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Bob Diamond’s big sacrifice?

Category : Business

The proposal that the Barclays chief ties part of his bonus to return on equity only affects 14% of his £17.5m pay package

Bob Diamond appears to believe that when Barclays does well, he has played a large part in its success, and when it does badly, his stewardship is of only marginal importance.

Diamond’s pay over the last five years has dipped slightly, but set against the near collapse of the bank and the huge losses incurred by shareholders, it has held up extraordinarily well.

The proposal by his chairman Marcus Agius for Diamond to tie 50% of his £2.7m share award for 2011 to the bank’s return on equity in three years is a classic manoeuvre to head off shareholders increasingly opposed to his double standards.

It appears like a huge sacrifice. And who can argue against pay related to performance? Except the deal only affects 14% of his £17.5m pay package at a time when the bank admits its financial performance is “unacceptable”.

And there are also plenty of academic studies showing that performance-related pay is flawed. For instance, back in 2006, was Diamond paid to minimise risk and limit leverage? No, like the rest of the industry, he was rewarded for jeopardising its very existence.

The pension fund advisers Pirc say bonuses should be off the agenda until the bank is in a better state. The Barclays board, which includes such eminent figures as former Fidelity boss Simon Fraser, chairman of the National Audit Office Sir Andrew Likierman, former KPMG boss Sir Mike Rake and Cadbury chairman until 2008, Sir John Sunderland, should take a lead and stop top bankers amassing undeserved rewards.

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