Download as PDFRemuneration report
Statement from the Chairman of the Board HR and Remuneration Committee (the Committee)
The Committee provides governance and strategic oversight of remuneration, Barclays Human Resource activities and senior management development. The Committee’s terms of reference are available in the Corporate Governance section of the Barclays Investor Relations website (www.aboutbarclays.com).
The Committee meets a minimum of four times a year. Marcus Agius became a member of the Committee on 1st January 2007. Marcus Agius was considered independent (for the purposes of the Combined Code) on his appointment as Chairman of the Board. All other Committee members are independent non-executive Directors.
The Committee’s objective in relation to remuneration is to ensure that it incentivises excellence in business and personal performance and enables the Group to attract and retain employees of ability and experience.
The Committee aims to achieve this by:
- – ensuring clear and quantified individual and Group performance goals are in place supported by rigorous performance appraisal systems;
- – creating externally benchmarked remuneration frameworks for each major business that provide an evidence based approach to decisions;
- – reviewing past remuneration decisions against objectives; and
- – approving the specific remuneration packages of executive Directors and other senior executives.
The Committee’s work is supported by independent professional advice from Kepler Associates, who were re-appointed in 2007, and Towers Perrin MGMC who were appointed in 2007.
In relation to HR and senior management development, the Committee’s objective is to ensure that the Group’s people resources are managed to maximise business performance, support the long-term success and growth of the business and protect the welfare of all employees.
Barclays PLC Annual Report 2007
The Committee aims to achieve this by:
- – ensuring there are appropriate succession and talent management plans in place;
- – providing oversight of Group level policy on HR matters including those related to the mobility of employees within the Group; and
- – monitoring health and safety and equality and diversity issues across the Group.
Barclays employee remuneration is performance based. Important context to this report and the disclosures that follow is provided below:
- – Group profit before tax was £7.1bn, broadly in line with the prior year;
- – Group profit before business disposals increased by 3%; and
- – careful management of performance related remuneration has resulted in a reduction in key remuneration ratios relative to 2006, including the absorption of 2007 headcount investment.
The Committee takes seriously its commitment to clear and comprehensive disclosure. This report details the remuneration of the individual Directors who served Barclays in 2007. Barclays Remuneration Policy remains unchanged, including the commitment to transparency and to policies and programmes that serve well the interests of shareholders.
The Committee unanimously recommends that you vote to approve the report at the 2008 AGM.
Signed on behalf of the Board
Sir Richard Broadbent
Chairman, Board HR and Remuneration Committee
7th March 2008
Board HR and Remuneration Committee Members
During 2007, the Committee comprised both independent non-executive Directors and the Chairman of the Board. Membership of the Committee was as follows:
| Sir Richard Broadbent (Chairman) |
| Marcus Agius |
| Leigh Clifford |
| Sir John Sunderland |
The non-executive Directors who were Committee members were considered by the Board to be independent of management and free from any business or other relationship that could materially affect the exercise of their independent judgement. The constitution and operation of the Committee complies with the Provisions on the Design of Performance Related Remuneration in the Combined Code adopted by the Financial Reporting Council.
Marcus Agius was appointed as a member of the Committee with effect from 1st January 2007.
The Chairman of the Committee presents a report of each meeting to the full Board.
Advisers to the Committee
The Committee has access to independent consultants to ensure that it receives independent advice. Advisers are appointed by the Committee for specific work, as necessary, and are required to disclose to the Committee any potential conflict of interest.
In 2007, Kepler Associates a were re-appointed by the Committee to provide independent advice to Committee members on remuneration matters. Towers Perrin MGMC a were appointed to provide advice to the Committee in 2007, primarily in relation to the provision of remuneration for employees below Board level and in the global financial services industry.
The Group Chief Executive, the Human Resources Director and, as necessary, members of the Executive Committee, also advise the Committee, supported by their teams. They are not permitted to participate in discussions or decisions relating to their own remuneration. The Human Resources Director is responsible for providing professional support to line management in HR policy and operations and for monitoring compliance with prescribed policy and programmes across Barclays. The Human Resources Director is not a Board Director and is not appointed by the Committee.
Remuneration Policy
Barclays policy is to use remuneration to drive a high-performance culture. Executive Directors can expect outstanding remuneration if performance is outstanding and below median remuneration for below median performance. This philosophy applies to remuneration policies and practices for all employees in the Group. The Committee considers remuneration levels across the Group when determining remuneration for executive Directors.
