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Barclays' Diamond geezer

Robert Peston | 20:48 UK time, Monday, 26 March 2007

Is Bob Diamond worth the £22m, or £420,000 per week, he earned last year? Are the star players of his beloved Chelsea football club worth around a third of that?

On one level it's a fatuous question. I have a simple, atavistic view: you're worth what you're paid. If you think you're worth more, go out into the market place and test it.

Diamond has turned Barclays' investment banking arm from an also-ran into a contender. No one in his game doubts that his contribution to Barclays’ highly profitable global debt business has been significant. And he's probably being paid more-or-less the market-price for his kind of talent.

But it's arguable that the market itself doesn't work terribly effectively, that it tends to over-value certain sorts of people - investment bankers, hedge-fund managers, chat-show hosts, former residents of the Big Brother house, Premier League footballers - while undervaluing the contribution made by millions of others.

However, some (but not all) investment bankers and footballers can point to the substantial incremental profits they've generated for their businesses, and they can claim with some credibility that their personal remuneration represents value-for-money in that context (actually, it's pretty difficult to make that claim of Chelsea superstars, in view of the huge financial losses incurred by the club).

We live in an era when financial capital is staggeringly cheap and the profit-generating skills of humans are relatively scarce and highly prized. It's why the gap between the wealthiest and the vast majority is widening in a way we haven't experienced for a hundred years.

There may be social and moral arguments against the widening in that gap.

But it’s hard to make an economic case against it, unless you believe that the prevailing global version of capitalism that rules almost everywhere (barring Cuba and Venezuela) is inefficient, unsustainable and will wither.

Comments   Post your comment

  • 1.
  • At 09:17 PM on 26 Mar 2007,
  • David wrote:

Whither? As is whither and dye?

  • 2.
  • At 09:41 PM on 26 Mar 2007,
  • Andrew wrote:

"I have a simple, atavistic view: you're worth what you're paid. If you think you're worth more, go out into the market place and test it."

"We live in an era when financial capital is staggeringly cheap and the profit-generating skills of humans are relatively scarce and highly prized. It's why the gap between the wealthiest and the vast majority is widening in a way we haven't experienced for a hundred years."

Such comments are both naive and uncritical, and overlooks the reason why the salaries of directors and executives and the income inequality keeps rising: the lack of corporate governance.

Not forgetting North Korea!

  • 4.
  • At 09:55 PM on 26 Mar 2007,
  • Paul Cockburn wrote:

It's actually rather smug to think that the current form of capitalism won't wither, or at least evolve. Don't fool yourself that you happen to be living at the moment in history when everything is perfect; things will change.

The specific thing that is wrong with capitalism in its current form is that it is actually a form of oligarchy. Far from being an objective system, the market is actually a self-sustaining 'club' in which the value of particular forms of employment are sustained by those who gain from it. The salaries of merchant bankers are not decided by nurses, but by others of their kind or those in mutually sustaining professions. By comparison, the salaries of nurses are set to a degree by merchant bankers, through their greater political leverage.

And one day a tipping point will be reached in which we politically decide, as a society, that the inequalities have gone too far. Watch your fat cats try to test their value in the market then.

  • 5.
  • At 09:57 PM on 26 Mar 2007,
  • Patrick Miscampbell wrote:

The final word should read 'wither'.

  • 6.
  • At 10:10 PM on 26 Mar 2007,
  • Keith, Aberdeen wrote:

Nothing really new here, just the same old drivel about justfying the wealth gap. Was this worth an article?

  • 7.
  • At 10:12 PM on 26 Mar 2007,
  • Mark wrote:

I know there will be a number of your readers who do not believe that financial organisations create real wealth; however, the skills of people like Diamond have generated profits which filter through in very large dollops to the Exchequer & our pension funds. If that is not spreading the benefit to a wider community I am not sure what is.

What is also pretty near certain, is that if the Peter Hain idea of forcing our best paid financiers to 'donate' most of their bonuses to good causes was followed through, those bonuses would not exist in London - more likely they would bolster the IRS & pension vehicles across the pond.

  • 8.
  • At 10:35 PM on 26 Mar 2007,
  • Freedom wrote:

No surprise that the typical Commie Liberal public are complaining about high incomes of their intellectual superiors.

"Communism has only killed 100 million people, let's give it another chance!"

  • 9.
  • At 10:36 PM on 26 Mar 2007,
  • Rex Horwood wrote:

Believe me as someone who used to work for/with Bob Diamond - he is worth every penny. He made Barclays Capital into the best Investment Bank in the world and is one of the most respected men in the business.

No he's not, and yes it is. Have a look at my URL link why don't you.

  • 11.
  • At 10:39 PM on 26 Mar 2007,
  • kim wrote:

It's all a little shocking, but that's between Mr. Diamond, his bosses and their shareholders.

The City is possibly the best example of how technology empowers those who are best placed to use it, and rewards massively those who then find themeselves at the pinnacle of all those empowered workers. The free (and gushing) flows of capital we see are all based on the humble PC.

What is more important is not to single out those with disproportionate gains, but rather to ensure that as many of us as possible have the chance to emulate (in perhaps a more modest fashion) their achievements, and then to ensure that those less fortunate are not thrown onto the slagheap.

That's education. While recently the explosion of technology has boosted wealth inequality, on the whole it's still better than, say, in the middle of the last century. We are in the midst of a blip. What is important is to make sure that the "new rich" do not become old money, and that the gains in social mobility are restored.

kim

  • 12.
  • At 10:47 PM on 26 Mar 2007,
  • andrei mashkov wrote:

This level of remuneration for a SINGLE human being is immoral, pure and simple. While MILLIONS of people in the third world starve, we seem content to fool ourselves that this is acceptable. It's not. No 'ifs', no 'buts'. No dumb arguments about 'trickle-down' and the efficiency of markets. It is immoral. And that, Mr Diamond, is that.

