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Barclays to face investor ire

Barclays will apologise to its shareholders when they gather for the bank’s annual general meeting today, ready to revolt against chief executive Bob Diamond’s multi-million-pound pay package.

In a bid to calm the anger, chairman Marcus Agius - who is expected to face a bid to unseat him - will admit the bank’s bosses “have not done a good enough job in articulating our case”.

“On some matters we should have communicated earlier and more clearly,” he will say, according to widely-trailed extracts from his speech to the meeting.

“For this I apologise, and I assure you that in the future we will be engaging differently and more purposefully with shareholders in order to ensure that we obtain a broader level of support on remuneration policy and practice.”

Mr Diamond received £17.7m in salary, bonus, benefits and vested long-term share awards last year - despite admitting his bank’s performance was “unacceptable”.

There have been growing calls among shareholders for remuneration committee chairman Alison Carnwath to stand down and for the 2011 pay report to be thrown out.

Mr Agius will pledge to “realign” payouts in favour of shareholders and insist the bank accepts the need to adjust pay and bonuses to reflect “the new reality” of the post-crash banking sector.

His expected apology emerged as the Business Secretary urged Mr Diamond to listen to shareholders and welcomed the brewing revolt as “a good example of shareholders standing up and saying no”.

“Like other top executives he’s got to start listening to his own shareholders, and I get a sense that that’s beginning to happen,” Vince Cable told ITV News yesterday.

“That’s a matter for him and his shareholders, and they’re going to sort this out.

“I’m not a Barclays shareholder, so I’m not going to put myself in their shoes. I’m certainly not going to tell them what to do, but the facts are very clear: this is a company that paid out three times as much in bonuses to its top executives as it paid out to its own shareholders and I think shareholders are drawing their own conclusions from that.

“My conclusion is that the shareholders have got to exercise their authority - they already are doing, it is proving to be effective and the Government is going to reinforce this by bringing in measures like binding votes.”

The Local Authority Pension Fund Forum, the Pensions & Investment Research Consultants and the Association of British Insurers have all warned members over the pay scheme.

And institutional investors, including Fidelity, Aviva and Scottish Widows, have said they will vote against the remuneration report or re-election of Ms Carnwath.

Mr Agius is also in for a rough ride at the AGM as a significant number of shareholders are expected to vote against his re-election as well.

In addition, a £5.7m tax payment made on Mr Diamond’s behalf when he moved from the US to London to take up the role sparked particular anger among investor groups.

The American banker tried to win support by offering to take half of his £2.7m all-shares bonus for 2011 if certain performance targets are not met within three years.

Barclays will hope that the 22 per cent rise in underlying pre-tax profits to £2.4bn for the first three months of the year will also calm investors.

The bank reported a five per cent increase in total group income to £8.1bn, which included a three per cent rise in income at its investment bank Barclays Capital.

UK retail banking - all business directly with consumers such as current accounts - lifted the group performance with a 16 per cent rise in pre-tax profits to £334m.

The bank also reported an adjusted return of equity of 12.2 per cent in the quarter - a key figure as Barclays has pledged to hit annual return of equity of 13 per cent.

Mr Diamond told shareholders it was “unacceptable” that the bank recorded a return of equity of just 5.8 per cent in 2011, down from 7.2 per cent the previous year.

The bank reported a three per cent drop in pre-tax profits to £5.9bn in 2011, when it cut its total bonus pool by 25 per cent to £2.2bn.

However, the bank came under fire as a 32 per cent cut to the bonus pool at Barclays Capital in 2011 was in line with a 32 per cent fall in profits at the investment arm.

Mr Diamond and his colleagues will also have to contend with protests from the World Development Movement and Robin Hood Tax campaigners outside the AGM, at London’s Royal Festival Hall.

 

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