The aims of the Barclays Remuneration Policy are to:
- – incentivise excellence in and balance between both short-term (one year) and longer-term (three years plus) performance such that Group financial goals and the goal of achieving top quartile total shareholder return (TSR) are met and sustained;
- – enable the Group to attract and retain people of proven ability, experience and skills in the pools in which it competes for talent;
- – encourage behaviour consistent with Barclays Guiding Principles b which leads to excellence and the appropriate balance in financial performance, governance, controls, risk management, customer service, people management, brand and reputation management;
- – promote attention to maximising personal contribution, contribution to the business in which the individual works and contribution to the Group overall; and
- – ensure, both internally and externally, that remuneration policies and programmes are transparent, well communicated, easily understood and aligned with the interests of shareholders.
The graph below shows the value, at 31st December 2007, of £100 invested in Barclays on 31st December 2002 compared with the value of £100 invested in the FTSE 100 Index. The other points plotted are the values at intervening financial year ends. The FTSE 100 Index is the index of the 100 largest UK quoted companies by market capitalisation. It is a widely recognised performance comparison for large UK companies such as Barclays and this is why it has been chosen as a comparator to illustrate Barclays TSR. The graph shows that, at the end of 2007, a hypothetical £100 invested in Barclays on 31st December 2002 would have generated a total return of £63, compared with a gain of £95 if invested in the FTSE 100 Index.
Remuneration for executive Directors
Remuneration for the executive Directors comprises:
- – base salary;
- – annual bonus including mandatory deferral into Barclays shares through the Executive Share Award Scheme (ESAS);
- – long-term incentives through the Performance Share Plan (PSP); and
- – pension and other benefits.
Source: Datastream
Schedule 7A of the Companies Act 1985 requires that the graph shows TSR for the five years ending with the relevant financial year.
Notes
- a
- Kepler Associates and Towers Perrin MGMC have given and not withdrawn their written consent to the inclusion of references to their name in the form and context in which it appears. Towers Perrin MGMC also provided remuneration benchmarking data to Barclays Group companies during the year.
- b
- Barclays Guiding Principles were introduced during 2005 and provide all parts of the Group with a unifying set of values. They are: Winning Together, Best People, Client/Customer Focused, Pioneering and Trusted.
The Committee reviews the elements of remuneration relative to the policies stated in this report and to the practice of other comparable organisations. Remuneration is benchmarked against the markets in which we compete for talent. This includes benchmarking against other leading international banks and financial services organisations, and other companies of similar size to Barclays in the FTSE 100 Index.
The component parts for each executive Director are detailed in the tables accompanying this report.
The Committee guideline that executive Directors should hold, as a minimum, the equivalent of one times their base salary in Barclays shares, including shares held under award through ESAS, was met by all executive Directors.
Each element of remuneration is important and has a specific role in achieving the aims of the remuneration policy. The combined potential remuneration from bonus and PSP outweighs the other elements, and is subject to personal and Group performance, thereby placing the majority of total remuneration at risk.
Of the key elements of remuneration (salary, annual performance bonus, ESAS and PSP), salary made up a maximum of 30% of the 2007 remuneration for executive Directors and 1.4% in respect of Robert E Diamond Jr’s arrangements, which reflects general practice in the investment banking and investment management industry. The remaining proportion of the key compensation elements for executive Directors is at risk. The relative weighting summarised in this paragraph does not include pension and benefits.
The purpose of each element of remuneration for executive Directors is summarised in the table below and discussed in greater detail in the sections that follow.
