Barclays bonus review as bank seeks UAE cash

Shareholders angry as board offers mid-East investors preferential terms for £6.5bn injection

Barclays Bank is planning radical changes to its pay structure following accusations that it shunned government aid to avoid being forced to curb bonuses.

The bank paid its president, Bob Diamond, more than £20m in cash and shares last year, while Roger Jenkins, chairman of its Middle Eastern operations, though not on the board, is understood to receive double that.

Chairman, Marcus Agius denied last week that Barclays raised £6.5bn from United Arab Emirates investors to avoid accepting money from the UK Treasury and the associated pay curbs. But he admitted that the bank's remuneration methods would be revised. "The capital-raising decision was taken by the board – not by the executive – and it was taken in the interests of the company as a whole," said Mr Agius. But, he added: "Barclays – in common with every other bank in the world – is giving careful thought to the whole structure of remuneration. It is premature to tell you what is going to come out of it, but it will be very different."

Banks are under pressure to replace short-term bonuses with payments that better reflect performance. Barclays directors held meetings last week with shareholders who are angry the Qatari and Abu Dhabi investors were invited to inject capital on attractive terms without existing holders being involved. Mr Agius, who was paid £750,000 in 2007, was quizzed on pay by investors and analysts. Mr Varley received a £1.4m bonus on top of his £1m pay but intends to waive any bonus due for this year.

Knight Vinke, the hedgefund which campaigned against HSBC, is thought to be sounding out big shareholders to gauge their discontent.

Shareholders will receive a circular this week asking them to approve the capital injection by Sheikh Mansour Bin Zayed Al Nahyan, owner of Manchester City football club, and Qatari Prime Minister Sheikh Hamad bin Jassim and his country's investment fund. They will own a combined 33 per cent of Barclays. The bank has not revealed whether the investors will be offered a seat on its board. Chinese bankers were asked to appoint a director after buying shares in the summer but have yet to do so. Accepting UK government money would have meant giving board seats to two Treasury representatives.