  • 13.
  • At 10:52 PM on 26 Mar 2007,
  • Emma wrote:

I can honestly say, that having left Barclays (specifically Barclays Wealth) recently, no, he isn't worth the money. The place is badly set-up with horrendous communication, IT and infrastructure problems. How it is making any money at all is beyond me. The staff are treated badly and the customers are treated worse. The 7 'lines to live by' are a joke intended to rip off their customers for as much money as possible and i can't even comment on the retail side of the business.

  • 14.
  • At 10:53 PM on 26 Mar 2007,
  • SG Cook wrote:

Who would you miss first, an investment banker or the bin man? This man is just greedy.

  • 15.
  • At 10:59 PM on 26 Mar 2007,
  • john wrote:

It`s really very simple, people in every industry are paid what it would cost to replace them. In most jobs, this replacement cost is transparent and there exists a reasonable supply of candidates.
The same cannot be said for Bob however, and so the pricing is less clear.

The decision's Bob takes, will make or lose shareholders Billions. In the context of this, whether Bob is paid 1mm or 100mm is irrelevant. Barclay`s shareholders are acting logically in paying him that if he truly delivers this alpha, and crucially that this alpha cannot be found anywhere for less than 22mm.

Do I believe that they`ve paid too much? Of course they have! The point is they (Shareholders/The Board) dont know what the minimum they have to pay him in order to keep him, so they will always overshoot.


  • 16.
  • At 11:01 PM on 26 Mar 2007,
  • Graham Townsend wrote:

As you say, Mr Diamond and others deliver a valuable service to their employers, so deserve rewarding. Their performances can be measured financially and so are in one sense easy to reward. The most obvious contrast is with the public service. Here the benefits are less financially tangible. NHS staff save lives, teachers enable many of the high earners to acquire the skils they need to earn their vast rewards, others also contribute to the wellbeing of society in ways that can't easily be priced. The principle of redistributive taxation should be championed rather than apologised for, as it can enable the earnings of those who make lots of money for their shareholders to be used to pay for things that are of benefit to society as a whole. The offers in the latest round of public sector pay negotiations show what Gordon Brown values most highly. Public bodies are struggling to recruit enough staff to provide the services that the public demand and expect, but the chancellor offers below inflation increases. I wonder if that's the same recruitment and retention strategy Barclays use?

  • 17.
  • At 11:06 PM on 26 Mar 2007,
  • Paul Johnson wrote:

Some excellent comments there Robert and in many respects I agree, especially with the idea of if you think you are worth more, go into the market and prove it.

However, I would be more willing to endorse the argument if I knew what his support staff, researchers and the like, were paid. I assume they played a large part in his success - I wonder if their pay reflects it.

Of course they themselves could go into the market to see if they are worth more, but the market is not perfect and does currently seem to overvalue the efforts of people at the top whilst underplaying the people who get them there.

  • 18.
  • At 11:12 PM on 26 Mar 2007,
  • James W wrote:

I doubt he was even the highest paid person at Barclays Capital, a trader probably was if the company was that successful. Its the classic principal agent problem of Microeconomics coming out in full force, suitable incentives have to be there to make people do their jobs well and maximise the principals utility, this is all Bob Diamond is doing, so what is wrong with it?

  • 19.
  • At 11:17 PM on 26 Mar 2007,
  • P Thomas wrote:

Presumably he'll pay it all back if Barclay's turns in a loss!

  • 20.
  • At 11:22 PM on 26 Mar 2007,
  • david hellier wrote:

re the comment about chelsea's superstars. there's no doubt they are being paid a huge amount of money but as a club chelsea has made massive strides in catching up with its rivals in the past three to four years. whereas arsenal, man utd and liverpool are all known worldwide, chelsea has needed to win a large number of domestic trophies to raise its profile. therefore some of the money spent on wages in the past few years must be seen as an investment for the future identification of the club, both here and overseas.

  • 21.
  • At 11:24 PM on 26 Mar 2007,
  • Nick Nelson wrote:

There is a sound economic case for the nuclear scientists of the world to practice their trade in North Korea/Iran/Zimbabwe or anywhere that pays well enough building bombs as the potential profits are enormous, and the potential downside, the death of large numbers of people, is merely a by product of this profit making enterprise. After all, we live in an era when human life is staggeringly cheap and the nuclear bomb making skills are relatively scarce.

It is hard to make an economic case against this, unless you don't believe the prevailing global version of capitalism provides a complete framework for human living.

Go back to your big house in your economically gated 'community' and take your sad, sick soul with you.

  • 22.
  • At 11:25 PM on 26 Mar 2007,
  • david hellier wrote:

re the comment about chelsea's superstars. there's no doubt they are being paid a huge amount of money but as a club chelsea has made massive strides in catching up with its rivals in the past three to four years. whereas arsenal, man utd and liverpool are all known worldwide, chelsea has needed to win a large number of domestic trophies to raise its profile. therefore some of the money spent on wages in the past few years must be seen as an investment for the future identification of the club, both here and overseas.

  • 23.
  • At 11:26 PM on 26 Mar 2007,
  • Ian Tresman wrote:

If your company earned an extra £50-million for another company, then who would complain if you charged them £10-million for your services.

So if I earn my company £50-million through my own efforts and initiative, then I think I'm worth a proportion for my services?

  • 24.
  • At 11:36 PM on 26 Mar 2007,
  • Andrew Kidd wrote:

£22 or not £22m - how much did he make for Barclays?
I would suspect he made several times that amount for his employers, and add to that what he (likely) also contributed to his staff's deal-making.
If I was a Barclay's shareholder and one employee was earning that much I'd presume he'd made me a significant part of my dividend (trading and investment made x5 that of retail banking from memory) but if not, I'd be at the AGM asking why not.
His 'basic' salary (yes, massive but probably average if not low, for that position) is a usual medi red-herring. Without looking him up I suspect he takes a more longer-term view on his investments as he doesn't really need the monthly pay cheque and reaps the benefit, unlike 99.99999% of hedge funds or most (but not all, venture capital firms which foucus on a much shorter time-frame.
Good luck to him if he's producing the profits.