Download table as excel file| Remuneration element | Purpose | Delivery | Programme detail | ||||||||||||||
| Base salary | To reflect the market value of the | – Cash | – Reviewed annually, with changes typically | ||||||||||||||
| individual and their role | – Monthly | effective on 1st April | |||||||||||||||
| – Pensionable | |||||||||||||||||
| Annual performance | To incentivise the delivery of annual | – Typically 75% cash a | – Based on annual business unit | ||||||||||||||
| bonus and ESAS | goals at the Group, business division | – Typically 25% | performance, performance of the Group | ||||||||||||||
| and individual levels | deferred Barclays | as a whole and leadership contribution | |||||||||||||||
| shares under ESAS | |||||||||||||||||
| – Annual | |||||||||||||||||
| – Non-pensionable | |||||||||||||||||
| PSP b | To reward the creation of above | – Free shares | – Discretionary awards | ||||||||||||||
| median, sustained growth in | subject to a | – Participation reviewed annually | |||||||||||||||
| shareholder value | performance | – Barclays performance over three years | |||||||||||||||
| condition | determines the number of performance | ||||||||||||||||
| – Annual awards | shares eligible for release to each individual | ||||||||||||||||
| that vest after | – For awards made in 2007, and awards to | ||||||||||||||||
| three years | be made in 2008, EP threshold, | ||||||||||||||||
| – Non-pensionable | thereafter 50% under a TSR performance | ||||||||||||||||
| condition and 50% under an EP | |||||||||||||||||
| performance condition | |||||||||||||||||
| Pension c | To provide market competitive | – Deferred cash or | – Non-contributory, defined benefit | ||||||||||||||
| post-retirement benefit | cash allowance | scheme and/or defined contribution | |||||||||||||||
| – Monthly | scheme, or cash allowance in lieu of | ||||||||||||||||
| pension contributions | |||||||||||||||||
Changes to Group Chairman and executive Directors
Marcus Agius was appointed Group Chairman with effect from 1st January 2007.
Marcus Agius receives a fee of £750,000 (inclusive of Director’s fees). He is also eligible for private health insurance. The minimum time commitment is equivalent to 60% of a full time role. Marcus Agius is not eligible to participate in Barclays bonus and share incentive plans, nor will he participate in Barclays pension plans or receive any pension contributions. The letter of appointment provides for a notice period of 12 months from Barclays and six months from Marcus Agius.
Naguib Kheraj ceased to be an executive Director on 31st March 2007. Naguib Kheraj was succeeded by Chris Lucas, who was appointed to the position of Group Finance Director with effect from 1st April 2007. The key terms of executive Directors’ service contracts are on page 149.
Barclays PLC Annual Report 2007
Base Salary
The annual base salaries for the current executive Directors are shown in the table below:
Download table as excel file| Date of | |||||
| As at | As at | previous | |||
| 31st Dec 2007 | 1st April 2008 | increase | |||
| John Varley | £1,000,000 | £1,100,000 | 1st Apr 2007 | ||
| Robert E Diamond Jr | £250,000 | £250,000 | 1st Mar 1999 | ||
| Gary Hoffman | £625,000 | £625,000 | 1st Apr 2006 | ||
| Frits Seegers | £700,000 | £700,000 | n/a | ||
| Chris Lucas | £600,000 | £650,000 | n/a | ||
In respect of John Varley and Chris Lucas, having regard to the levels of salary and total compensation in comparable organisations, the Committee approved an increase to base salary effective from 1st April 2008.
Notes
- a
- Eligible executives may request that all or part of the cash bonus to which they would otherwise become entitled, be granted in the form of an additional award under ESAS or as a pension contribution by way of Special Company Contribution (Bonus Sacrifice). For 2007 Robert E Diamond Jr received 43% of his annual bonus in cash and 57% as a recommendation for an award of Barclays shares under Mandatory ESAS.
- b
- Please refer to Note 44 to the accounts for further information on PSP.
- c
- Please refer to Note 30 to the accounts for further information on the Group’s pension plans.
Annual Bonus and ESAS
The maximum bonus opportunity for executive Directors is tailored to the relevant market; this is typically 250% of base salary. The annual bonus is based on a qualitative and quantitative assessment of performance (including EP and PBT results) with the quantitative assessment comprising the majority. EP and PBT are considered to be good measures of value creation for shareholders.
ESAS is a deferred share award plan which operates in conjunction with the annual Barclays Group cash bonus plans (and various other cash long-term incentive plans operated by Barclays Group companies). Currently, for executive Directors, typically 75% of the annual bonus is delivered as cash. A recommendation may be made to the ESAS trustee that the remaining 25% is delivered as an award under ESAS (‘Mandatory ESAS award’).
In addition, executive Directors may request that any cash bonus, to which they may have otherwise become entitled, be granted as an additional award under ESAS (‘Voluntary ESAS award’).
