Bob Diamond could receive £30 million payout despite being forced to resign as Barclays chief executive
Bob Diamond's resignation was swiftly followed by that of Barclays’ chief operating officer Jerry del Missier, who was formerly co-president of its investment arm Barclays Capital
Bob Diamond could be entitled to a pay-off of between £20 and £30 million it emerged this afternoon despite being forced to resign of chief executive of Barclays over the rate rigging scandal.
Mr Diamond left his job with immediate effect early this morning after the Bank of England governor Sir Mervyn King made it clear to the Barclays’ chairman Marcus Agius that Mr Diamond’s position had become unsustainable.
He was swiftly followed by Barclays’ chief operating officer Jerry del Missier, who was formerly co-president of its investment arm Barclays Capital who stepped down just after lunch.
But despite the nature of their departure both men could be entitled to a huge pay-off.
The former City minister Lord Myners said that after taking into account share options, pension contributions and other factors – the total payout for Mr Diamond could reach £30 million.
“Defining the payoff is complex because senior executives get paid in multiple ways,” he said.
“But I think the amount of money, if you include his share options, restricted share rights, matching share options, retained bonus, pension, life and medical cover, is probably in the order of £20-£30 million.”
Executive directors at Barclays are entitled to a notice period of 12 months and payment in lieu of notice in instalments. This would mean Mr Diamond could be entitled to a full year's salary, worth £1.4 million.
However, the report adds that the remuneration committee's approach when considering payments in the event of termination is to take account of the individual circumstances.
These include the reason for termination, contractual obligations and cash, share and long-term incentive plan and pension plan rules.
Barclays board said it would ask Mr Diamond to give up nearly £20 million in bonuses.
Within minutes of Mr Diamond’s decision being officially announced the Chancellor George Osborne went on the radio to welcome the news as “the right decision for Barclays (and) the right decision for the country”.
In mid-morning trading Barclays share were up nearly three per cent.
Mr Diamond will still give evidence to Parliament on the interest rate fixing scandal which led to his departure tomorrow.
As Mr Diamond is no longer in post that testimony may now be even more revealing and drag the Bank of England deeper into the Libor crisis.
He is certain to be asked about a disputed phone conversation he had with the deputy governor of the Bank of England Paul Tucker in late 2008.
Sources at Barclays have claimed they have contemporaneous notes that conflict with some accounts given by regulators.
After the conversation Barclays managers are understood to have believed they had Bank of England permission alter the Libor figures which the bank was submitting each day.
In his resignation statement the 60-year-old was far from contrite – insisting his decision to step down was not because of any wrongdoing on his part.
“I am deeply disappointed that the impression created by the events announced last week about what Barclays and its people stand for could not be further from the truth," he said.
“My motivation has always been to do what I believed to be in the best interests of Barclays. No decision over that period was as hard as the one that I make now to stand down as chief executive. The external pressure placed on Barclays has reached a level that risks damaging the franchise - I cannot let that happen.”
Barclays’ Chairman Marcus Agius, who resigned over the affair yesterday, will now remain with the bank to lead the search for a new chief executive before stepping down at a later date.
Barclays said that Mr Diamond's severance package was “still under discussion”.
Labour leader Ed Miliband welcomed the decision but continued to call for a full judicial inquiry into banking culture.
He said: “This was necessary and right. It was clear Bob Diamond was not the man to lead the change that Barclays needed.
“But this is about more than one man - this is about the culture and practices of the entire banking system, which is why we need an independent, open, judge-led public inquiry.”
The Government have rejected Mr Miliband’s demand and instead want a Parliamentary inquiry into the Libor scandal led by the Chairman of the Treasury Select Committee.
A decision on whether that will go-ahead is likely to be taken on Thursday.
Mr Osborne, who said he had been told of Mr Diamond’s resignation last night denied that he had put private pressure on him to go.
“I was very clear that it was not the job of the Chancellor of the Exchequer or the Prime Minister or anyone else in the Government to make a decision about who ran, in effect, a private company, Barclays,” he said.
“This is ultimately a decision for the board of Barclays. Obviously we have had conversations over the last few days with Barclays Bank. But this is, as I say, ultimately a decision for their board.”
But he added that he felt it was an important and correct decision.
“I think and I hope that it is the first step towards a new culture of responsibility in British banking,” he added.
Financial analysts had a mixed reaction to Mr Diamond’s departure.
Some felt that he would be hard to replace while others regarded it as inevitable that a man once derided by Lord Mandelson as the “unacceptable face of banking” would have to fall on his sword.
Ian Gordon, an analyst at Investec, said: “We are disappointed by Bob's resignation this morning.
“That said, it is undeniable that the unrelenting political/media campaign had centred on Bob personally, and this was leading to a persistent misrepresentation of Barclays' position in relation to the multi-bank Libor investigations, and a clear distraction from the execution of Barclays' strategic repositioning.”
But David Jones of IG Index said there was a sense of relief in Mr Diamond had gone.
“From an investor's point of view, it [Diamond's resignation] was expected. We've seen that business leaders, like politicians, try to hand on in these circumstances but eventually they do go.”
Speaking at the FSA's annual meeting, chairman Lord Adair said the Libor scandal had caused a huge blow to the reputation of the banking industry.
“The cynical greed of traders asking their colleagues to falsify their Libor submissions so that they could make bigger profits has justifiably shocked and angered people, in particular when we are facing hard economic times provoked by the financial crisis,” he said.
“But, sadly, it is clear that the behaviours evidenced in the Libor case were not, in the years before the crisis, confined to this specific area of financial activity.”
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