Barclays under fire over ‘inadequate’ pay response to whistleblower scandal
ISS said support for the bank’s remuneration report was ‘not considered warranted’ ahead of the May 2 AGM.
Shareholders in Barclays are being advised to vote down pay plans for top bosses after “inadequate” measures to dock chief executive Jes Staley’s pay following the whistleblowing scandal.
Influential investor advisory group Institutional Shareholder Services (ISS) has recommended shareholders vote against the bank’s remuneration report at next week’s annual general meeting (AGM), claiming support for the plans was “not considered warranted”.
ISS said the measures taken by the remuneration committee did not go far enough after regulatory investigations and a 15 million US dollar (£11.5 million) fine by US authorities over the matter, which saw Mr Staley attempt to identify a whistleblower.
The remuneration committee's response is considered inadequate, given the loss of shareholder funds and the broader reputational damage and additional regulatory oversight incurred by the group ISS
Mr Staley was also personally fined £642,000 by UK watchdogs, while the bank clawed back £500,000 of previous bonuses following investigations into the affair.
The group reduced its overall bonus pool by £290 million to £1.6 billion for 2018 due to conduct charges, although it was higher than the £1.5 billion shared out among staff for 2017.
But the bank’s annual report in February revealed that Mr Staley was still paid a total of £3.4 million for 2018, down from £3.9 million in 2017, while he received an annual bonus of £1.1 million for last year.
In its report ahead of the bank’s AGM on May 2, ISS said: “The remuneration committee’s response is considered inadequate, given the loss of shareholder funds and the broader reputational damage and additional regulatory oversight incurred by the group as a result of this issue.”
Fellow investor advisory group Pirc is also recommending shareholders oppose the bank’s pay report, although it put this down to the ratio of chief executive pay to average employee being “not acceptable”, at 34:1.
Pirc added that the changes in chief executive’s pay at Barclays over the past five years were not in line with total shareholder performance and said Mr Staley’s pay is in the upper range compared with peers.
In response to ISS, Barclays said its board made a “significant malus adjustment to Jes Staley’s compensation based on the facts of its independent investigation, as well as the findings of the FCA/PRA investigation”.
It added the US fine was in response to findings of shortcomings in Barclays controls, as opposed to any additional penalties on Mr Staley.
“Barclays took that into account in reducing group-wide compensation by £290 million for risk and conduct events in 2018,” it added.
It comes ahead of what is promising to be an eventful AGM, when investors will also vote on whether to appoint New York-based activist investor Edward Bramson to the board.
Mr Bramson – whose investment vehicle Sherborne Investors owns a 5.5% stake in Barclays – is trying to muscle his way on to the bank’s board, having called for the lender to curtail its investment arm and increase returns for investors.
ISS has said that Mr Bramson’s resolution should be voted down, as has Glass Lewis, but Pirc abstained on the issue.
In a blow to Barclays, Pirc also said investors might be advised to vote to elect Mr Bramson at next year’s AGM.
First-quarter results out from Barclays will be watched closely this Thursday, with any signs of weakness seen as adding fuel to Mr Bramson’s campaign.