Both Mandatory and Voluntary ESAS awards will normally include additional shares called bonus shares with a value of up to 30% of the bonus amount awarded in shares. The ESAS trustee may apply dividends it receives on shares held in trust in purchasing additional Barclays shares which may also be released to participants.
A Mandatory ESAS award is a provisional allocation of Barclays shares which does not give rise to any right or interest in those shares. Normally, under a Mandatory ESAS award, the ESAS trustee grants participants the right to call for the shares plus two-thirds of any bonus shares, in the form of a nil-cost option following the third anniversary of the award date. If this right is not exercised, the ESAS trustee may, following the fifth anniversary, release all the Barclays shares including all bonus shares and dividend shares to the participant.
Awards under Voluntary ESAS are granted in the form of a nil-cost option which is a right to acquire Barclays shares which will become fully exercisable after five years.
Neither the exercise of nil-cost options granted under Mandatory or Voluntary ESAS nor the release of Barclays shares under award is subject to performance conditions. As ESAS is a deferred share award plan, it would not be appropriate to attach a performance condition to options or awards.
If an executive ceases to be employed he may forfeit his award depending on why he leaves.
PSP
The PSP was approved by shareholders at the 2005 AGM and replaced the ISOP as the main performance linked share incentive plan. PSP awards to date have been granted in the form of provisional allocations of Barclays shares which do not give a participant any right to acquire, or an interest in, shares until such time as the PSP trustee decides to release the shares to the participant (i.e. when the PSP awards vest). Participants do not pay to receive an award or to receive a release of shares. Performance share awards are communicated to participants as an initial allocation. Normally, the maximum expected value of an award at the date of grant will be the higher of 150% of base salary or 75% of base salary and target bonus. ‘Expected value’ is a single value for the award at grant which takes account of the various possible performance and vesting outcomes, although it is Barclays performance over a three-year period which determines the final number of shares that may be released to participants. Dividend shares may also be released in respect of the vested shares.
Awards normally vest on the third anniversary of the date of grant, if and to the extent that the performance conditions are satisfied. Note that:
- – relative TSR and EP are both considered to be good measures of value creation to shareholders;
- – before any shares are released, Barclays cumulative EP over the performance period must normally be greater than the total for the previous three-year period;
- – for PSP awards made in 2005, the award depended on Barclays TSR relative to a peer group of 11 other international banks. These awards are due to lapse in 2008 as the TSR performance condition was not satisfied;
- – the performance conditions for PSP awards made in 2006 and 2007 will be measured over the three-year performance period (2006 to 2008 and 2007 to 2009 respectively);
- – for PSP awards made in 2006 and 2007, 50% of the award depends on Barclays EP and 50% of the award depends on Barclays TSR relative to a peer group of 11 other international banks;
- – for awards made in 2005, 2006 and 2007 in relation to the TSR element of the award, there is no vesting unless Barclays is ranked above median on relative TSR.
The peer group for the TSR element of the 2007 award, as for the 2006 award, is a :
| UK | Mainland Europe | US | ||
| HBOS | Banco Santander b | Citigroup | ||
| HSBC | BBVA | JP Morgan Chase | ||
| Lloyds TSB | BNP Paribas | |||
| Royal Bank of Scotland | Deutsche Bank | |||
| UBS | ||||
The performance scales for the TSR and EP elements of the 2007 award are as shown in the two charts below:
Notes
- a
- The reserve companies for the 2006 and 2007 awards are UniCredit, Morgan Stanley, Bank of America and Wachovia.
- b
- The Committee has approved the substitution of Banco Santander for ABN AMRO in the TSR peer group for awards granted under the PSP in 2005, 2006 and 2007, in accordance with the Committee’s agreed peer group adjustment principles. This adjustment was made in anticipation of the takeover of ABN AMRO. Following a review of the peer group reserve banks, it was decided that Banco Santander was the most suitable substitute based on both competitive position relative to Barclays and similarity to ABN AMRO.
EP comprises profit after tax and minority interests less a capital charge.
Independent confirmation is provided to the Committee as to whether a performance condition has been met.
