Vote against executive pay at Barclays and Standard Chartered, investors said | Executive compensation and bonuses
Barclays and Standard Chartered are facing the prospect of rebellions over executive pay after a influential adviser said investors should vote down the salaries and pension plans of executives at FTSE 100 banks.
Investors should challenge directors and reject Barclays new chief executive’s higher base salary and potentially ‘excessive’ pension awards at Standard Chartered, according to Glass Lewis, who advises investors such as pension funds on how to vote at annual meetings.
Big companies around the world faced a wave of investor rebellions over pay at annual meetings in 2021 as investors objected to executives taking advantage in the first year of the pandemic. However, some executive compensation packages are expected to rebound in 2022 as bonuses return, and careful scrutiny is expected, especially in light of the soaring cost of living hitting customers and employees.
NatWest Group, formerly known as Royal Bank of Scotland, is also under pressure after the proxy adviser this month said shareholders should vote against the bank’s government-backed pay policy due to increased potential rewards for bankers.
Barclays boss CS Venkatakrishnan – known as Venkat – was promoted to chief executive in November following the resignation of Jes Staley. Staley resigned after Britain’s city regulator raised questions about his description of his links to Jeffrey Epstein, the convicted pedophile and former financier who died in prison in 2021 while awaiting sex trafficking charges.
Venkatakrishnan’s fixed salary has been set by Barclays’ compensation committee at £2.7m, around 12.5% higher than Staley’s. On top of that, Venkatakrishnan would also be eligible for a long-term incentive plan worth up to 140% of his salary, or around £3.8million.
While Barclays’ vote on his pay report will only be advisory, scrutiny of his pay would be ill-advised for Venkatakrishnan as he seeks to put the Epstein scandal behind the bank and tries to avoid censure from regulators for having potentially “played the rules” on capital requirements.
Glass Lewis said he was “unable to support this proposal at this time given the fixed compensation level of the newly appointed chief executive upon his appointment”.
He also asked why Venkatakrishnan’s salary was compared to his American peers. This “could result in excessive total compensation opportunities, beyond what we consider appropriate for a FTSE-listed bank,” Glass Lewis said.
Luke Hildyard, director of the High Pay Centre, a campaign group, said: ‘It is surprising given the scale of societal concerns about inequality and extreme concentrations of income and wealth that banks continue to put forward proposals extraordinarily high pay.
“For Barclays in particular, a change in chief executive should really provide an opportunity to reduce top salaries to more reasonable and proportionate levels.
“These salary rewards are made on the basis that only a small number of people are capable of filling the role and if they are not paid enough they will go to work elsewhere. But this is a very questionable assertion and reflects the wrong views that banks have of their own recruitment and training processes, and even of humanity in general.
Glass Lewis’ objections to Standard Chartered’s pay policy, a binding vote that takes place every three years, center on how it intends to calculate executive pension entitlements.
He said tenured Standard Chartered executives are eligible for higher pensions relative to their pay than the general workforce, and that there was ‘no compelling reason’ why a new policy allows outgoing executives to keep pensions at the same level as if they had stayed. Longer.
The annual meetings of the two banks will be held on May 4.
A Barclays spokesperson declined to comment on Glass Lewis’s recommendation, instead referring to the bank’s compensation report. In the report, Brian Gilvary, chairman of Barclays’ compensation committee, justified Venkatakrishnan’s pay increase by saying it was “a reduction from his previous role as head of global markets and co-chairman of Barclays Bank plc”.
Barclays has frozen around £22million in bonuses for Staley until regulatory investigations are completed.
A Standard Chartered spokesperson said: “We believe the current policy is both appropriate and consistent with the rest of the UK workforce. The Compensation Committee will decide whether to pro-rate at the time and on a case-by-case basis. It will not be used automatically.