  • 25.
  • At 11:37 PM on 26 Mar 2007,
  • Ricky wrote:

No. It's all nonsense about the market paying him what he's worth. This is not about the market or about capitalism, it's about who you know. Basically all these executives get their bonuses set by their director friends or by their investment fund manager friends who control the major shareholdings. I'm sure if I was friends with this lot I could earn a few million for shuffling papers around on my desk. It's all just a big pig trough...trouble is we can feed only on the scraps.

  • 26.
  • At 11:39 PM on 26 Mar 2007,
  • Peabop wrote:

Two observations:

(1) I suggest Bob floats himself as 'Diamond Bob Plc' - he could be worth £220m if he could justify Barclays' p/e and well, a man of his calibre...

(2) Barclays' market cap is approx £48.3bn, so it would only take around 200 Bob's to generate this value. At £22m each, they could save an awful lot of money. Get rid of the remaining 118,000 staff, and save £3.7bn in staff costs.


... or perhaps all the other staff did contribute just a little to Bob's success. Here's hoping he at least takes them down the pub for a bit of a 'thank you'.

  • 27.
  • At 11:49 PM on 26 Mar 2007,
  • Malcolm Parker wrote:

If financial capital really is so cheap, why in percentage terms does it cost so much more for those who can least afford it?
Profit is hot air unless it serves some useful purpose and the increasing dependance of certain areas of the worlds economy on the profitability of non-productive industries such as those you've suggested can only be maintained in a world of of instability and inequality. Whilst capitalism will undoubtably continue for the forseeable future, improving worldwide education must ultimately bring an end to the folly of such an obscene overvaluation of any one individual. Statistically, there are already thousands of people with the potential to do the same job as well if not better and it is purely a matter of luck that has put him in the right place at the right time with the right connections to get the job.

  • 28.
  • At 11:50 PM on 26 Mar 2007,
  • Stephen Norton wrote:

I'm afraid my views will not tally with what seem to be the views of the majority here.

I work as a design engineer - I have responsibility for people's livelihoods in my company. Being a professional, qualified engineer, I'm even personally liable if anything I design causes injury or death - that means a prison sentence plus the overwhelming guilt that would affect me if someone were to die because of professional choices I have made.

Doctors and nurses have equal responsibilities as have commercial pilots, firemen, policemen.

They, like me, work hard (I've heard many an extremely highly paid executive use this as a justification for their exhorbitant salaries).

All Mister Diamond really does is the overseeing of making money.

Has society's mores become so twisted that we countenance paying this man in a morning more than I and many other professionals earn in a whole year.

Does he work 700 times as hard as us?

Does he have 700 times the responsibilities of us?

Is he 700 times as capable as us?

Do we as individuals only contribute 1/700 of what Mr Diamond does to society?

  • 29.
  • At 11:56 PM on 26 Mar 2007,
  • Voltaire wrote:

My thought is that yes he is worth a fat salary. But my other thought is that the business pretty much ran itself. When the wind blows ships move. 2006 was a gail force wind in world economies. All he had to do is steer just a little bit. Can i steer daddy?

  • 30.
  • At 11:58 PM on 26 Mar 2007,
  • Lindsey wrote:

Ugh, there should be laws about people being so stupidly rich in a world where so many are exploited. At the end of the day, no one should be worth this amount of money, someone somewhere has been exploited in order to pay for this.

  • 31.
  • At 12:35 AM on 27 Mar 2007,
  • Sam wrote:

Money this, money that. If you're earning enough to live a decent life, and do it through a job that you feel rewarded by in values other than money, then that's far better than a high-earning city banker who spends 20 hours a day working and can only get enjoyment out of seeing his paycheck.

  • 32.
  • At 12:37 AM on 27 Mar 2007,
  • Paul Ebbens wrote:

Strange how he can earn so much money. Whilst the bank itself says it must charge customers for breathing (even though its making more profit every year) to make up for losses. What losses? Quite frankly I'm sure that Banks do not want customers. So lets give them that!

  • 33.
  • At 12:55 AM on 27 Mar 2007,
  • Alex wrote:

"While MILLIONS of people in the third world starve, we seem content to fool ourselves that this is acceptable."

At what point does pay cease being acceptable? Some might argue that £20k/annum, which is many thousand times more than the majority of people on this planet earn, is unacceptable.

Besides, £22m is a drop in the ocean on the scale of the global issues you raise. Whether he's paid it or not, the huge problems of this world will remain.


"Basically all these executives get their bonuses set by their director friends or by their investment fund manager friends who control the major shareholdings."

Fund managers who are investing YOUR savings and are paid according to the returns they deliver to YOU. If (as you suggest) they deliberately engaged in overpaying their friends with YOUR money, their investments would under-perform the market, their funds would diminish and they'd be out of a job.

Directors and fund-managers merely play their part in delivering wealth-generation to a hungry public and they are paid accordingly. The reason that those who are good are rewarded so substantially is because they deliver terrific returns---returns of which we are all hoping to be part when we select a high-performing fund for our investments over the competition.

  • 34.
  • At 01:15 AM on 27 Mar 2007,
  • Thomas wrote:

I found that article to be a truly appalling justification of greed. Evry day the rich get richer, while the poor get much poorer, and articles like this treat the lower classes like they are worthless numbers. They are not numbers, statistics or anything else. They are people. This system has marginalised the poor, and created a totally new underclass. As one of the supposedly wealthiest nations on this planet, we are seeing poverty on an unprecedented level.
The current system is doomed to faliure. It will die. Not for any numerical or economic reason, but because people are being driven to poverty to line the pockets of the rich. Jobs sent abroad, industrial closures and lives crushed in the name of efficiency and profits.
People are angry at their futures being sold away, and crime is on the increase. We have a whole new social underclass in every town, who only exist because their hope and futures were sold. The longer this continues, and the more uneven things become, the angrier people will become, and there a whole lot more of them than fat cats.
Personally I hope they keep this up. The more the rich push, the quicker the backlash, and then the quicker they'll be some real change in the UK that benefits the many and not the few.

  • 35.
  • At 01:27 AM on 27 Mar 2007,
  • Dick wrote:

Just for comparison £25m is five times the amount invested by the financial institutions in start-ups and spin-outs in Scotland in 2006.

