Following fall in profits and row over tax avoidance schemes, bank pays chief executive's £5.7m tax bill
Barclays bank boss Bob Diamond received £17m in pay, shares and perks last year – at a time when the bank's profits fell 3% and amid continuing criticism of bankers' pay.
The bank also paid £5.7m to cover Diamond's tax bill and he was awarded even more in shares which will pay out, according to performance, in up to three years' time.
The chief executive's pay deal is likely to infuriate shareholders and pay campaigners and comes after Barclays was forced into an embarrassing row with HM Revenue & Customers over two tax avoidance schemes that could have saved Barclays up to £300m.
TUC general secretary Brendan Barber said that the bonus "epitomises how banks have failed the wider economy and got away with it" while advocates for a fresh tax on banks, the Robin Hood Tax campaign, stepped up their calls for a tax on transactions.
The details of Diamond's payout are revealed in the bank's annual report and accounts, published on its website on Friday. The report also shows that 238 of the bank's senior staff were paid an average of £1.2m.
Diamond received a £2.7m share bonus (80% of his maximum) on top of his £1.35m salary. He also received perks worth £474,000 – which usually covers bills like chauffeurs, security and the cost of personal financial advice. Another £3.7m was released from a share scheme dating back to 2006 – which was delayed after the banking crisis – £1m from a 2008 scheme and £7.8m from a separate executive share award scheme.
The American-born chief executive, who also has British citizenship, was awarded £2.25m in shares under a long-term incentive plan based on performance in three years' time although the bank has only included 33% of the maximum he could receive of £6.75m. There is also another award of £2.35m which can pay out in May provided the bank's capital cushion meets a certain threshold.
The bank paid £5.745m of tax incurred by Diamond directly to the government as it was not covered by the joint taxation treaty between the UK and the US, where Diamond had relocated to run the BarCap operation before taking the helm as chief executive on 1 January last year.
The bank, which stressed Diamond was a UK taxpayer at the 50% rate, said the tax resulted from the difference in treatment on gains on historical share awards between the US and UK which resulted in a one-off tax charge that could not be offset by a double taxation treaty.
The bank's annual report focused on the salary and annual bonus total of £6.3m, down from £9m a year ago.
Attention is likely to turn to pay deals outside the Barclays boardroom, particularly at its Barclays Capital investment banking business, because as a percentage of BarCap's profits, the bonus pool had remained static at 35% (against 36% a year ago) despite the bank's claims it was showing pay restraint.
Under disclosure rules announced by the government, requiring the pay of the eight highest paid individuals regardless of whether they are in the boardroom to be published, Barclays said the highest paid "executive" was an unnamed individual handed £5.2m – before an award of £1.5m shares under a long-term incentive plan to take the total to £6.7m.
Under separate disclose rules, some 238 staff were deemed to be "code staff" – the Financial Services Authority's definition of those who take and make risks for the bank – who were paid a total of £274m, or an average of £1.2m each. One was handed £1.8m in a severance award.
In 2010, the bank reported that 231 staff were paid a combined £554m in 2010 – an average of £2.4m each. Last month HSBC, the biggest bank in Europe, admitted it handed more than £1m to 192 of its top staff in 2011, a year when profits at the bank slipped 6%.
Of Barclays, Barber said: "People are sick of seeing money that should be spent supporting businesses being lavished on the very people that brought our economy to its knees a few years ago."
Data provided by Barclays shows that £100 invested in Barclays shares in 2006 was worth £29 at the end of 2011 compared with £108 if it had been invested in the broader FTSE 100 index.
David Hillman, a spokesman for the Robin Hood Tax campaign, said: "The pockets of Bob Diamond and his fellow bankers are busting at the seams from their multimillion-pound pay packets while the exchequer is being left short by the bank's tax avoidance measures … Such excessive rewards are a clear sign that the financial sector can afford to contribute more to those still feeling the consequences of the banks' past mistakes".