Each year a review of the Group’s share-based long-term incentives (currently the PSP) is undertaken to check that the structure and performance conditions remain appropriate in respect of the Group’s business objectives and best market practice. The 2007 review included consideration of eligibility criteria. The outcome of the review was that participation in the PSP should be restricted to executive Directors, members of the Executive Committee, Executive Committee direct reports and other key senior positions. Developing a link to Barclays share price is important and therefore, as individuals below these levels become more highly remunerated, some of their remuneration may be delivered as an award of Barclays shares (to be known as Incentive Shares). Participants would not be eligible for a release of shares until the third anniversary and the release of Incentive Shares would not be subject to performance conditions. It is intended that a new employee share plan will be established under which Incentive Shares will be granted. No Board Directors will be eligible to participate in this plan and awards will be settled using only existing Barclays shares.
ISOP
ISOP (Incentive Share Option Plan) has not been used for awards to executive Directors since 2004. Details of ISOP awards held by executive Directors can be found on page 157. Awards in 2003 and 2004 under ISOP include financial metrics or thresholds which were adjusted where necessary to neutralise the effect of the introduction of IFRS.
The main performance condition was TSR relative to a peer group of 11 other major international banks, combined with an EP threshold. Awards have now vested, as set out in the table on page 157.
Retained Incentive Opportunity
Robert E Diamond Jr received an award in February 2008 under the Retained Incentive Opportunity. This award was subject to performance criteria based on the delivery of EP at Barclays Capital over the period 2005 to 2007. The performance measure applied was cumulative EP performance of Barclays Capital during the period 1st January 2005 to 31st December 2007. In order to achieve the maximum value award under the Retained Incentive Opportunity, Barclays Capital had to successfully generate a cumulative EP of £2bn over the performance period. EP was chosen as this is an appropriate measure to align the interests of the participant with those of shareholders and is a good measure of value creation for shareholders.
Details of the award which was made to Robert E Diamond Jr are on page 155.
Sharesave
All eligible employees including executive Directors may participate in Sharesave. Sharesave is an HMRC (Her Majesty’s Revenue and Customs) approved all-employee share option plan. HMRC does not permit performance conditions to be attached to the exercise of Sharesave options. Under Sharesave, participants are granted options over Barclays shares. Each participant may save up to £250 per month to purchase Barclays shares at a discount. For the 2007 grant, the discount was 20% of the market value of a share at the time the option was granted. Sharesave is also offered to employees in Spain and Ireland. Following the 2007 invitation, a total of 40,621 employees in the UK, Spain and Ireland were participants in Sharesave with 72.4 million shares under option. Details of options held by executive Directors are on page 156.
Sharepurchase
Sharepurchase was introduced in January 2002. It is an HMRC approved all-employee share plan. Sharepurchase is open to all eligible employees including executive Directors. Under Sharepurchase, participants are able to purchase up to £1,500 worth of Barclays shares each year, which, if kept in trust for five years, can be withdrawn from Sharepurchase tax-free. Any shares in Sharepurchase will earn dividends in the form of additional shares, which must normally be held by the trustee on behalf of the participant for no less than three years.
Barclays PLC Annual Report 2007
To encourage employee ownership of Barclays shares, Barclays matches, share for share, up to the first £600 each participant invests in Sharepurchase in each tax year. Matching shares must normally be held by the trustee on behalf of the participant for no less than three years.
At 31st December 2007, 23,097 employees were participants in Sharepurchase, with a total of 12.9 million shares held on their behalf by the Sharepurchase trustee.
Dilution Limits
The outstanding awards under ISOP and Sharesave are intended to be satisfied by the issue of new Barclays shares or through treasury shares within the limits agreed by shareholders when these plans were approved. These limits comply with the Association of British Insurers’ guidelines restricting dilution from employee share plans. The overall limits under the guidelines are that no more than 10% of a company’s issued share capital may be used in any ten-year period. Up to 5% may be used for executive share plans. Shares in Barclays Global Investors UK Holdings Limited issued as a result of option exercises under the BGI EOP also count towards these limits. As at 31st December 2007, Barclays headroom under these limits, i.e. the amount remaining available for issue, was 4.2% and 1.5% respectively.
Employees’ Benefit Trusts (EBTs)
The trustees of the Barclays EBTs grant awards under ESAS and PSP over existing Barclays shares which they have purchased in the market. The trustees of the Barclays EBTs have informed the Bank that their normal policy is to abstain from voting in respect of the Barclays shares held in trust.
The trustees of the Sharepurchase EBT may vote in respect of Barclays shares held in the Sharepurchase EBT, but only at the direction of the participants. The trustees will not otherwise vote in respect of shares held in the Sharepurchase EBT.