Oh and US investors put over $3bn into clean technology start-ups last year. That's roughly 10% of the £9bn City types received in bonuses this year.

Makes you truly proud doesn't it.

  • 36.
  • At 01:53 AM on 27 Mar 2007,
  • Tim Corke wrote:

Personally, I would like to echo what Mr Norton said above and what a couple of others have said.

We live in a society where the rich get richer and those that make the day-to-day decisions that enable such people to earn such high wages get paid less than they deserve.

The problem is mainly that all costs and wages have to be quantified in the modern, accountant-run society. A doctor, nurse or firefighter may save hundreds of lives over the course of a year, but there's no quantifiable gain as far as the accountant sees it.

Life on the 'shop floor' is cheap, as far as the general feeling in Britain goes, with many people unsure of a way out of it.

I'm fully in support of performance related salaries, and subcontractors charging what they feel is appropriate based upon the personal risk involved, but not for really silly money (which is what Mr Diamond's salary is). The main reason for being paid that much is so you can give a large proportion of it to charity to help others. Share the wealth!

  • 37.
  • At 02:03 AM on 27 Mar 2007,
  • brethynda wrote:

Vive la Revolution! Off with their heads!

  • 38.
  • At 02:22 AM on 27 Mar 2007,
  • Andi wrote:

While I think it is only fair a person to be paid based on performances - and this case is one - I also point out that a cap is required so as to not become obscene in a public-traded company.

Also, please review past examples: i.e. Lord Simpson, the CEO of Marconi PLC who for 2 years was greeted as a winner, while the share price was growing, just to have time prove he made some horrendous decisions. Unfortunately, after Marconi crashed, reaching 5-10p/share, nobody took back the bonuses he received while everything looked rosy.

And please, Mr Freedom do not use arithmetic to prove that Mr Diamond is 550 times smarter than I am...

  • 39.
  • At 03:41 AM on 27 Mar 2007,
  • Peter Dewsnap wrote:

22,000,000 pounds? No one can possibly earn that kind of money. They may be paid it but they cannot earn it. No one can contribute to that extent. They should be paid on the basis of fair return for effort.
Add to that the fact that this money comes out of the pockets of those working people who keep their savings in these banks.
Peter D SC

  • 40.
  • At 04:40 AM on 27 Mar 2007,
  • Jean wrote:

I really disagree with Robert Peston's assertion that:

"the profit-generating skills of humans are relatively scarce and highly prized. It's why the gap between the wealthiest and the vast majority is widening in a way we haven't experienced for a hundred years."

The profit generating skills aren't scarce at all, there are so many of these corporate droids doing exactly the same thing:

Develop a "symbiotic" relationship, i.e. merge with a competitor. New CEO promises to slash overheads, looks for "synergies", close branches, centralise (i.e. cut) services, do less in the real world, more in the virtual world, slash jobs.

And then expect those lower down the food chain to do more work for less money. And if they can't or won't, then "outsource" their jobs to somewhere with less demanding employees (How *dare* they want a living wage! We're not a charity!).

So you've slashed the salary bill both by cutting employees in the first instance, and then by transferring the jobs of many of the remaining workforce to the developing world and taking advantage of cheap labour.

Well done! You've improved profitability! Pass Go and collect £20m!

And those skills are allegedly scarce? I can write a memo making a couple of thousand people redundant at a stroke and slashing the payroll bill. (I'm talking about the wider issue here, not about this particular banker)

No, more seriously though it's a myth that's being perpetuated by mostly white mostly middle class mostly educated mostly men. They're effectively operating a closed shop.

If it truly is all about market forces, then why is it that call centre jobs can be outsourced to India (to undercut British jobs), clothing manufacturing can be outsourced to China (to undercut Welsh jobs at Treochy), but bankers don't outsource their own jobs to those who will do the job more cheaply?

Why is it that the bankers aren't undercutting themselves? Making themselves more affordable? Compared to a couple of decades ago, there's a surfeit of MBA graduates. Compared with a few decades ago, more people than ever before have gone to university and gained a degree. It's a nonsense to suggest that there isn't the potential economically/financially educated, commercially astute workforce out there to staff the banks at a more reasonable cost. Why don't those same market forces apply to the banker's jobs?

Three words spring to mind:
pigs, snouts, troughs

  • 41.
  • At 04:50 AM on 27 Mar 2007,
  • Anthony Cowlam wrote:

Somebody called Diamond making a mint? Why am I not surprised?

  • 42.
  • At 05:11 AM on 27 Mar 2007,
  • Julie wrote:

Is Bob Diamond worth 22 million ?

Most certaianly not!!!!

It's absoloutely disgusting that this sort of money is being handed over to any individual. Just how much real work does this man do?

This has outraged me and my family to the extent that we are now moving our accounts out of Barclays. We've all been life long customers of the bank but this is the final straw.

No he is most definately not worth OUR MONEY! So we are taking ours away from Barclays so they can not spend our money; which we work hard for to earn each and every penny.

  • 43.
  • At 06:31 AM on 27 Mar 2007,
  • Tim wrote:

Reluctantly I agree, society regards your worth by your pay. My view is that teachers should be paid more and footballers less, but we as a global society value footballers so much more because their pay is higher. If we want we can change the law - but we don't. Regarding Mr Diamond, no doubt his contribution to society through his work is really significant, but I can't help feeling someone else can do just as well, but be paid say GBP1m. I actually happen to think a strong charismatic teacher could join a blue chip company tomorrow as CEO and do remarkably well, if not better than some CEOs.

