By Margot Patrick
LONDON-- Barclays PLC shareholders made a fresh protest against
high employee bonuses Thursday at a lively annual meeting that
showed the scant progress Chief Executive Antony Jenkins has made
in rebuilding trust with investors.
Just 76% of voting shareholders approved the 2013 pay report,
marking an unusually high level of dissent and reflecting the
pressure the bank is under to boost dividends and still pay enough
to keep its top staff. After accounting for shareholders who chose
not to vote at all on the item, the pay report got about two-thirds
support.
Mr. Jenkins has sought to recast the bank in a friendlier light
since taking over as CEO in August 2012 in the wake of a scandal
over Barclays's attempts to rig interest rates. He has pledged to
change the bank's culture to be more customer and shareholder
focused, and to clamp down on costs including pay.
Those vows were called into doubt in February, when the bank
said it had hiked its bonus pool for 2013 by 10% despite a sharp
fall in 2013 pretax profit. Some shareholders who stumped up GBP5.8
billion ($9.73 billion) in fresh capital in October to plug a
regulatory hole at the bank told Barclays officials privately that
Mr. Jenkins's credibility was at stake, people familiar with those
complaints said.
At the meeting Thursday, Mr. Jenkins and Barclays Chairman David
Walker were asked by several shareholders why the bank has to pay
so much in bonuses. Mr. Walker said the rise in bonuses last year
came after two years of declines, and that Barclays has been
"attacked very aggressively by its competitors, particularly in the
U.S." to poach staff. Some candidates rejected offers for top jobs
at the bank because of pay, and the number of U.S. senior staff who
resigned last year had nearly doubled, Mr. Walker said.
Barclays along with other European banks must follow rules
limiting cash bonuses and the composition of pay packages. U.S. and
Asian banks have adopted some of the practices, such as paying a
portion of bonuses in shares that can be cashed in over time, but
generally have much more flexibility over pay.
Mr. Jenkins said the bank is moving in the right direction on
pay and that it will gradually reduce. He is to present a planned
revamp of the investment bank on May 8 that executives have said
will include job losses. The bank on Tuesday said it would exit
most of its commodities businesses.
But the explanations drew jeers from some in the 800-strong
crowd of shareholders. One shareholder bluntly asked Mr. Jenkins
why he thinks he's worth his pay. Cries of "yes" greeted the
rhetorical question posed by remuneration committee chairman John
Sunderland on whether anyone really thought the bank wanted to pay
people more than it had to.
Such heckles are commonplace at annual meetings in Britain, and
Barclays's meeting is typically an unruly affair. The biggest
surprise came when Alison Kennedy, governance and stewardship
director at Standard Life, stood up to say the insurer was voting
against the pay report, in an unusual public statement.
"We appreciate that there were competitive pressures during
2013, particularly in the investment banking business and that the
board was seeking to protect a business franchise under threat,"
Ms. Kennedy said.
"Nevertheless, we are unconvinced that the amount of the 2013
bonus pool was in the best interests of shareholders, particularly
when we consider how the bank's profits are divided amongst
employees, shareholders and ongoing investment in the
business."
The insurer holds 1.41% of Barclays, according to FactSet, and
is one of the U.K.'s biggest institutional investors.
Mr. Sunderland appeared ruffled by Ms. Kennedy's comments, and
said he wished the concerns had been raised earlier in the bank's
private consultations with large shareholders. Mr. Walker later
told reporters there was "just a bit of irritation" over the
episode.
Another major institution, F&C Investments, later said it
voted against the remuneration report because it believes the
"aggregate rewards to staff were excessive relative to
performance."
U.K. shareholders get a vote each year on companies' pay
reports. Last year, 95% of voting shareholders approved the
Barclays pay report, just above the company average.
The votes aren't enforceable, but a new rule introduced late
last year gives shareholders a binding vote on companies'
remuneration policies. Company remuneration reports are issued
annually and outline how much the bank is paying its top
executives. U.K. companies for the first time this year must also
spell out their broader remuneration policies for a vote every
three years.
Of the Barclays shareholders voting Thursday, 93% approved the
bank's pay policy. A separate, binding vote on whether the bank
should be able to pay individuals up to 200% of their fixed pay in
the form of bonuses--the maximum allowed under new European Union
rules--passed with 96% approval.
Before the meeting, Barclays had cautioned that first-quarter
profit will be lower than in the same period last year after a
"significant" fall in fixed-income trading revenue. It will report
complete first-quarter results on May 6.
Mr. Jenkins told shareholders the fall reflected difficult
market conditions and that last year's strong first quarter was
hard to beat. The bank's equities and investment banking advisory
businesses were broadly flat on the first quarter of 2013, he
said.
Barclays reported GBP1.79 billion in adjusted profit in the
first quarter of 2013, driven by a strong quarter for its
investment bank. Adjusted pretax profit strips out fluctuations in
the value of the bank's own debt and provisions to reimburse
customers for mis-sold products.
Write to Margot Patrick at margot.patrick@wsj.com
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