Diamond 'reluctant' to act over pay

Bob DiamondFormer Barclays boss Bob Diamond was "reluctant" to accept pay at the bank was too high and the board ignored recommendations to withhold his bonus for 2011, MPs have heard.

Alison Carnwath, previous head of remuneration at the bank, told the Parliamentary Commission on Banking Standards she believed Mr Diamond should have received no bonus at all for 2011 after a year of poor performance and mounting anger over banker pay.

In her first public hearing since resigning last year amid a storm of controversy, Ms Carnwath said Mr Diamond was "overly protective" of his investment bankers.

She told MPs: "The committee was aware that pay was at the top end of the scale and asked the chief executive on his appointment to take a leadership position and clarify the pay culture to staff. Mr Diamond was reluctant to do this and reluctant to accept pay at Barclays was high, particularly in the investment bank."

Ms Carnwath stepped down last July, citing "personal reasons" and "other commitments" for her departure, which came after the exit of Mr Diamond and chief operating officer Jerry del Missier following the bank's £290 million fine for Libor rigging.

She found herself at the heart of a shareholder rebellion in 2012 over Mr Diamond's 2011 pay package when some 23% of investors failed to back her re-election.

Mr Diamond received around £18 million in salary, bonus, benefits and vested long-term share awards in 2011, including a near-£2 million annual bonus - around 75% of the maximum payout.

But she insisted she was "amazed" at the planned payout for Mr Diamond and said her recommendations fell on deaf ears. She said: "My determination was quite straight forward, return to shareholders had been poor and Mr Diamond needed to set an example to all stakeholders that remuneration policies had to change to reflect the low return environment."

The hearing comes as scandal-hit Barclays is reportedly in talks with shareholders over plans to pay its new boss Antony Jenkins a bonus worth more than £1 million, despite the bank being forced to allocate almost £2 billion for fines relating to rate-rigging and mis-selling scandals.

Barclays' current remuneration committee head Sir John Sunderland told the committee the bonus plans were "speculation" and said Mr Jenkins's bonus had not yet been determined. Sir John, who was involved in the decision to award Mr Diamond a 2011 bonus, admitted the bank should have reined in the former chief executive's handout. In aggressive questioning, Sir John was asked whether his predecessor was right and he was wrong not to have agreed to scrap Mr Diamond's 2011 bonus. He said: "With hindsight, would it have been better if the bonus was less? Possibly," he said.
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