  • 44.
  • At 07:09 AM on 27 Mar 2007,
  • Kenneth Armitage wrote:

It matters not if Mr Diamond is or is perceived to be 'value for money' by the shareholders of Barclays Bank, or indeed any other company for that matter, the question is whether the payment of such sums is seen as nothing more than greed. The pursuit of privatization and profit, Dollars, Pounds, Euros, Yen, Krone or Shekels or any other currency for that matter is commendable but only if the result of such enterprise leads to greater awareness and more effort to improve the notion of social equality through the provision of services. As Charles Dickens observed, about business and commerce in America, in his novel ‘Martin Chuzzlewit’ in 1844,

""Dollars! All their cares, hopes, joys, affections, virtues, and associations seemed to be melted down into dollars. Whatever the chance contributions that fell into the slow cauldron of their talk, they made the gruel thick and slab with dollars. Men were weighed by their dollars, measures were gauged by their dollars; life was auctioneered, appraised, put up, and knocked down for its dollars. The next respectable thing to dollars was any venture having their attainment for its end. The more of that worthless ballast, honour and fair-dealing, which any man cast overboard from the ship of his Good Nature and Good Intent, the more ample stowage-room he had for dollars. Make commerce one huge lie and mighty theft. Deface the banner of the nation for an idle rag; pollute it star by star; and cut out stripe by stripe as from the arm of a degraded soldier. Do anything for dollars!""

Mankind has a number of choices related to globalization and the pursuit of profit; but if it continues with this headlong rush into unfettered capitalism without any real and sustained effort to control the ever increasing divide between the richest and poorest levels in societies and countries then it can only lead to economic and social disaster for individuals and for individual nations and lead to a gradual breakdown of law and order, it has happened before and it can happen again.

  • 45.
  • At 07:19 AM on 27 Mar 2007,
  • KK wrote:

Market is a market. If that is the price that means banks ready to pay it and they wouldnt overpay. For the naive comments above I would say welcome to capitalism - the communist experiment failed. For the envious comments - you should have chosen your career path earlier if wanted to earn more money. For those wanting to earn big bucks in iBanking/Markets - it seems easy but actually often takes decades (except for some extra brainy traders)

  • 46.
  • At 07:33 AM on 27 Mar 2007,
  • KK wrote:

Tim, why do u compare a an ave. teacher who done 3 years of University (if anot a special courses) with the cream de la cream of professional sport who play professional soccer from the age of 5?? Wouldnt it be right to compare a football superstar with a top Harvard or Oxford professor?? I doubt they earn peanust like a secondary school teacher. If one wants to be compared a questioned should be asked - Are you the top of the top of your field??
If not try to be one or stop complaining.....!

  • 47.
  • At 07:41 AM on 27 Mar 2007,
  • andrew wrote:

If you'd ever worked at the peasant end of one of these large banking and oil multinationals you'd be aware of the huge savings on staff and property available, the basic and obvious structural changes needed to increase productivity and the complete waste of product and service opportunities.

The truth is there are hundreds of thousands of people in England who could have done as good or better a job at Barclays than Bob Preston. His "market value" is totally down to being lucky.

If you doubt me try working for BT, Texaco, etc. They are shambolic. Management who can't manage, boards that have no idea of the day to day business and rely on the latest management consultancy wheeze because they haven't a clue, psychopath high flyers playing politics because that's how you get up the ladder.

I expect most will dismiss my comments. But try working at one as a low down employee. I've done it and have the T shirt.

  • 48.
  • At 08:22 AM on 27 Mar 2007,
  • Keith wrote:

Interestingly, his salary only made up a tiny percentage of the total. The remainder is was performance related bonuses and share options.

So, he took a package with a big performance element - effectively a gamble on his own ability to deliver, and that of the people he managed. If he hadn't performed, he would be looking for another job today instead of making headlines (and paying £9M in tax).

Keith.

  • 49.
  • At 08:50 AM on 27 Mar 2007,
  • Ian Kemmish wrote:

I suspect that the mistake lies in believing that "you are paid what you're worth" is a simple view.

On the one hand, if you work in a company of ten people with no tiers of management, as I did, you can be reasonably sure that what you're paid is what the customers want you to be paid.

On the other, if you are at least ten tiers of management away from the closest customer, and your salary is set by a remuneration committee stuffed with old boys, then "what you're worth" is more likely to be interpreted as "what is needed to preserve your status" (both for CEOs and footballers) - a measure of worth which is meaningless to most people, and offensive to many.

One might argue that "remuneration committee capitalism" bears the same relation to "capitalism" as "parliamentary democracy" does to "democracy"...

  • 50.
  • At 09:05 AM on 27 Mar 2007,
  • iamagreatskier wrote:

I don't understand why we English have this negative thing about success and money. Do we really want to live under a communist style regime - the poor were really poor and the bosses really rich - in the end it collapsed. All this stuff about third world poor - yes it is bad but how about the extremely rich arab oil states putting some of their billions to work....etc

  • 51.
  • At 09:11 AM on 27 Mar 2007,
  • Bob wrote:

Is he worth it? Yes.

We now live in a global economy that competes for talent. The wider marketplace has caused more intense competition for the best and this has driven pay for the best higher. The Chelsea example shows this in action.

Will it wither? Yes.

Globalisation will not last if it is only for the rich. The Chancellor et al will not be able to continually subvert wage rates for the working classes (note the 2% pay award for public sector staff) while the market pushes pay for the top talent even higher. Eventually the voters will revolt and that will be a very unpleasant mess to unravel. Each recession brings the risks of revolt more sharply into focus.

And the next recession could be closer than we all think - If housing wealth in the US is cut because of the shrinking sub-prime market this could restrict expenditure from Americans leading to a global recession. Western workers will not put up with negative equity, low pay rises, job losses and seeing the elite earn these levels.

  • 52.
  • At 09:18 AM on 27 Mar 2007,
  • Scott wrote:

Well there's nothing like a discussion about money to get people's backs up!

I wonder how many of those who think it's unfair to be paid so much are just jealous. I'm sure very few, if any would refuse to accept such sums given the chance.

And those who bring up that old "third world suffering" cliche...I wonder how many of those actually give up a significant proportion of their income to help? No, I'd bet they don't. They'll use their money on ensuring their own lives are more comfortable than anyone in the third world could hope for.

Life is unfair, simple as that. There's always winners and losers. If everyone's efforts were rewarded equally there would be no incentive to achieve.

Those that can, do!

