Barclays and Standard Chartered face the prospect of rebellions over executive pay after an influential adviser said investors should vote down pay and pensions packages for executives at the FTSE 100 banks.
Investors should defy directors and reject higher base pay for Barclays’ new chief executive and potentially “excessive” pension awards at Standard Chartered, according to Glass Lewis, which advises investors such as pension funds on how to vote at annual meetings.
Big companies across the world faced a wave of investor rebellions on pay at annual meetings in 2021 as investors objected to executives profiting during the first year of the pandemic. However, some executive pay packets are expected to rebound in 2022 as bonuses kick in again, and scrutiny is expected particularly 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 down the government-backed bank’s pay policy because of increased potential rewards for bankers.
Barclays boss CS Venkatakrishnan – known as Venkat – was promoted to chief executive in November after the resignation of Jes Staley. Staley stepped down when the UK City regulator raised questions about his description of his links to Jeffrey Epstein, the convicted paedophile and former financier who died in prison in 2021 while awaiting charges of sex trafficking.
Venkatakrishnan’s fixed pay was set by Barclays’ remuneration committee at £2.7m, about 12.5% higher than Staley’s. On top of that Venkatakrishnan would also be eligible for a long-term incentive plan worth a maximum of 140% of his salary, or about £3.8m.
While the Barclays vote on its remuneration report will only be advisory, scrutiny of his salary would be unwelcome for Venkatakrishnan as he seeks to put the Epstein scandal behind the bank and tries to avoid censure from regulators over potentially “gaming the rules” on capital requirements.
Glass Lewis said it was “unable to support this proposal at this time given the newly appointed chief executive’s fixed pay level on appointment”.
It also questioned why Venkatakrishnan’s salary was benchmarked against US peers. That “could result in excessive total remuneration opportunity, beyond what we consider to be appropriate for a FTSE-listed bank”, Glass Lewis said.
Luke Hildyard, director of the High Pay Centre, a campaign group, said: “It’s surprising given the extent of societal concern about inequality and extreme concentrations of income and wealth that banks continue to put forward such extraordinarily high pay proposals.
“For Barclays in particular, a change in chief executive really ought to offer an opportunity to reduce top pay to more sensible, proportionate levels.
“These pay awards are made on the notion that only a tiny number of people are capable of filling the role and if they’re not paid enough they’ll go and work elsewhere. But that’s a very debatable assertion and reflects the dim view that the banks have of their own recruitment and training processes, and indeed humanity in general.”
Glass Lewis’s objections to Standard Chartered’s remuneration policy, a binding vote which takes place every three years, centre on the way it intends to calculate pension entitlements for executives.
It said that incumbent Standard Chartered executives are eligible for higher pensions relative to their pay than the broader workforce, and that there was “no compelling reason” for a new policy to allow departing executives to retain pensions at the same level as if they had stayed on longer.
Both banks’ annual meetings will be held on 4 May.
A Barclays spokesperson declined to comment on Glass Lewis’s recommendation, referring instead to the bank’s remuneration report. In the report Brian Gilvary, the chair of Barclays’ remuneration committee, justified Venkatakrishnan’s increased pay by saying it “was a reduction from that for his previous role as head of global markets and co-president of Barclays Bank plc”.
Barclays has frozen about £22m worth of bonuses for Staley until the regulatory investigations have been completed.
A Standard Chartered spokesperson said: “We believe the current policy is both appropriate and consistent with the rest of the UK workforce. The remuneration committee will make a decision on whether to disapply pro rata at the time and on a case-by-case basis. It will not to be used automatically.”