Bob Diamond has been an outspoken defender of bankers' rights to enjoy fat bonuses, but the Barclays
Diamond was due to be given 2.7 million pounds' worth of shares in stages over the next three years. A performance condition has now been added onto half of this bonus, requiring Barclays to generate a return on equity exceeding its cost of equity. Should it fail to do this within three years, Diamond will lose half of his bonus, as will his CFO, Chris Lucas.
Given that Diamond's take-home pay was 25 million pounds in 2011, this doesn't seem an overly harsh condition to agree to. Indeed, given that Barclays' return on equity was 6.6% in 2011 and its cost of equity was 11.5%, you wonder whether he should be getting a bonus at all.
Barclays also made a second, and perhaps more important, concession in its statement on Wednesday, saying, "Barclays is fully committed to ensuring that a greater proportion of income and profits flow to shareholders notwithstanding that it operates within the constraints of a competitive market."
This translates as a commitment to increase dividends, and it is of far more direct relevance to Barclays' shareholders than the size of Bob Diamond's bonus.
Are shareholders happy?
This protest has been led by insurer Standard Life
However, the Association of British Insurers, whose members control 20% of the shares on the stock market, is less happy and has maintained its "amber top" rating on Barclays -- its second-highest warning, signifying possible breaches of corporate governance codes.
The ABI is particularly unhappy about the 5.75 million pound "tax equalisation payment" received by Diamond last year to prevent him from having to pay the tax consequences of his move from New York to London.
Barclays' climb-down under shareholder pressure is the latest in a series of concessions made by bankers on both sides of the Atlantic. Earlier this week, 55% of Citigroup
In the UK, the biggest shareholder in RBS -- the government -- put enough pressure on its CEO, Stephen Hester, to persuade him to turn down his bonus earlier this year. Lloyds Banking Group was also moved to claw back some of its past bonuses as a result of the payment-protection insurance scandal.
A sign of things to come?
It's very hard for even a determined group of small shareholders to achieve any kind of change in corporate governance. In most cases, investors like you and I have two realistic choices: put up or sell up! We can only hope that institutional investors continue to find their voices and stand up for their interests -- and ours.
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