Pensions
All Group pension arrangements are managed in accordance with the Global Retirement Fund Governance Framework to ensure best practice in respect of regulatory compliance, governance, investment and administration. The framework is overseen by the Committee.
Pension benefits for executive Directors are provided through defined benefit plans, defined contribution plans, unfunded unapproved retirement benefit arrangements, cash or a combination of these. The pension benefit applicable will depend on the date an executive Director was appointed and their individual situation. Annual performance related bonuses are not included in pensionable salary.
The Group’s closed UK defined benefit pension arrangement, of which John Varley and Gary Hoffman are members, is a non-contributory scheme. Benefits are provided on leaving service at normal pension age (60) by reference to the executive Director’s length of service, normally by reference to 1/60th of pensionable salary for each year of pensionable service (John Varley’s pension accrual is provided through the scheme in accordance with his service contract as set out in the notes to the pensions table on page 152).
The Group’s closed UK defined benefit pension arrangement also provides that, in the event of death before retirement, a cash lump sum of up to four times salary is paid together with a dependant’s pension of 50% of the pension that would have been payable had the member remained in active service until their normal pension age. For death in retirement, a dependant’s pension is payable of approximately 50% of the member’s pension at the date of death, not taking into account commutation of any cash lump sum at the time of the member’s retirement. If a member is granted a deferred pension that has not yet come into payment, the widow/widower receives a pension of 50% of the deferred pension payable. Where applicable, children’s pensions are payable, usually up to the age of 18. Enhanced benefits may be payable if it is determined that a member is unable to work as a result of serious ill-health.
The Group’s US non-contributory defined benefit arrangement, of which Robert E Diamond Jr is a member, provides a benefit at age 65 of 1/60th of final average pensionable pay plus 0.3% of final average pensionable pay in excess of the US Internal Revenue Service’s covered compensation limit for each year of pensionable service (up to a maximum of 30 years). In line with current market practice, final average pay in the US includes an element of bonus subject to overall plan limits. In the event of a member’s death before retirement, a spouse’s pension of approximately 50% of the member’s pension had the member taken early retirement on the date of death, is payable. On death after retirement, a spouse’s pension of 50% of the pension in payment is payable. In addition, enhanced benefits are payable if the member qualifies for disability benefits.
The US Restoration Plan, of which Robert E Diamond Jr is also a member, is an unfunded unapproved arrangement which restores reductions in the benefits provided through the approved US plan resulting from the application of relevant compensation and benefit limitations under the US Internal Revenue Code. Robert E Diamond Jr participates in this plan on similar terms to other Barclays senior executives participating in US benefit plans.
Robert E Diamond Jr also participates in the Barclays Bank PLC 401K Thrift Savings Plan and Thrift Restoration Plan on similar terms to other Barclays senior executives in the US.
Where appropriate, cash allowances are provided to executive Directors in lieu of being able to join a Group pension arrangement. Chris Lucas, Naguib Kheraj and Frits Seegers received such cash allowances in 2007.
In the event that an executive Director builds up pension benefits close to, or in excess of, the HMRC Lifetime Allowance, the executive Director is eligible to opt for a cash allowance instead of continued pension accrual. The allowance given is no more than the cost of funding the existing pension benefit.
Service Contracts
The Group has service contracts with its executive Directors. The effective dates of the contracts for the executive Directors who served during 2007 are shown in the table below. The service contracts do not have a fixed term but provide for a notice period from the Group of one year and normally for retirement at age 65, except for Naguib Kheraj who has left the Group. The Committee’s policy is that executive Directors’ contracts should allow for termination with contractual notice from the Group or, in the alternative, termination by way of payment in lieu of notice (in phased instalments). In the event of gross misconduct, neither notice nor a payment in lieu of notice will be given. Payments in lieu of notice are subject to contractual mitigation.
The Committee’s approach when considering payments in the event of termination is to take account of the individual circumstances including the reason for termination, contractual obligations and share and pension plan rules.
