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Of UK Shareholders, Rebellions & Coloured Warnings

Posted on April 11, 2012 at 4:50 PM

Did they think a little Easter break would interrupt the scrutiny? Barclays Bank is still and again in the spotlight about the vast tub of money it is throwing at its CEO Bob Diamond and its finance director Chris Lucas. 

Bob Diamond: salary a puny £1.35m, "tax equalisation" (eh??) package worth £5.75m.......strange, I'm sure I heard Gideon on BBC being morally outraged by "tax evasion" - sorry I meant "tax avoidance" - measures but never knew about "tax equalisation" AND  what matters is what Bob is getting amounts to total pay and benefits worth around £17.7m.

The photograph of Mr Diamond alone is worth a peek here in The Telegraph. Having first revealed that institutional investors Standard Life, Fidelity, Aviva and Scottish Widows, which control 6.5pc of Barclays shares between them, were preparing to protest Mr Diamond's pay, the paper then revealed the Association of British Insurers (ABI) had joined the chorus of disgruntled voices.

For the second year in a row, the ABI has issued an "amber top" alert to its members on Barclays. "Amber", is, as we all know, one step down from RED. An "Amber top" alert signals that investors should consider voting against a given proposal by a company. 

The ABI's actions put it in the camp of the further left investor body Pensions & Investment Research Consultants (PIRC), which had already recommended shareholders oppose bits of the Barclays annual report, partly on grounds of concern over pay.

In detailed advice to shareholders PIRC argued: “In view of the fact that Barclays’ shares are trading far below net asset value, we cannot think of any circumstances in which a chief executive who was part of a team when the bank got into this predicament should be receiving any bonus at all, indeed the board should also be considering clawbacks itself.” Three cheers for plain speaking. 

PIRC has also been taking on the banks on 'true and fair reporting' (also previously mentioned in this blog).

The Barclays AGM is on April 27th. Watch this space.

Peanuts by comparison, but (only) the FT reports that at  Logica, the UK-based IT services company, top management under pressure from shareholders turned down bonuses worth nearly £1m. The waiving of bonuses came after a year in which the company lost a third of its value and announced 1,300 redundancies.

The thing is, I do love the very British 'different colour warnings' and the nudge theory of behaviour but when it comes to investment banks subtlety is not a valued art. Maybe the ABI should just stick with RED, when amounts are over, say £3m and the returns are not evident? At least then everyone's moral outrage can be triggered at once, rather than waiting for individual perspectives to kick in.

Here's an excellent chart courtesy the FThttps://twitter.com/#!/FT/status/190102443856625664/photo/1" target="_blank">  on twitter (I hope - may not reproduce here, so check out FT tweets today or I retweeted @dinamedland )

https://twitter.com/#!/FT/status/190102443856625664/photo/1" target="_blank">https://twitter.com/#!/FT/status/190102443856625664/photo/1

But maybe some sense of common values is finally emerging......for just as I am about to post this blog, it seems  shareholders at BP (confession: I am one, for my sins) are going to mount a revolt at the annual general meeting of BP on Thursday. This follows the board decision to give more than £4m remuneration to chief executive, Bob Dudley, despite a depressed stock price.


You can read The Guardian's coverage which also points out that the group of investors who will vent their displeasure by voting against acceptance of this part of the company's remuneration report, was emboldened by a negative recommendation from none other than - PIRC.

Just to end on a positive note on other board talk - Dame Helen Alexander, former president of the the CBI, is to become chairman of UBM, the UK-listed business media group. She will succeed John Botts and the full details are here.

Categories: Investors, Accountability, Scrutiny