Barclays boss Bob Diamond agrees to bonus change after pressure from shareholders

Barclays boss Bob Diamond moved to quell a shareholder rebellion today by offering to change the terms of his £2.7 million annual bonus.

Ahead of next week's annual meeting, Mr Diamond and group finance director Chris Lucas have agreed not to receive half of their all-shares bonus award for 2011 if certain performance targets are not met within three years.

The concession comes amid mounting shareholder fury over a £5.7 million tax payment made on Mr Diamond's behalf and growing concerns over his bumper pay deal.

But the move, which threatens to dock Mr Diamond's overall pay for last year by £1.35 million, does not address previously-awarded long-term incentives which push up his total pay package to some £17.7 million.

Barclays said it had been in talks with major shareholders since the remuneration report was published on March 9.

The banking giant said Mr Diamond and Mr Lucas "volunteered" to subject their bonuses to new conditions in recognition of the "strength of opinion expressed by some shareholders".

The executives agreed that 50% of their deferred bonus awards, £2.7 million for Mr Diamond and £1.8 million for Mr Lucas, will not pay out until Barclays' return on equity exceeds its cost of equity. The return on equity was 6.6% in 2011, while cost of equity was 11.5%.

Barclays said if that condition is not met, the potential pay-out will be subject to lapse if it is not met within three years from the date of the award.

The bank has agreed the condition and said: "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."

Barclays reiterated that it regards returns produced in 2011 as "unacceptable on an absolute basis".

The bank said it remains committed to delivering a 13% return on equity as soon as possible, although in February it admitted this would not happen in 2013 as previously hoped.

The shareholder rebellion over Barclays pay gathered pace earlier this month after leading investor group Pensions & Investment Research Consultants (Pirc) said Mr Diamond should not receive "any bonus at all".

Pirc advised its members to vote against the bank's remuneration report, while Standard Life, Fidelity, Aviva and Scottish Widows, which account for 6.45% of the share register, are expected to do the same.

As well as Mr Diamond's pay package, a £5.7 million tax payment to Mr Diamond when he moved from the US to London to take the role of chief executive also sparked anger.

The chief executive will also reportedly see the long-term incentive part of his pay package fall away, which may see his total package of salary, bonuses and tax benefits slide by 75% to no more than £5.5 million.

PA