The chief executive of Barclays, who famously described himself as a "bargain", is to be paid more than £10m by the bank over the next three years. The pay deal includes a doubling of the annual pension contributions he receives to almost £1m.
Details of Canadian-born Matt Barrett's new pay package – which will see his annual salary rise from £850,000 to £1.1m – triggered an angry response from unions.
Especially sensitive is the disclosure that the bank's annual contributions to his pension pot will soar from £425,000 to £990,000 at a time when many workers are having to cope with worsening provisions for their old age. Mr Barrett, 57, is entitled to a yearly cash bonus matching his salary if Barclays meets profit targets.
Mr Barrett has also been granted 500,000 share options on top of the options worth £2.2m he holds. The deal is retrospective from 1 January and replaces his contract due for renewal in October.
A Barclays spokesman said: "We have struck a balance between what Mr Barrett could expect here and what he might receive in the US. If he delivers outstanding performance he will be rewarded accordingly." The increase in pension contributions was a reflection of Mr Barrett's age, he said.
Unifi, the financial services union, expressed disgust. "Our members won't understand or accept these figures, in particular the pension element," a spokesman said. The Trades Union Congress said the pension contribution rate for directors and for employees should be the same.
The timing of Mr Barrett's new contract is awkward. Sharp falls in the value of the stock market over the past two years have plunged many company pension schemes into deficit and raised fears that people may have to work until the age of 70 to build up a sufficient pension pot. That has forced many organisations, among them British Telecom and even the charity Age Concern, to close generous final salary schemes to new members.
Barclays closed its scheme to new members in 1997, before Mr Barrett's arrival. The average salary at the bank is less than £14,000, although the bank usually contributes 5.5 per cent of employees' salaries to their pension scheme and matches any additional employee contributions. The company is not making contributions at the moment because its pension fund is in surplus.
Last week, the Chancellor, Gordon Brown, criticised the four largest banks – Barclays, Royal Bank of Scotland, Lloyds TSB, and HSBC – for profiteering at the expense of small businesses to the tune of £725m a year. Bank chiefs are to face the Treasury Select Committee next month. It was while giving evidence to the committee that Mr Barrett described himself as a "bargain".
Michael Fallon, the Conservative MP for Sevenoaks who sits on the committee, said Mr Barrett's contract was a matter of concern since it was not clear that Barclays' performance was rooted in a fully competitive market. "There have been too many instances of directors receiving huge increases in pension contributions towards the end of their careers," he said.
News of Mr Barrett's pay package follows the disclosure last week that, despite falling profits, BP's chief executive, Lord Browne, received a 57 per cent rise in his combined salary and bonus last year to £3.1m, while also receiving shares worth £2.6m. Railtrack, BT and Marconi have also caused outrage by awarding huge pay-offs to executives despite appalling corporate performance.
Mr Barrett is well-paid compared to his peers at other banks. Royal Bank of Scotland's chief executive, Fred Goodwin, received £1.57m in salary and bonuses last year. HSBC's chief executive, Keith Whitson, had a 30 per cent rise, and his counterpart at Lloyds TSB, Peter Ellwood, a 17 per cent increase.Reuse content