Barclays Reports Executive Remuneration

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Barclays (LSE:BARC) Chief Executive Bob Diamond earned £6.3m in remuneration last year according to its annual report, made available online today. For 2011, Diamond earned £1.35m in base salary, £2.7m in bonuses, and £2.2m in long-term incentives.

Though Diamond earned £9m in 2010, £2.7m more than 2011, the announcement comes at a time when banking executives have come under increasing scrutiny for their compensation packages during the UK’s greatest economic downturn in recent memory. In January, PM David Cameron appealed to banks to show “proper regard” in rewarding bonuses, and in ensuring that compensation coincides with performance.

Ironically, Chief Executive Diamond was not even Barclays’ highest paid director last year. According to the report, two unnamed senior directors earned £6.7m and £6.5m last year, respectively.

Diamond’s take home pay for 2011 may be even higher, thanks to a so-called “tax equalisation payment” made by Barclays on their Chief Executive’s behalf. Upon being tapped for promotion to chief of Barclays plc last year (Diamond had previously served as head of Barclays Capital, the group’s investment banking arm), Diamond moved from the U.S. to the U.K., incurring roughly £5.75m in one-time taxes in the process, which Barclays eventually paid. Most of the taxes were incurred as a result of capital gains, which are taxed at a higher rate for the top tax bracket in the U.K (28%) than in the U.S. (15%).

A Worthy Reward?

Many are questioning Diamond’s remuneration for 2011, a year when Barclays share price fell by 33% (whereas Britain’s next five largest banks averaged a 30% drop), and return on equity fell to an “unacceptable” 6.6%. This drop in profitability has frozen Diamond’s pay for 2012, though he maintains the bank will hit its profit targets in the immediate future.

Furthermore, just weeks ago, HM Revenue & Customs ordered the bank to pay £500m in taxes it had attempted to to circumvent through a series of “highly abusive” and “aggressive” schemes.

Company Spotlight

Barclays is a British financial institution providing universal banking solutions in retail and business banking, corporate and investment banking, and wealth management.

Irrespective of the news, shares on the London Stock Exchange closed flat today.


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