Download table as excel file| Potential | |||||
| Effective | compensation | ||||
| date of | Notice | for loss | |||
| Directors a | contract | period b | of office | ||
| John Varley | 1st Sept 2004 | 1 year | 1 year’s contractual | ||
| remuneration c | |||||
| Robert E | |||||
| Diamond Jr | 1st Jun 2005 | 1 year | " | ||
| Gary Hoffman | 1st Jan 2004 | 1 year | " | ||
| Naguib Kheraj d | 1st Jan 2004 | 1 year | " | ||
| Chris Lucas e | 1st Apr 2007 | 1 year | " | ||
| Frits Seegers | 7th Jun 2006 | 1 year | " | ||
Barclays Capital, BGI, Barclays Wealth and GRCB
The Committee has established frameworks for the governance of remuneration in these businesses. Ranges have been set for key financial and remuneration ratios. The Committee approves aggregate bonus and long-term incentive expenditure, and strategic investment for new hires. The Committee also approves individual remuneration for the members of the management teams, and any employee with total remuneration in excess of £750,000.
The BGI EOP
BGI is Barclays asset management business headquartered in San Francisco. The BGI EOP (BGI Equity Ownership Plan) was approved by shareholders at Barclays 2000 AGM to provide the employee share incentive arrangements required to recruit and retain the quality of senior management and investment talent appropriate for building a global investment management business. The BGI EOP was designed to provide participants with a long-term equity interest in BGI to meet the expectations of, in particular, BGI’s key investment talent in the United States, who could expect to participate in the equity of their employer. Under the terms of the BGI EOP, options are granted at fair value to key BGI employees over shares in Barclays Global Investors UK Holdings Limited (BGI Holdings) within an overall cap of 20% of the issued ordinary share capital of BGI Holdings.
All grants of options are approved by the Committee. The Committee is also advised of option exercises and share sales by employees. Directors of Barclays PLC are not eligible to receive options under the BGI EOP.
In summary the BGI EOP operates as follows:
- – certain key BGI employees are granted options over shares in BGI Holdings;
- – the option exercise price is based on the fair value of a BGI Holdings share at the date of grant determined by an independent appraiser;
- – the options generally vest evenly over a three-year period and can normally be exercised in two annual exercise windows;
- – option holders are required to fund the exercise without any financial support from any member of the Barclays Group.
Once employees become shareholders, they are subject to the Articles of BGI Holdings under which:
- – shareholders are required to hold the shares for a minimum of 355 days. As shareholders, employees derive the full risks and rewards of ownership, including voting rights and entitlement to any ordinary dividends paid by BGI Holdings;
- – on expiry of the minimum holding period, shareholders may, but are not obliged to, offer their shares for sale usually during two annual sales windows;
- – Barclays Bank PLC, at its discretion, has a right to purchase shares so offered, but is not obliged to do so.
Notes
- a
- Details of executive Directors standing for re-election at the 2008 AGM are set out on page 130.
- b
- Notice period from Barclays to executive Director.
- c
- One year’s contractual remuneration is calculated as follows: 12 months’ base salary, bonus, if eligible (being the average of the previous three years’ bonus awards, in some cases (Gary Hoffman, Chris Lucas and Naguib Kheraj) capped at 100% of base salary), medical benefit (while an employee) and continuation of pension benefits. Payments in lieu of notice are subject to mitigation if alternative employment is found during any period in which pay in lieu of notice is paid.
- d
- Naguib Kheraj ceased to be an executive Director on 31st March 2007.
- e
- Chris Lucas was appointed as an executive Director with effect from 1st April 2007.
Barclays PLC Annual Report 2007
The table below contains information on the number of shares in BGI Holdings over which options were granted, outstanding and exercised in 2006 and 2007:
Download table as excel file| Number | Number | ||||
| granted | outstanding | Number | |||
| during year | at year end | exercised | |||
| Year | (000s) | (000s) | (000s) | ||
| 2006 | 3,973 | 6,929 | 2,188 | ||
| 2007 | 2,599 | 7,502 | 1,632 | ||
In 2007 BGI employees exercised options over 1.6m (2006: 2.2m) shares for consideration of £57m (2006: £44m); Barclays Bank PLC purchased 4.9m (2006: 4.9m) shares offered for sale by shareholders for consideration of £488m (2006: £410m). As at 31st December 2007, employees own 5.9% of BGI Holdings (2006: 9.4%).
