Barclays has also held discussions in recent days with Qatar Holding LLC and entities representing the beneficial interests of HH Sheikh Mansour Bin Zayed Al Nahyan (“the Investors”) who agreed on 31st October 2008 to invest substantial funds into Barclays. The Investors wish institutional investors to be able to participate further in the capital raising. The Board of Barclays today announces that the Investors have each offered to make available up to £250m of Reserve Capital Instruments for clawback by existing Barclays institutional investors at par. By consequence £500m of Reserve Capital Instruments (excluding Warrants) will today be made available to Barclays institutional investors by way of a bookbuild placing.
The RCIs are one of the tasty bits of the deal, as they pay out a generous coupon. Originally existing investors weren't being offered any of this, now they are going to get access to about a sixth of the total. It's a significant move in favour of institutional investors, though small shareholders won't get a look in (though this might not be practical/possible anyway). But there's no movement on the warrants- effectively an option to by Barclays shares in future.
Part 2 of the concessions are as follows -
In recognition of the extraordinary circumstances of the Capital Raising, the Board of Barclays also announces that:
*all members of the Board will exceptionally offer themselves for re-election at the Barclays Annual General Meeting to be held in April 2009; and
*no annual bonuses will be paid to executive directors of Barclays PLC for 2008, following the offer by the executive directors to waive any annual bonus for 2008.
This doesn't add up to much and surely ought to be standard operating procedure for the banks now. On the bonuses Barclays is simply following the now well-established trend that acknowledges that in the current crisis giving your top team rewards for good performance might look a bit wrong, though presumably it will be a bit painful for Bob Diamond.
And does putting all directors up for election at the AGM (and this isn't - yet - even a commitment to annual re-election) really mean much? Perhaps we really are in a new world where institutional investors will pull the trigger if they think directors aren't up to the job. Judged on previous evidence I think we ought to be a bit sceptical. How many directors actually get voted off boards? (admittedly some get knifed before it gets anywhere near a vote). If shareholder don't use the vote effectively, what sort of concession is it?
Unfortunately this kind of 'back me or sack me' initiative plays out in the corporate world rather differently to the political world. Business journalism plays a part here since it tends to play up the idea of superhero chief execs. Business leaders can garner the kind of fawning coverage politicians can only dream of if the organisation which they lead does well, and this attitude seems to seep into many people's views of companies. Therefore when execs pull the equivalent of a John Major resignation it is perhaps not surprising that many investors blink first. If we are ever to get to a position where shareholders really do act like owners this is exactly the sort of issue over which investors ought to call the company's bluff. Here's hoping...