strong conduct culture and other factors
including reputation, impact on customers, markets and other stakeholders.
Total incentive awards granted – current year and deferred (audited)
Barclays Group Investment Bank
Year ended
31.12.15
£m
Year ended
31.12.14
£m % change
Year ended
31.12.15
£m
Year ended
31.12.14
£m % change
Total current year bonus 839 885 5 367 381 4
Total deferred bonus 661 757 13 579 634 9
Bonus pool 1,500 1,642 9 946 1,015 7
Commissions, commitments and other incentives 169 218 22 30 38 21
Total incentive awards granted 1,669 1,860 10 976 1,053 7
Proportion of bonus that is deferred 44% 46% 61% 62%
Total employees (full time equivalent) 129,400 132,300 2 21,000 20,500 (2)
Average bonus per employee £12,900 £14,100 9 £46,500 £51,400 10
Deferral levels vary according to the incentive award quantum. With reductions in incentive award levels, this has reduced the proportion of the
bonus that is deferred.
Deferred bonuses are delivered, subject to the rules, and only once an employee meets certain conditions, including continued service. This creates a timing
difference between the communication of the bonus pool and the charges that appear in the income statement which are reconciled in the table below:
Reconciliation of total incentive awards granted to income statement charge (audited)
Barclays Group Investment Bank
Year ended
31.12.15
£m
Year ended
31.12.14
£m % change
Year ended
31.12.15
£m
Year ended
31.12.14
£m % change
Total incentive awards for 2015 1,669 1,860 10 976 1,053 7
Less: deferred bonuses awarded in 2015 (661) (757) 13 (579) (634) 9
Add: current year charges for deferred bonuses from previous years 874 1,067 18 736 854 14
Othera2 (108) 51 12
Income statement charge for performance costs 1,884 2,062 9 1,184 1,285 8
Note
a Difference between incentive awards granted and income statement charge for commissions, commitments and other incentives
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