Barclays, investors clash over bonus pot

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London - Barclays faces a backlash from shareholders over its decision to raise bonuses despite a fall in profits, with investors increasingly demanding that chief executive Antony Jenkins give more money to them and less to his staff.

British banks have failed to rein in pay despite a new EU cap, leading to a threat that politicians and regulators in Brussels and London might impose more curbs.

Few have drawn as much criticism as Barclays, where profit fell by a third, but staff have just won a 10 percent bigger bonus pot to share for last year than the year before.

Jenkins said in a newspaper interview last week that he was forced to increase bonuses after an exodus from Barclays’ investment bank in America left him fearing a “death spiral”. But the excuse seems only to have annoyed shareholders, who think he should have fought harder on their behalf.

“The bonus issue is on a collision course with shareholders again. I have been unhappy with this for a long time,” one of the bank’s institutional shareholders said on Tuesday.

“Shareholders have been long suffering, while employees sail on unscathed. They will trot out the same arguments again, about how if they don’t pay up they will lose key staff. This is a bluff that has never yet been called.”

In a rare public display of criticism, Fidelity, Barclays’s 17th biggest shareholder, said it was “disappointed” that the bank was not paying shareholders more.

Fidelity chief investment officer Dominic Rossi said the bank had landed itself in a “public relations mess”. Fidelity confirmed the comments, first reported by Sky News.

Barclays is paying three times more in bonuses to staff than in dividends to its owners, a fact that business leaders’ group the Institute of Directors said should push shareholders to be more “aggressive”.

Once hailed as Saint Antony for his pledge to overhaul the hard-charging culture at Barclays’s investment bank, Jenkins is on the defensive after raising the bonus pool for last year to £2.4 billion (R43bn) despite the fall in profit.

While investors do not have a vote on overall pay levels at banks, some said last week that they could voice dissatisfaction at a bank’s failure to cut overall pay by voting down remuneration for executives. Shareholders in British companies have a binding vote on directors’ pay.

Barclays holds its annual general meeting on April 24.

Barclays declined to comment on the criticism. Its shares dropped as low as £2.336 on Tuesday, the lowest level since December 2012. The stock has fallen 15 percent since results on February 11 amid concern that fixed income revenues have stayed weak across the industry. – Reuters


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