LONDON – Barclays promised a rigorous review of executive pay on Thursday, as shareholders at the bank's annual meeting criticized the new management, unconvinced that the paying of big bonuses will be abandoned as part of a new ethical drive.
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Chief Executive Antony Jenkins, drafted in last year to tear up Barclays' profits-at-all-costs culture, told shareholders it would take time for them to see the benefits of his multi-billion-pound overhaul.
But evidence of patience was thin on the ground at the company's annual general meeting in London's Royal Festival Hall.
"'Go-To' bank? Go to hell Barclays. I don't understand why anyone needs 1 million pounds and anyone who asks for more is a greedy bastard. The banks have brought us down, brought the whole economy down," said Joan Woollard, 75, from Lincolnshire, who said she bought five shares to attend the AGM.
Her comments were applauded and echoed by others.
Jennifer Cramer, a small investor, said talk of pay restraint at previous AGMs were shown to be "a sham" after Alison Carnwath, former head of remuneration, last year quit after disagreeing with the board on the bonus for Jenkins's precedessor Bob Diamond.
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Jenkins has promised to overhaul Barclays' standards and culture in trying to make it the 'Go-To' bank of choice and develop a more open relationship with regulators and customers after costly scandals involving rate-fixing, product mis-selling and big bonuses ousted Diamond and saw the once-venerable Barclays brand pilloried in the media and in parliament.
Institutional investors, who hold the vast bulk of Barclays' shares, are broadly supportive of Jenkins' plans and were expected to vote through a resolution on pay tabled at the AGM. The results of all voting were due to be announced later.
"We were originally thinking about abstaining on the remuneration report but I personally thought that as they are moving in the right direction, that we would support them, and if they don't continue to change, we will vote against them," said one top-20 investor, who declined to be named.
"That sends the right message without encouraging more banker bashing. That does need knocking on the head because it has gone on for way too long."
Jenkins said that shareholders would have to wait until 2015 to see a real return from their investment as he closes profitable businesses and axes thousands of staff.
"We will not achieve a return over the current cost of equity until 2015 and cultural change of the scale we are looking at will take time," he said. "This might not be what people want to hear but it's realistic."
Barclays' cost of equity is currently 11.5 percent.
Barclays' shares were down nearly around 0.3 percent at 294 pence on Thursday. It fell over 1 percent on Wednesday when the bank said investment banking generated most of its first-quarter profits.
The investment bank is being pared back as part of Jenkins' reforms.
A MULTI-YEAR JOURNEY
A report commissioned by Barclays and written by veteran lawyer Antony Salz said earlier this month that the bank's rapid transformation from domestic retail lender to global universal bank created a sprawling set of businesses, each with their own culture, and an emphasis on profit, sometimes at all costs.
Salz also said pay for the top 70 executives at Barclays was consistently above the average at other banks. The bank has been condemned by politicians for paying 428 of its employees one million pounds or more in 2012.
In response to the Salz report, Barclays said on Thursday it would rein in executive pay.
"The remuneration committee recognises that these are not one-off changes and that the path to reposition our remuneration is a multi-year journey," the bank said in a statement.
The board and remuneration committee will consider changes "to ensure the rigorous review of remuneration proposals for high earners," it said, and promised more simplicity and transparency for long-term share awards.
Jenkins has pushed out executives associated with the Diamond era, including Rich Ricci, the head of the investment bank, who collected a $26 million bonus last month.
Ricci, famed for wearing a broad-brimmed felt hat and loud checked suit while watching his racehorses compete, responded to media criticism by naming one of his horses "Fatcatinthehat".
Barclays has said it will now ensure shareholders get an increased share of income and pre-compensation profits.
Compensation swallowed 41 percent of the investment bank's income in the first quarter, down from 43 percent a year ago but above Jenkins's target of cutting it to near 35 percent.
Jenkins opted not to take a bonus for 2012. He got a package worth 2.6 million pounds, including shares awarded under a long-term incentive plan. His predecessor, Diamond, took home 17 million pounds in 2011.
In a nod to criticism that executives or board members did not stand up enough to Diamond, the Barclays report also said action would be needed to ensure that "the role of the CEO in encouraging open debate and challenge is fulfilled".
In other changes, branch-based staff will not longer get commissions on sales, Barclays will publish an updated code of conduct and all employees will have to attend a course on the company's new values.
(Additional reporting by Sinead Cruise; Writing by Carmel Crimmins; Editing by Tom Pfeiffer and Greg Mahlich)