Barclays Bank shareholders dished out a strong protest against pay plans for Bob Diamond and other top executives at the bank's annual meeting yesterday. Including abstentions, 11 per cent of voters withheld support for its remuneration report, with rebellions against two specific bonus plans.
The unrest came as the bank announced a U-turn over its controversial move in 2009 to transfer toxic assets to a fund staffed by former Barclays investment bankers. Barclays will buy back £6bn of assets and pay the Protium fund's managers $83m (£50m) to get out of a 10-year management agreement originally priced at $40m a year.
The deal reverses a complex manoeuvre that was attacked for its accounting trickery in getting the illiquid assets off Barclays' books. "It was a transaction that was necessary back in 2009," said Chris Lucas, Barclays' finance director. "External factors have changed quite significantly and we now have the best way of going forward."
He denied Barclays had come under pressure from regulators to reverse the deal, but said that new rules meant Barclays had to allot more capital to the loan it made to Protium.
He added that Barclays had always said the assets – mainly credit securities – were good quality, and that demand for them had returned.
The bank announced falling income at its key Barclays Capital investment bank for the first quarter, but said it was comfortable with forecasts for about £7bn annual profit. The shares fell almost 5 per cent to 287.5p.
At Barclays' heated annual meeting in London, shareholders accused Mr Diamond, who took over as chief executive this year, and other bosses of paying themselves big bonuses while investors lose out on the value of their shares and dividends.
One investor said the dividend on his 40,000 shares had fallen to 20 per cent of the £13,000 he got before the bank cut it during the crisis. "I fear directors and senior staff will continue to treat small shareholders of the business as a cash cow," he said.
Another said the dividend supported his family of nine and compared his plight with that of Mr Diamond, who was paid a £6.5m bonus last year.
Barclays has tried to win over investors with a pay plan that pays bonuses in deferred securities linked to the bank's performance and swaps basic shareholder return for measures linked to its capital strength and criteria such as customer satisfaction.
But the revamp has divided shareholders, while some investors have bristled at the 20 per cent rise in the chief executive's salary and large interest payments on deferred bonuses.
The bank's chairman, Marcus Agius, said he understood shareholders' unhappiness about Barclays' depleted dividend, but that the bank had cut the payout during the crisis because it needed to raise new capital.
Mr Agius and Mr Diamond tried to head off criticism by pledging to improve poor customer service and admitting that shareholder returns were unacceptable. Mr Diamond also denied talking to US regulators about moving the bank to New York, and said he wanted to continue Barclays' 320-year history in the UK.
Mr Diamond is cutting costs and getting out of unprofitable businesses. As well as quitting Indonesian and Russian retail banking, the bank will also consider selling its Spanish business after returning it to profit, Mr Lucas said.