  • 53.
  • At 09:21 AM on 27 Mar 2007,
  • rhino wrote:

Tycoon - a eastern word meaning great military leader, a tycoon is someone who put's themselves in a possition of great importance and mention. I believe that whomever wants to get there can with the right amount of determination and will power. I say well done to Bob Diamond it is a great display of this principle. Do what it takes to get to the top and not be a victim of society. People believe they are meant to be in a mold of "average joe", going to work just to live another day, but any one can break the mold and become a great tycoon.

  • 54.
  • At 09:44 AM on 27 Mar 2007,
  • Jane wrote:

It's inconsistent to criticise a banker for the amount of money he earns while not being so critical of footballers/actors/singers etc are earning sacks of money. Many actors earn millions per movie. Where is the consistency?

  • 55.
  • At 09:48 AM on 27 Mar 2007,
  • wally donuts wrote:

That article was smug and embarrasingly ignorant.

"There may be social and moral arguments against the widening in that gap"

you don't say

  • 56.
  • At 10:00 AM on 27 Mar 2007,
  • jon wrote:

If it is seen "immoral" and "unfair" that Mr. Diamond should earn £22m in 1 year in exchange hours of hard-work, skill and ingenuity, then how do we justify the national lottery, sometimes paying >3 times as much to a single person on the roll of 6 balls in 30 seconds!

Mr Diamond, congratulations. Keep up the hard work, and inspire more people to go out and stake their claim.

  • 57.
  • At 10:12 AM on 27 Mar 2007,
  • Someone who knows someone wrote:

For all the people saying they will take their money out of Barclays, he isn't in the normal banking side, but the investment banking side...

And the more interesting fact isn't that he made all this money, it is that on the same year IT staff at the company had PAY FREEZES being effectively worse off during the year

  • 58.
  • At 10:30 AM on 27 Mar 2007,
  • John, Devon wrote:

Get real, Mr. Peston!

These inflated payments to "businessmen" don't reflect the success of the market, they reflect it's failure. Charles Allen has walked away after failure at ITV with £5M and a pension of £550K for life.

Bob Diamond and his like have never been in a competitive market like footballers, who we can see performing week after week. Mostly they are benefiting from a money making machine. Equally, no-one has been given the chance to do his job better, or as well for less. We have no information as to whether he is really good at his job, or whether the real work was done by his staff, or whether they are all just lucky in a favourable market.

Furthermore, the shareholders have no real say in his remuneration package, which is decided by a coterie of his mates. Remuneration Committees of large companies are a complete joke, they collude in the racheting up of executive pay, partly because they benefit from it themselves in their day jobs.

  • 59.
  • At 10:49 AM on 27 Mar 2007,
  • Mark wrote:

Are Barclays going to update their marketing campaign to reflect the remuneration given to it’s senior management? I suggest:

Barclays “Now there’s a fraud”

  • 60.
  • At 11:02 AM on 27 Mar 2007,
  • JARandomPerson wrote:

The problem with top level corporate compensation is that it isn't truly correlated to the fortunes of the company.

Firstly, statistically it can't be actually based on one individual, in such a large organisation in a complex competitive environment, good performance is probably just a black swan. As with fund managers hardly anyone beats the index over a meaningful period.

Secondly, the rewards are all positive, golden handshake, postive performance related pay, severence package but never do they have to repay bonuses or fear losing their own capital due to losses.

In business as in life, risk and reward should and tend to be balanced. So an entrepreneur setting up a company and making good deserves the rewards of their efforts. But this is not such a case, where is the personal risk?

It is merely a contractual agreement, based on some industry norms of percentage rewards, with an upswing in the global markets and chance delivers good performance which must be "rewarded". It is just a lottery.

If the system on bonus allocation was fair (gain and loss) and if they pay full tax on the sums involved, then it is a win-win situation.

After all, the top 1% pay 21% of all income taxpayers and the top 10% of income taxpayers.

The more generated the more there is for the public finances.

The issue is the fairness.


Robert, I am in interested in your use of atavistic to back up your viewpoint. As this means that your view is based on your genetic or ancestral background, it means you are telling us that this excessive pay award is ok because your genetic footprint compels you to do so. Not a very logical argument is it ? (Unless cavemen had investment banks too)

  • 62.
  • At 12:56 PM on 27 Mar 2007,
  • Dan wrote:

If you guys think it's that easy then send in your CV's...

  • 63.
  • At 02:08 PM on 27 Mar 2007,
  • Andy Barton wrote:

Most people are missing the point here. This £22M pay award is symptomatic of a belief that personal fortune (and the security we believe it brings us) is more important than helping those in most need in our world (and this not only includes those in poverty, but many who think they have "made it" as well).

  • 64.
  • At 02:17 PM on 27 Mar 2007,
  • Stuart wrote:

Bob isn't even the highest paid man in Barclays. Thats probably Roger Jenkins £40million http://www.thebusinessonline.com/Document.aspx?id=46C843F0-E597-46C7-9AE7-8C93A65A3B40 or Lindsay Tomlinson (shares worth £50m, pay who knows)
http://www.guardian.co.uk/executivepay/story/0,,1887122,00.html or one trader in the bank (name I can't disclose) generates about £500 million of revenues and so is probably paid £25-30 million. But they aren't on the board so we don't get to know.

  • 65.
  • At 05:38 PM on 27 Mar 2007,
  • PC wrote:

Isn't it strange how in this country we continue to lambast those who succeed?

Yes, plenty of people work hard, and you could argue that investment bankers don't necessarily work any harder than some people in other professions (although there are few professions where you will have to work intensely for 18-20 hours a day, 6/7 days a week, sometimes for weeks on end!), but they've chosen to pursue a banking career knowing that the financial rewards will be greater. People can exercise a degree of choice - if you don't feel you're paid enough but you work as hard as everyone else (if not harder!!), do something about it! Not everyone can be paid the same for working equally hard - that's a ridiculous concept and naturally certain sectors and jobs will pay better.

