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Barclays top pay rejected by 32%
Protesters from the World Development Movement demonstrate outside the Barclays AGM at the Royal Festival Hall, London
Barclays has been stung by shareholders after nearly a third of their votes failed to back the bank's bumper pay awards.
Following a heated annual meeting, Barclays revealed that 32% of investors voted against or withheld votes for the bank's pay report, while 24% failed to back remuneration committee chairman Alison Carnwath.
Chief executive Bob Diamond sparked anger among shareholders when it emerged he would receive £17.7 million in salary, bonus, benefits and vested long-term share awards last year, despite admitting his bank's performance was "unacceptable" in 2011.
The protest vote is a sizeable one in terms of recent corporate history and will send a powerful message to the bank's board. The blow comes at a time when the Government is consulting on plans to return power to shareholders, which would include introducing a binding vote on executive salaries.
Business Secretary Vince Cable welcomed signs of what he said was shareholders "doing what they are supposed to do, which is holding executives to account". Mr Cable is reportedly still considering a proposal to require the backing of 75% of shareholder votes on company resolutions, such as pay deals.
The Barclays vote came despite an apology from chairman Marcus Agius, whose admission that the bank failed to engage with shareholders was met with heckling, shouting and heated questions over the bank's pay culture. Mr Agius defended the bank's position, saying "the brutal reality" was that paying "zero bonus" was not an option.
Responding to a shareholder question about why Mr Diamond merited any bonus at all, Mr Agius said: "We operate in an international competitive industry. We have to fight for our business every day. It's not an option to pay zero bonus. We would be so far out of line with our competitors that the commercial consequences would be dire."
A significant vote against the pay report and Ms Carnworth's re-election was expected after the Local Authority Pension Fund Forum, the Pensions & Investment Research Consultants and the Association of British Insurers warned members over the pay scheme. And institutional investors, including Fidelity, Aviva and Scottish Widows, said they would vote against the report or re-election of Ms Carnwath.
Alan MacDougall, managing director of PIRC, said: "This vote is humiliating for Barclays and will cement its reputation as a bank that just doesn't get it when it comes to concerns about excessive pay at the top." He called on Barclays to "do the right thing" and issue a statement setting out how it intends to address shareholder concerns as soon as possible. PIRC estimates that the average vote against a remuneration report last year was about 6%, while the average vote against a director facing election was approximately 1%, which puts the scale of the revolt into context.
David Paterson, head of corporate governance at the National Association of Pension Funds, said: "The vote may have been passed, but the level of dissent about executive pay at Barclays needs to be taken seriously by the company and by the rest of the banking industry. Boardroom pay in the sector needs to be better aligned with the long-term interests of shareholders."