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Barclays stung after 32pc of shareholders fail to back bumper payments

BAILED out British bank Barclays was stung by shareholders today after nearly a third of their votes failed to back the bank's bumper pay awards.

Following a heated annual meeting, Barclays revealed that 32% of investors voted against or withheld votes for the bank's pay report, while 24pc failed to back remuneration committee chairman Alison Carnwath.



Chief executive Bob Diamond sparked anger among shareholders when it emerged he would receive £17.7m (€21.7m) in salary, bonus, benefits and vested long-term share awards last year, despite admitting his bank's performance was "unacceptable" in 2011.



The protest vote is a sizeable one in terms of recent corporate history and will send a powerful message to the bank's board.



The blow comes at a time when the Government is consulting on plans to return power to shareholders, which would include introducing a binding vote on executive salaries.



British business secretary Vince Cable welcomed signs of what he said was shareholders "doing what they are supposed to do, which is holding executives to account".



Mr Cable is reportedly still considering a proposal to require the backing of 75pc of shareholder votes on company resolutions, such as pay deals.



The Barclays vote came despite an apology from chairman Marcus Agius, whose admission that the bank failed to engage with shareholders was met with heckling, shouting and heated questions over the bank's pay culture.



Mr Agius defended the bank's position, saying "the brutal reality" was that paying "zero bonus" was not an option.



Responding to a shareholder question about why Mr Diamond merited any bonus at all, Mr Agius said: "We operate in an international competitive industry. We have to fight for our business every day.



"It's not an option to pay zero bonus. We would be so far out of line with our competitors that the commercial consequences would be dire."



A significant vote against the pay report and Ms Carnworth's re-election was expected after the Local Authority Pension Fund Forum, the Pensions & Investment Research Consultants and the Association of British Insurers warned members over the pay scheme.



And institutional investors, including Fidelity, Aviva and Scottish Widows, said they would vote against the report or re-election of Ms Carnwath.



Robert Talbut, ABI investment committee chairman, said today's vote "clearly shows the investor concern" with the company's remuneration policy.



He said: "Investors take executive pay very seriously. Getting it right is an important part of a successful company."



Earlier in the meeting, Ms Carnwath was given the opportunity to defend her record.



She said: "We reduced awards significantly in 2011."



But in response, one shareholder heckled "not enough", triggering laughter and applause from the auditorium.



Ms Carnwath went on: "We will continue to seek to push down remuneration levels in the context of the environment in which we operate."



Ms Carnwath was met with further taunts, such as: "Why have you only just woken up to this?"



Yesterday, the bank reported an adjusted return of equity of 12.2pc in the quarter - a key figure as Barclays has pledged to hit annual return of equity of 13pc.



Mr Diamond previously told shareholders it was "unacceptable" that the bank recorded a return of equity of just 5.8pc in 2011, down from 7.2pc the previous year.