I think Bob is worth every penny, and he is arguably getting paid less than some of his peers across the pond. Barclays Capital has a great brand and offering and it's in no small measure down to him. I'd like to point out that I work for Barclays (not Barclays Capital, but another arm of the bank), and earn substantially less than the investment banking boys, but don't have an issue with them being rewarded for what they do!!!

On a related note, i'd also like to point out that if banks don't do well, all our pension funds are in a world of trouble and the government loses a substantial amount of tax! As for individual high earning bankers - let's not forget the contribution they make via income tax! Yes, they'll earn more in a day than some people would in a year, but their tax bills are much higher than the average man on the street as well!

Could get into the whole inequality of wealth issue but i won't - yes, the wealth gap is concerning, but the solution to that isn't to drive talent overseas.

No doubt i'll be shouted down for this, but from reading some of the comments above it also feels like jealousy is playing a part in the comments!

  • 66.
  • At 06:19 PM on 27 Mar 2007,
  • John, Devon wrote:

I'm no fan of the lottery, but in reply to Jon, who said "how do we justify the national lottery, sometimes paying >3 times as much to a single person on the roll of 6 balls in 30 seconds!", the answer is that everyone has an equal chance if they spend £1 on a ticket. And most of the money goes to good causes and tax. I wonder how much tax Mr. Diamond paid on his £22m?

  • 67.
  • At 07:30 PM on 27 Mar 2007,
  • Alex wrote:

Perhaps another way of thinking about this: if you sat on Barclays' remuneration committee, what sort of package would you offer to incentivise those you ask to run your investment banking division?

Perhaps a £250k base salary, plus performance related bonus and stock options would seem reasonable?

If that person's performance then exceeds expectation to the point that the total package becomes worth £22m, should you not honour it? After all, it was that incentive which drove him to perform in the first place.

If you were to cap his earnings, then there is only an incentive to reach that cap---not to continue striving for better performance thereafter.

  • 68.
  • At 10:16 PM on 27 Mar 2007,
  • Daniel wrote:

Yes, I agree!

  • 69.
  • At 12:54 AM on 28 Mar 2007,
  • Mark wrote:

This seems to have turned into a 'lets slate high earners' forum and whether or not it's moral to pay someone this much.

Come on, let's face it - if you were offered £22 million nicker a year, would you turn it down or give it away?

I suspect jealousy plays a large part in this, but if you were in the position to negotiate this type of pay deal, you'd be a fool not to.

As a shareholder in Barclays, I'm glad Bob is there, his department generating all those profits. If he wasn't worth it, he wouldn't be there. That is capitalism.

  • 70.
  • At 01:15 AM on 28 Mar 2007,
  • Ricky wrote:

Unfortunately those who try to justify this salary by claiming the salary is set by the market are very deluded. It's laughable to suggest that the laws of supply and demand are at work here, this is about peer pressure, incompetence, greed and even corruption. The renumeration committees who pay these bonuses and award these share options are made up of overpaid directors from other firms. These people are completely out of touch with the real world. This isn't capitalism it is purely bad decision making.

  • 71.
  • At 10:06 AM on 28 Mar 2007,
  • A member wrote:

THIS IS DISCUSTING, I have recently been talking to a number of friends that work in barclays and have learnt that many people who I know have worked their socks off didn't get paid any bonuses this yesr, probably to fund Mr Diamond Gizzers pocket.

Why is it that the ones that do the hard work don't get paid any rewards and the ones that over see the hard workers get paid a mint??

Let's see if this man goes and see's if he really is worth this money, see if he can do the same for another financial institue.

  • 72.
  • At 10:09 AM on 28 Mar 2007,
  • Matt wrote:

Obviously a very contraversial topic!

My view is simplistic but I think logical.

I dont see why people have a problem with him earning this quantum of money. If he has generated substantial amounts of profit, why shouldnt he reap the rewards? In fact I bet the majority of people on this page arent even Barclays account holders. Even if they were, how has it disadvantaged them? 0.0000001p interest or dividend?

If he was a sole trader (or had his own business/company) and he earned that money, nobody would begrudge him, they would probably say well done.

His tax liability would be massive and therefore contributes way more than probably everyone who has commented put together(many times over).

It seems to me there are a few green eyed monsters here.

Who is to say he doesnt contribute to the third world? Why should he contribute more than anyone else? He is certainly not more responsible for the worlds problems than you or me.

As for changing accounts from Barclays, that seems pathetic to me based on Mr Diamonds remuneration.

  • 73.
  • At 11:16 AM on 28 Mar 2007,
  • jon wrote:

In response to John (6:19pm)...

yes, everyone has an equal chance on the lottery.

I would argue that (the majority - if not all) of us have an equal chance in life!

If you dont like what you do / earn, then change it. Plenty of education opportunities, and an abundance of recruitment agents!

  • 74.
  • At 01:30 PM on 28 Mar 2007,
  • Terry Raleigh wrote:

I worked for Bob a number of years ago and have followed his success for the past 10 years. He is a visionary, innovator and exceptional leader, few like him on the street; Deserves every penny and more.
It has taken him 10 years to turn Barcap into a top tier bank and it's about time the board has acknowledged it. Way to go Bob!

  • 75.
  • At 02:52 PM on 28 Mar 2007,
  • PC wrote:

In response to post number 71...yes, many people who worked hard received no bonus, but bonus' should be, and are, based on performance. You may work hard, but if your output isn't as good as some of your peers, then you will get a lower, or no, bonus. Paying bonuses to the best performing staff is a way of raising the bar and encouraging people to strive for excellence....perhaps more people should be working smarter rather than harder????

  • 76.
  • At 03:42 PM on 28 Mar 2007,
  • Hamant Patel wrote:

Bob, and indeed the rest of the senior management team at Barclays are abusing there position to set targets which are 'obviously' going to be overshot and hence perforamance related bonuses are huge.

Unfortunately, this principle is not allowed to be practised lower in the organisation, as evidenced by Barclaycard CEO, Antony Jenkins, who instigated an edict to not allow any 'C' performers any bonus (announced in November) though the senior management schemes remain untouched.

Of course, this is the argument used to justify the ridiculous salaries in the upper regions of the BBC, so we shouldn't be surprised to see it here.

