Pirc urges investors to say no to Barclays pay

Corporate governance consultant Pirc yesterday fired an early shot in what is expected to be one of the stormiest annual meetings seasons in years, urging its clients to vote against Barclays' remuneration report.

In an "alert" to clients yesterday, Pirc – which advises pension funds and other investors on voting decisions – said the rewards offered by the bank were "potentially excessive" and highlighted the pay of its increasingly controversial investment banking chief, Bob Diamond.

The latter's multimillion-pound packages have widely come to be seen as something of a lightning rod for what are seen as excessive rewards to bankers in the City of London. Earlier this month the Business Secretary, Peter Mandelson, described him as the "unacceptable face of banking".

Pirc said of Mr Diamond: "Bob Diamond received £26m on exercise of BGI (Barclays Global Investors) options in the year and a performance share plan (PSP) award equivalent to 2,400 per cent of salary in the year. We consider the vesting scale of the TSR (total shareholder return) element of the PSP to be sufficiently broad and the comparator group and upper target to be acceptable. However, we consider the performance conditions to be insufficiently stretching given the level of award."

Pirc continued: "Despite the extent of pay disclosure we do not consider that shareholders are given sufficient information to judge how challenging the targets are regarding the economic profit performance measure in place for PSP awards to date and the Return on Risk Weighted Assets target for awards going forward.

"The performance underpin, that cumulative economic profit in the performance period must be higher than that of the previous three-year period, is considered to be an acceptable performance measure. However, the underpin of 'financial health' to be used going forward is unclear."

Pirc is widely seen as the most radical among the shareholder groups. However, critics have noted that organisations such as the Association of British Insurers are very much part of the City's establishment and have been less willing to take a hard line on boardroom pay.

Barclays declined to comment on Pirc's findings. However, Mr Diamond has become sensitive over criticism of his pay; he rounded on journalists at the bank's last results meeting, saying questions over remuneration had "an edge" to them and that journalists and other critics should be "proud" to have a successful bank like Barclays based in London.

Barclays' annual meeting will be held on 30 April, two days after that of Royal Bank of Scotland. Lloyds Banking Group holds its annual meeting on 6 May, with HSBC the last of the "big four" banks to face its shareholders on 28 May.