Barclays is proposing to cut its chief executive’s fixed salary each year as part of an overhaul of its pay package that will cap his maximum salary at just over £14 million.
Sky News has learned that Barclays has written to its major shareholders this week to inform them of detailed proposals that would change the way it remunerates CEO CS Venkatakrishnan and group finance director Anna Cross.
Under the plans, which will be presented to investors at the bank’s annual meeting in the spring, Mr. Venkatakrishnan will see his annual fixed salary – including a salary and a stock allocation – cut by almost half, from £2.95 million to £1.59 million.
His new arrangements, if approved by shareholders, would allow him to become eligible for bonuses and long-term share awards worth up to eight times his new salary of £1.59m sterling.
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It would mean Mr Venkatakrishnan’s total maximum package would rise from £9.8 million to £14.3 million, although people briefed on the plans said he would not be able to secure awards at the higher end of the spectrum than if Barclays achieved a return on tangible equity above 14%. – a level well beyond the objectives that the bank said it was aiming for.
Ms Cross, meanwhile, would see her maximum salary increase to £8.1 million.
The new arrangements will mean Barclays will ask shareholders to vote on its director remuneration policy (DRP) a year earlier than planned.
The move follows the government’s decision to abolish the pre-Brexit cap which prevented senior bankers earning more than double their fixed salary in bonuses and other variable rewards.
Last year, Barclays investors voted overwhelmingly to allow the company to set its own bonus cap.
For hundreds of significant risk takers (MRTs) at the UK-based bank, this ratio has been set at 10:1, meaning a banker earning £1 million in fixed salary could receive a maximum of £10 million in bonuses.
Other major investment banks, including Goldman Sachs, have set this ratio significantly higher than Barclays.
In a letter to major shareholders, seen by Sky News, Brian Gilvary, the non-executive director who chairs Barclays’ remuneration committee, said the changes would “simplify the remuneration structure for executive directors and more closely align results on the performance of our business and the experience of our shareholders”.
Mr Gilvary said Barclays had already committed to investors representing around 40% of its share register.
The bank’s proposals come at a time of intensifying debate over executive pay in the UK, with companies seeking to make the more vocal case that higher pay is needed to preserve the UK’s economic competitiveness. United.
Addressing the point in his letter to Barclays shareholders, Mr Gilvary wrote that his overhaul of executive pay was “a recognition that Barclays competes with a wide range of peer banks, including major universal banks and investment, even if we must guarantee a maximum total amount. remuneration does not approach the level of our US peers to reflect our UK listing context.”
Last week it emerged that David Solomon, Goldman’s chief executive, had benefited from an $80 million retention plan, as well as $39 million in compensation for his work in 2024.
JP Morgan and Morgan Stanley, two other firms with which Barclays competes in investment banking, have also awarded significant retention rewards to their CEOs.
Under Mr Venkatakrishnan’s leadership, Barclays’ performance has improved markedly: its shares doubled last year, outperforming other British banks.
Its market capitalization now exceeds £42 billion.
If Mr Venkatakrishnan met the targets set, he would receive remuneration under the new plan worth £9.2 million, less than the current maximum of £9.8 million.
He would have been paid less under the revised compensation package offered to investors this year than under the existing framework in nine of the past 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 against financial measures such as profit before tax, cost-to-income ratio and return on tangible equity. , all of which are key indicators of bank performance.
Mr. Gilvary’s letter also states that investors should be “(reassured) that we will retain current waivers and discretionary powers at the board level, to ensure that incentive outcomes are aligned with shareholder experience to the results obtained, and that the remuneration of executive directors continues to support our objectives. culture of risk and control”.
Barclays was no stranger to battles with shareholders over top salaries in the years following the 2008 financial crisis, notably during periods when the bank was led by CEOs Bob Diamond and, later, Jes Staley .
On Thursday, Ambrose Faulks, a fund manager at Artemis Investment Management, one of Barclays’ top ten shareholders, backed the board’s plans, saying: “We have spoken with the Barclays board about this – after the lifting of the bonus cap – and see it as a good opportunity to obtain a better alignment of investors’ interests.
“These objectives are ambitious and performance-oriented.
“If we aspire to compete globally, our companies need good CEOs and shareholders must be prepared to have structures suitably aligned with those of their international peers. »
In a statement released 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 a change to our current director remuneration policy in 2025, the policy will continue to focus on rewarding sustainable performance and close alignment with shareholder interests.
“The committee will publish its views and decisions in the 2024 annual report on February 13.”