BGI EOP – Accounting and disclosure
The BGI EOP is accounted for as an equity settled share-based payment in accordance with IFRS 2 ‘Share-based Payment’. The fair value of the services received from the employees is measured by reference to the fair value of the share options granted on the date of the grant. The cost of the employee services received in respect of the share options granted is recognised in the income statement over the period that the services are received. The cost for 2007 of £54.8m (2006: £37.4m, 2005: £14.9m) is included in staff costs in Note 8 to the accounts. In accordance with IFRS 2, details of share options granted and exercised, together with weighted average fair values at grant date and weighted average exercise prices are set out in Note 44 to the accounts. In accordance with IAS 33 ‘Earnings per Share’, unexercised options are taken into account in the calculation of diluted earnings per share as set out in Note 11 to the accounts.
For Group reporting, the exercise of options by employees is treated as a deemed disposal of interests in a subsidiary, as its holding in the subsidiary has been reduced for the consideration represented by the exercise price. Any subsequent purchase of shares offered for sale by employees is treated as a purchase of an additional investment in a subsidiary entity. The cash flows relating to these capital transactions are included in the consolidated cash flow statement and disclosed, along with other disposals and acquisitions, in Note 38 to the accounts and related movements in goodwill and minority interests are included in Notes 21 and 33 to the accounts respectively.
Replacement of the BGI EOP
The Group will introduce a new BGI employee share plan in 2008, under which awards will be made using Barclays PLC shares purchased in the market. The quantum of awards will be linked to BGI business performance. Executive Directors will not be eligible to participate in the new BGI plan.
It is intended that no further options will be granted under the BGI EOP and that the BGI EOP will not be renewed in 2010 when it comes to the end of its life.
Non-executive Directors
The Board determines the fees of non-executive Directors and the fees are reviewed annually. The fee structure as at 31st December 2007 is shown below.
Download table as excel file| Base fee | £65,000 | ||||
| Plus: | |||||
| Chairman of Board Audit Committee | £50,000 | ||||
| Chairman of the Board HR and Remuneration Committee | £40,000 | ||||
| Chairman of Board Risk Committee | £30,000 | ||||
| Members of the Board Audit Committee | £20,000 | ||||
| Members of the following Board Committees: | |||||
| Risk, HR and Remuneration and | |||||
| Corporate Governance and Nominations | £15,000 | ||||
Barclays PLC Annual Report 2007
As Deputy Chairman, Sir Nigel Rudd receives £200,000. Sir Nigel Rudd did not receive any additional fees for serving as a member of the Board Corporate Governance and Nominations Committee. Sir Richard Broadbent receives an additional £30,000 in respect of his role as Senior Independent Director. Marcus Agius serves as a member of the Board HR and Remuneration Committee and is Chairman of the Corporate Governance and Nominations Board Committee. He does not receive any fees in relation to these appointments.
David Booth was appointed as non-executive Director with effect from 1st May 2007.
The Board’s policy is that fees should reflect individual responsibilities and membership of Board Committees. Barclays encourages its non-executive Directors to build up a holding in Barclays shares. £20,000 of each Director’s base fee of £65,000 is used to buy Barclays shares. These shares, together with reinvested dividends, are retained on behalf of the non-executive Directors until they retire from the Board. They are included in the table of Directors’ interests in Barclays shares on page 158. Non-executive Directors do not receive awards under share plans for employees, nor do they accrue pension benefits from Barclays for their non-executive services.
Non-executive Directors do not have service contracts but each has a letter of appointment. For each non-executive Director who served during 2007, the effective date of their appointment, notice period and the Group’s liability in the event of early termination are shown in the following table.
Download table as excel file| Effective | Group | ||||||
| date of | liability in the | ||||||
| Non-executive | letter of | Notice | event of early | ||||
| Directors a | appointment | period | termination | ||||
| David Booth | 1st May 2007 | 6 months | 6 months’ | ||||
| fees | |||||||
| Sir Richard Broadbent | 1st Sep 2003 | " | " | ||||
| Leigh Clifford | 1st Oct 2004 | " | " | ||||
| Fulvio Conti | 1st Apr 2006 | " | " | ||||
| Dr Danie Cronjé | 1st Sep 2005 | " | " | ||||
| Professor Dame | |||||||
| Sandra Dawson | 1st Mar 2003 | " | " | ||||
| Sir Andrew Likierman | 1st Sep 2004 | " | " | ||||
| Sir Nigel Rudd | 1st Feb 1996 | " | " | ||||
| Stephen Russell | 25th Oct 2000 |