ABI flashes yellow card at Barclays over controversial tax payment to chief executive Bob Diamond
22:28 GMT, 10 April 2012
The UK’s leading shareholder group has issued a warning notice to investors over the controversial 5.7m tax payment to Barclays chief executive Bob Diamond.
The Association of British Insurers (ABI) served an ‘amber-top’ report on the bank, signalling that there are serious concerns for investors when they vote on Barclays’ pay policy at its annual meeting later this month.
Its move adds to the protests against Diamond’s rewards and piles the pressure on the bank to perform a U-turn over the tax award, which dissident shareholders say flouts the ABI’s principles on executive pay.
Under pressure: Bob Diamond's pay soared while Barclays shares tumbled
Barclays was the second biggest faller
in the FTSE yesterday, dropping 13p to 206.3p, as the row over
Diamond’s tax bill escalated. Supporters of Diamond attributed the fall
to eurozone worries.
Diamond ran up the bill due to a move from New York to London. Barclays
says it paid on his behalf to avoid him being taxed twice.
section of the ABI principles dealing with taxation declares that pay
committees should not compensate bosses for changes to their personal
The main thinking behind the wording was to stop companies hiking executive pay to make up for increases in the UK tax rate.
some believe it also applies to Diamond’s so-called ‘tax equalisation’
payment and that the bank has committed a breach of the principles. The
ABI has also flashed a warning light over the sheer size of Diamond’s
His total pay
disclosed in the annual report this year could tot up to 27m including
long-term, performance-linked incentives over several years.
ABI does not issue rulings on how its principles should be interpreted
but leaves it to individual shareholders to cast their votes. A growing
band of investors plans to vent its fury by voting against the pay
report. Some intend to go further and vote against the entire pay
committee including chair, Alison Carnwath.
denies it has broken the ABI principles and claims such tax payments
are common practice. The only other example the Mail could unearth this
year by a rival bank was a much smaller sum of over 100,000 to HSBC
executive Sandy Flockhart.
spokesman for Barclays said: ‘Barclays takes its responsibility to
engage all of its shareholders seriously. We have had extensive
engagement with shareholders, including the ABI and its members over
have produced a carefully considered report. We note the concerns and
questions that they have raised in their report and look forward to
continuing to work with them on those.’
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