Thursday, 24 April 2014

Watch the bonus birdie

I'm a pessimistic person instinctively, so perhaps my naturally negative take is colouring my view, but I do wonder whether coverage of today's Barclays AGM isn't framing it as something that it isn't.

There has been a bit of a ding dong in the meeting by all accounts. Standard Life, which has voted against the rem report, had a public pop at Barclays over the size of the bonus pool, something which has aggravated some shareholders given declining profits. In return, the board seem to have told Standard Life it shouldn't raise these issues publicly, which would seem to call into question the whole idea of an AGM, but hey.

In the meantime, Saint Vince has written out to rem comms telling them to exercise restraint, several  months too late to have any realistic hope of having an impact this year. And he's got his name in the Barclays story, suggesting that it's a bit of a test for shareholders too.

Reading the runes, it seems that we can expect a big vote against the Barclays rem report, so everyone is a winner. Shareholders demonstrate they are cracking down on pay, Vince can say 'my reforms are working, shareholders are getting active' and the bank wins too.

You get that last bit right? Because while you were looking at the advisory vote on the rem report, there was also a forward-looking binding vote on remuneration policy, and a vote on raising the bonus cap from 100% to 200% of salary. Which of those three actually sounds like the least important one? To me it's the backward-looking advisory vote on the rem report. And, of course, it's the one of three votes on pay that already existed before this AGM season. So it's hard for Cable to claim it's a vindication of his policy, though he may try.

If votes go as expected, then Barclays can pay a higher proportion in bonuses and its current rem policy is potentially locked for three years. They get a day or two of bad press for sure, but their freedom of movement on pay has actually just increased compared to the worst case scenario, because shareholders will have assented to it.

If shareholders really wanted to bring Barclays to heel, surely the binding policy vote was the place to put pressure? And if bonuses are a genuine concern, wouldn't it make sense to vote against them being higher as a percentage of salary?

Ho hum.

UPDATE: the results couldn't be more stark. rem report has 24% vote against, and large number of abstentions, but the rem policy passes with 93% in favour, and the increase in the bonus cap gets 96% in favour.

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