Barclays Bob Diamond to lead the way in 2012 banker bonus season

Sunday, 15 January 2012 12:07

Bob Diamond, the chief executive of Barclays could receive a bonus of £10 million as city banks and other financial institutions prepare to pay out billions of pounds in banker bonuses before the end of the financial year.

Barclays share price has fallen by around fifty per cent over the past twelve months from around 300 pence per share to its current level of 201.20 pence per share. It fell to a low of 139 pence per share in September but has recovered in the last three months.

Mr Diamond is entitled to share awards worth up to 7.5 times his basic annual salary of £1.3 million. However, this is dependent on the profits the bank makes and the share valuation.

Barclays did not require a bail-out by the UK taxpayer during the financial crisis so the level of bonuses the bank pays out to senior executive is not under quite as much scrutiny as banker bonus payments from bailed-out banks Lloyds and Royal Bank of Scotland (RBS).

However, the issue of banker bonuses is one that still provokes strong negative reaction from most people in the UK as the economic problems of the UK continue to be felt acutely by households who have been squeezed by rising inflation, low wage growth and concerns about rising unemployment. None of these issues look like disappearing in 2012.

Both the Prime Minister, David Cameron and the Chancellor, George Osborne have said publicly that they want bonuses to be lower this year. Mr Cameron said last week that executive pay is “out of kilter” with the performance of the companies.

RBS is 83 per cent owned by the UK taxpayer and controversy surrounded the bank over what it will pay in bonus to the head of its investment bank, John Hourican. The chairman of RBS, Sir Philip Hampton is expected to award other senior executives with million pound bonuses, including Stephen Hester, the chief executive. He will argue that if you want a top banker you have to pay the market rate. RBS is likely to pay around £500 million in bonuses overall.

The bank will also face renewed pressure to not make £10 million of payments to nine key executives that were deferred from last year. Last week Mr Osborne said that he would use his powers to do what’s necessary to lower RBS bonuses this year. In November Mr Cameron said he had the power to stop RBS paying bonuses this year.

The chief executive of Lloyds, Antonio Horta-Osorio said last week that he did not want to be considered for a bonus this year, though that is in part due to his extended absence from his post due to fatigue in the final two months of 2011.

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