Barclays to slash CEO’s fixed pay as package capped at £14m | Money News
Barclays is proposing to slash the fixed pay it hands to its chief executive each year as part of an overhaul of his remuneration package that will see his maximum earnings capped at just over £14m.
Sky News has learnt that Barclays has this week written to its largest shareholders to notify them of detailed proposals that will change the way it pays CEO CS Venkatakrishnan and group finance director Anna Cross.
Under the plans, which will be put to investors at the bank’s annual meeting in the spring, Mr Venkatakrishnan will see his annual fixed pay – comprising salary and a share allowance – nearly halved from £2.95m to £1.59m.
His new arrangements would, if approved by shareholders, see him become eligible for bonuses and long-term stock awards worth up to eight times his new £1.59m salary.
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That would mean Mr Venkatakrishnan’s total maximum package increasing from £9.8m to £14.3m, although people briefed on the plans said he could only earn rewards at the upper end of the spectrum if Barclays achieved a return on tangible equity in excess of 14% – a level well beyond the targets the bank has said it is aiming for.
Ms Cross, meanwhile, would see her maximum pay package rise to £8.1m.
The new arrangements will mean that Barclays asks shareholders to vote on its directors’ remuneration policy (DRP) a year earlier than it is required to.
Its move follows the government’s decision to abolish the pre-Brexit cap which restricted senior bankers from earning more than twice their fixed pay in bonuses and other variable awards.
Last year, Barclays investors voted overwhelmingly to allow the company to set its own bonus cap.
For hundreds of so-called material risk-takers (MRTs) at the UK-headquartered bank, that ratio has been set at 10:1, meaning a banker earning £1m in fixed pay could be awarded a maximum of £10m in bonuses.
Other leading investment banks, including Goldman Sachs, have set that ratio at a significantly higher level than Barclays.
In a letter to top shareholders, seen by Sky News, Brian Gilvary, the non-executive director who chairs Barclays’ remuneration committee, said the changes would “simplify the structure of Executive Director pay and to align the outcomes more closely to the performance of our business and the experience of our shareholders”.
Mr Gilvary said that Barclays had already engaged with investors accounting for roughly 40% of its share register.
The bank’s proposals come at a time of sharper debate about boardroom pay in the UK, with companies seeking to argue more volubly that bigger remuneration packages are necessary to preserve Britain’s economic competitiveness.
Addressing that point in his letter to Barclays shareholders, Mr Gilvary wrote that its overhaul of executive directors’ pay provided “recognition that Barclays competes with a broad range of peer banks, including the leading US universal and investment banks, though we must ensure maximum total compensation does not approach the level of US peers to reflect our UK-listed context”.
Last week, it emerged that David Solomon, the Goldman chief executive, was being handed an $80m retention plan, as well as being paid $39m for his work in 2024.
JP Morgan and Morgan Stanley, two other firms with which Barclays competes in investment banking, have also handed big retention awards to their CEOs.
Under Mr Venkatakrishnan, Barclays’ performance has improved markedly: its shares have doubled in the last year, outperforming other UK banks.
It now has a market capitalisation of over £42bn.
If Mr Venkatakrishnan achieved his on-target performance, he would receive a pay package under the new plan worth £9.2m – less than the current maximum of £9.8m.
He would have been paid less under the revised compensation package being put to investors this year than under the existing framework in nine of the last 10 years, Mr Gilvary wrote in his letter to shareholders.
As part of its plans, Barclays intends to increase the weighting of its executive directors’ variable pay to financial measures such as profit before tax, cost:income ratio and return on tangible equity – all of which are key measures of banks’ performance.
Mr Gilvary’s letter also said investors should be “[reassured] that we will retain current Board-level overrides and discretions, to ensure that incentive outcomes are aligned with shareholder experience of the results achieved, and that the executive directors’ remuneration continues to support our risk and control culture”.
Barclays was no stranger to battles with shareholders over top pay in the years after the 2008 financial crisis, most notably during the periods when the bank was run by CEOs Bob Diamond and, later, Jes Staley.
On Thursday, Ambrose Faulks, a fund manager at Artemis Investment Management, one of Barclays’ ten largest shareholders, backed the board’s plans, saying: “We have engaged with the Barclays board over this – post-the lifting of the bonus cap – and see this as a good opportunity to get a better alignment of investor interests.
“These targets are stretching and performance-driven.
“If we aspire to compete globally then our companies need good CEOs, shareholders should be prepared to have structures that are suitably aligned with international peers.”
In a statement issued to Sky News, a Barclays spokesperson said: “The remuneration committee meets with stakeholders throughout the year to gather feedback on our remuneration policy.
“Whether or not the committee chooses to propose any change to our current Directors’ Remuneration Policy in 2025, the policy will continue to focus on rewarding sustainable performance, and close alignment with shareholders’ interests.
“The committee will publish their views and decisions in the 2024 annual report on 13 Feb.”