Barclays braced for shareholder rebellion over Bob Diamond's pay

http://www.guardian.co.uk/business/2012/apr/22/barclays-shareholder-rebellion-bob-diamond-pay

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Barclays is braced for a bruising encounter with shareholders at Friday's annual meeting when protests are expected to be lodged against the bank's pay policies after another major investment group recommended voting against the £17m handed to chief executive Bob Diamond.

The Local Authority Pension Fund Forum (Lapff), whose members combined own 1-2% of the bank' shares, has issued a voting alert highlighting Diamond's pay and the £5.7m tax bill the bank paid when he moved from the US to the UK to take the helm in January 2011.

It will also be a tense week for Alison Carnwath, the boardroom veteran who chairs the remuneration committee and who is under fire for agreeing the pay deals. It is being estimated that up to one in four investors who vote – between 15 and 20% – could fail to back the remuneration report and that Carnwath may face a significant protest vote.

Even the prospect of £2bn profit in the first quarter – which is expected to be announced by Barclays on Thursday – may not temper the anger of investors who have already been warned that the bank might need to increase its £1bn provision for payment protection. The bank said in a regulatory filing in March that it had been receiving an unexpectedly high volume of complaints.

Ian Greenwood, the councillor who chairs the Lapff, said there had been an "unprecedented level of interest from members about the pay schemes at Barclays this year. We support the position of other investors and investor groups proposing to vote against the remuneration report, in particular due to issues relating to the pay of the chief executive. We believe the company needs a clear signal from shareholders that a different approach is required in future."

Concessions made by Barclays last week to head off a revolt immediately won the backing of 2% shareholder Standard Life but was not enough to encourage the Association of British Insurers to give the pay policies a green light before Friday's annual meeting. An "amber top" highlights corporate governance concerns to the members of the ABI, who control around 15% of the stock market.

Barclays attached performance conditions to half of the £2.7m bonus for 2011 awarded to Diamond and the £1.8m awarded to finance director Chris Lucas. They will forego the share award in three years' time if the bank's return on equity – a closely-watched measure of performance – is greater than its cost of equity (11.5%). The bank's ROE was 6.6% at the end of 2011 and the consenus of the current forecasts by analysts is for that to fall to 6.3% by the end of the year.