Mr Peston, if you want to 'blog', do it for free like the rest of us, why should we pay you for this fatuous nonsense?

  • 78.
  • At 01:49 AM on 29 Mar 2007,
  • Hiroki Negishi wrote:

Well, I happen to believe that the prevalent global version of capitalism is unsustainable, because it rewards rather than penalizes vandalization of our life support systems.
Never forget that Homo Sapiens (That is us Human Race for those who don't know) is but one of the many tenants of the Planet Earth, and our landlady is quite scrupulous, if slow, about the tenants' housekeeping standards, and she doesn't accept cash as compensation for the damages to her property.

  • 79.
  • At 10:43 AM on 29 Mar 2007,
  • Aquila Maris wrote:

As a shareholder I am delighted that BD has done the business - I am sure that there other high flyers around the world who could do a similar job, but, they are not in the job, he is, and has performed in developing Barclays Capital into a major league investment Bank.

I look forward to the dividend.

  • 80.
  • At 11:45 AM on 29 Mar 2007,
  • Peter Gray wrote:

As an ex employee of Barclays International (and one who did not always get a bonus) I can say that Bob is worth every penny of his salary as he and Matt Barrett have turned the whole Group around and made it into the major force it is on a global basis. good luck, Bob - keep making it!

  • 81.
  • At 12:12 PM on 29 Mar 2007,
  • Ian wrote:

How much you are paid should be dictated by the value you add - to the lives (and fortunes) of others. Clearly Mr Diamond has added much value - and I applaud him.

  • 82.
  • At 12:59 PM on 29 Mar 2007,
  • jonathan wrote:

Go Bob

I hav just left Barclys after a brief stint, and while walking around the higher levels of chiefdom never once did i see BD. This leads me to think seveal things, is he too busy to evn get a coffee, or does Bob have people to do this for him? As I would imagine he has people to do the majority of his work for hm too. Remember big cheeses rarely do any kind of real work as to what the average man on the street would do but have to live by the consequences of their actions/ sleeples nights etc.
But £22 Mil is fine, BOA, HSBC, Citibank would pay that and a lot more to have him jump ship, rather keep in the hands of a British company han walking away.

  • 83.
  • At 01:25 PM on 29 Mar 2007,
  • Irwin wrote:

I am a Barclays Bank plc shareholder. Barclays was a rather pedestrian company until recently. Its shares are owned by many pension funds that have been emasculated by Gordon Brown. Fortunately some shares have risen in value to compensate for that and Barclays is one of them.

I am extremely pleased that Barclays employs Bob Diamond because he has increased the wealth of himself, his employer and the nation. Why on earth cannot all these whingers understand that we collectively need the few Bob Diamonds of this world more than we need other skills. The Bob Diamonds of this world cannot be remunerated at conventional levels.

I just wish that the whingers were not so envious and be pleased that he works in the UK paying UK taxation.

  • 84.
  • At 01:41 PM on 29 Mar 2007,
  • Ben wrote:

I wonder how much Nick Leeson was worth to Barings. I bet the market would have paid handsomely for his services too. Its the economics of the casino. Those who rob Peter to pay Paul can always depend upon the support of Paul.

  • 85.
  • At 01:46 PM on 29 Mar 2007,
  • Sam wrote:

I read with amazement the several mentions of Mr Diamonds contribution to the country by way of the "massive" tax bill he will have.

Are people really naieve enough to believe a person that earns this much has not paid a top notch tax adviser to minimise the tax liability by use of trusts and the like?

I dare say Mr Diamond would have more respect if he announced he was paying the same percentage of TAX/NI that us mere mortals are - somehow I doubt that he is or that he will.

  • 86.
  • At 02:57 PM on 29 Mar 2007,
  • John wrote:

Undeniably we need to reward high achievers in many walks of life, if they contribute to general economic well-being.

The challenge for this society is to ensure that through redistributive taxation that all people are better off as a result of Mr Diamond's efforts. To state that "there may be moral and social arguments against the widening of that gap " (between richest and poorest) is merely a statement of the blindingly obvious.

It's a nonsense to say that anybody is worth what they are paid.
If an employee fails to do the work they are required to do they aren't worth what they are paid no matter how large or small their salary. If they succeed then that is what is expected and the reason they are paid.
If Mr Diamond earned only a mere £50,000 year would he only put a tiny percent of effort in? If he were a nurse working for a Nurse's wage would he tell a patient they may die because he wasn't getting paid enough and couldn't be bothered to help them? I hope not.
You suggest that the market decides and morals don't come into it and if Mr Diamond can earn more elsewhere then he might go elsewhere and work.
If the market is the deciding factor in this wonderful world of Capitalism then you would, I assume, applaud any terrorists who persuaded british troops to change sides and attack us because they would be paid more by those terrorists.
If everything is to be decided by the market then the one with the most money will win every time.
Fortunately for us, most people who earn a lot less than Mr Diamond do have morals and put their fellow human beings and countrymen first even at the risk of their own lives.
I wonder how many times Mr Diamond put his life on the line for that £22m. Any guesses anyone?

  • 88.
  • At 10:11 AM on 03 Apr 2007,
  • Hiroki N wrote:

I agree that achievements and rewards must match, but how much of Mr. Diamond's "achievements" were from his own judgements and decisions, and how much of it was just being at the top at the favourable times??

Also, there are occasions where many a CEO cashed in the future of his company for immediate profit, and then fled like a rat from a sinking ship.

  • 89.
  • At 09:18 PM on 03 Apr 2007,
  • Shaun Mahoney wrote:

Re: New Century, the subprime US mortgage lender which last night filed for Chapter 11 bankruptcy,

Barclays is believed to be owed $1bn and HSBC, already hit by the collapsing US market, is ranked in the top 25.
Goldman Sachs emerged today as the single biggest creditor of New Century.

Barclays Bank is at number 15 in the list of top 50 creditors.

It will be interesting to see how much the London office was responsible for this poor investment, and whether Bob Diamond will receive a lower 2007 remuneration package?

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