Bonuses for Diamond and Varley

BBC business editor Robert Peston on Barclays renumeration

Barclays will publish its remuneration report this afternoon, ahead of the publication of its annual report - which is a slightly unusual demerger (as it were) of one bit of the annual report.

Presumably that's because it knows that the pay of the last chief executive, John Varley, and of the new one, Bob Diamond, is of some interest.

The headlines are these.

Bob Diamond received a bonus for his 2010 performance as head of Barclays' investment banking and wealth management operations of £6.5m, which consist of £1.8m in shares and a deferred award of £4.7m in shares and contingent capital (bonds that convert into shares in certain circumstances).

This comes on top of his salary of £250,000 per annum. He also received a few million pounds worth of shares from a long term incentive plan (I will be able to calculate the precise value of that when the remuneration report is available later today).

We can assume however that he pocketed somewhere in the order of £10m or so for 2010.

As for John Varley, he received a bonus of around £2m, according to sources, on top of his annual salary of £1.1m (again I will be able to confirm the detail later).

What to say about all this?

Well Mr Diamond appears to be pocketing a bit more than his peer at HSBC, Stuart Gulliver - who was also recently appointed as chief executive and whose recent rewards, of £6.2m in salary and bonus, was for his erstwhile role as investment banking boss.

Barclays will argue that Mr Diamond is only receiving the going rate for a job where he plainly has world class skills in a high-paying industry.

That said, the pay of both Mr Diamond and Mr Gulliver will infuriate those who argue that they are based on banks' unsustainably large profits - or excessive profits generated thanks to implicit taxpayer funding subsidies and rent extracted from the rest of us due to the opacity of their services and products (see my post on Adair Turner's recent analysis of this).

PS This is what a senior non-executive of Barclays told me about the bonus award to Mr Diamond:

"We could have been idealistic but we felt we had to be pragmatic; we had to swallow hard. What we've done won't be popular in the UK but I think it will eventually be seen as in the interest of the country."

How many of you think he's right?

Update 12:06: Barclays has also disclosed the pay of the five highest paid executives below board level for the first time (though not necessarily its five highest paid employees, since the remuneration of super-traders with little management responsibility has not been disclosed).

The top earner received £10.9m plus £3.4m in long term incentive rewards, number two got £10.6m plus £3.4m, number three pocketed £7.9m plus £1m, the fourth go £5.2m plus £1.3m and the fifth took £3.7m plus £1.5m.

So a couple of them received more than Bob Diamond.

Anyway here is what Barclays will see an insensitive way of contextualising these rewards: each of the top five senior executives earned more than the aggregate pay of the entire cabinet, and the top four earned a multiple of total cabinet pay.

Update 12:24: The total pay for 2010 of John Varley was £3.85m, including a cash bonus of £550,000 and a shares and deferred award of £2.2m.

The total remuneration of Bob Diamond was £6.75m, as analysed above.

On top of that, Mr Diamond receives a long term incentive award - contingent on future performance - which would be worth £2.25m, on the very conservative assumption that he only receives a third of his maximum entitlement.

Finally, Mr Diamond has also received shares in the past year from previous incentive schemes worth £13.8m. So his 2010 hasn't been too injurious to his net worth.

Update 13:00: I did Bob Diamond a small disservice in respect of his recent rewards from older incentive schemes. On top of this year's pay, he has just been handed £15.2m in Barclays shares (not £13.8m) from previous incentive schemes, some of which he has sold.

You can keep up with the latest from business editor Robert Peston by visiting his blog on the BBC News website.

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