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Last updated: April 27, 2012 7:03 pm
Nearly a third of Barclays shareholders failed to support the bank’s pay report during a fiery annual meeting at which the bank’s chairman apologised for its “poor communication” on executive pay.
At Friday’s vote, 26.9 per cent of investors opposed the Barclays pay plan and a further 4.6 per cent abstained, marking another signal of investor discontent in what is being dubbed a “shareholder spring”.
Chairman Marcus Agius and Alison Carnwath, who chairs the bank’s remuneration committee, also pledged to cut bankers’ pay and boost shareholder payouts in future: “The balance of rewards between shareholders and employees has to change in favour of shareholders,” Ms Carnwath said to enthusiastic applause from shareholders.
Also on Friday, Credit Suisse directors faced a similar rebellion, as 32.4 per cent of shareholders refused to back the Swiss bank’s pay report.
The rebellion would have constituted a formal defeat for the bank under proposals still under consideration by the UK government, which would force a binding vote on pay with a “supermajority” approval threshold of 75 per cent. Vince Cable, Business Secretary, welcomed what he said was shareholders “doing what they are supposed to do, which is holding executives to account’’.
Dominic Rossi, head of equities at Fidelity Worldwide, said: “[Bank boards] must respond to the fundamental shift which has taken place in the status of banks, which now increasingly resemble low return, highly regulated, capital intensive public utilities. In these sectors the executives earn less, yet the returns on equity are higher.”
The Barclays row has been brewing for weeks, after the bank’s 2011 executive pay plans revealed Bob Diamond, chief executive, and Chris Lucas, finance director, had been awarded annual bonuses close to the maximum defined by the bank even though the share price slumped by a third, dividends stagnated and profits fell. There had also been shareholder anger at a £5.75m “tax equalisation” deal for Mr Diamond, paid to compensate him for duplicate tax liabilities in the US and UK.
Almost 1,000 largely retail investors, assembled at London’s Royal Festival Hall, heard Mr Agius apologise for the way the pay issue was handled. “Evidently we’ve not done enough [to communicate with shareholders],” he said. “And for this I apologise.” His remarks still drew a sprinkle of boos and heckles from his audience, as did Ms Carnwath for her role in overseeing last year’s pay deals.
Patrick Evershed, a former top fund manager at New Star Asset Management, praised the way the bank had come through the crisis but told the meeting: “All the good work has been undone by the pay row. You’re dividing society. And you’re doing a lot of damage to the reputation of the bank, the reputation of the City and the reputation of capitalism.”
At Credit Suisse, Urs Rohner, chairman, said he, too, needed to do more work on the bank’s pay structures.
Ms Carnwath’s re-election to the board was supported by only 76 per cent of shareholders. Mr Agius secured 92.5 per cent support, while Mr Diamond and Mr Lucas were both backed by more than 99 per cent of shareholders.
Additional reporting by Daniel Schäfer and George Parker
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