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Lawyers In Barclays Bonus Battle
Investors in Barclays have
warned that the bank
a battle to fully withhold bonuses owed to Bob Diamond and Jerry del Missier, the two top executives
quit the bank last week.
I understand
lawyers acting
Barclays have informed directors that the contracts of the former
executive and chief operating officer are likely to enable them to walk
with significant chunks of their bonuses
the bank being fined £290m
attempting to rig the interbank borrowing rate Libor 10 days
.
It is partly for that
that - as I disclosed last week - Alison Carnwath, the non-executive director
chairs the Barclays remuneration committee, is understood to
asked Mr Diamond to voluntarily waive approximately £18m
deferred long-term and annual share awards triggered
his resignation.
"Bob built Barclays' investment bank
a world leader and that’s one factor being taken into
by the lawyers," a source
to the Barclays board told me. "A contract is a contract."
I'm told that the prospect
withholding and clawing back elements of Mr del Missier's past bonuses is
likely because of his involvement
the instruction to Barclays employees to lower the bank's Libor submissions
the strife-torn autumn of 2008.
Barclays
have a clawback provision in the contracts of a large number of senior executives -
who are judged to be 'code staff' by the City regulator - which
it inevitable that the bank will be able to demonstrate that it
effectively cancelled tens of millions of pounds
bonuses even if it does not succeed
restricting Mr Diamond's payoff to the contractual minimum.
Sir Michael Rake, the deputy chairman and favourite to
the helm, briefed shareholders to expect a wide-ranging clawback effort
a meeting on Thursday.
The 2011 Barclays annual report, published earlier this year, states: "Events that may lead
clawback include employee misconduct, harm
Barclays reputation, material restatement of Barclays financial statements, a material failure
risk management or a significant deterioration
the financial health of Barclays. Awards may
be suspended where an employee is
investigation for a regulatory or disciplinary
."
It's clear
the events of the last ten days that many of these 'events'
occurred, and I'm told that Marcus Agius, the chairman, wants to
able to provide more detail
the clawback plans when he appears
the Treasury Select Committee on Tuesday.
In other developments relating
the crisis
Barclays, I've learnt that:
- easyJet, the budget airline,
preparing to elevate Charles Gurassa, its deputy chairman, to
top job if Sir Michael
way to take the Barclays chairmanship.
- Sir Michael has told investors
he will only agree to replace Marcus Agius as Barclays' chairman if he has the
support of investors, regulators and senior politicians,
I suspect that the endorsement of leading political figures will count
little if other mis-selling scandals emerge after Sir Michael is installed
the post.
- Barclays directors will early next week sift
a list of names of potential candidates to head an independent inquiry
the business practices and culture of
bank. Contenders will include Sir David Walker, the author of a report
bank governance reform; Sir Richard Lambert, former head of the CBI; Anthony Salz,
respected City lawyer; and Lord Davies, former trade minister.
- BT is likely to begin searching
a new chairman within weeks if Sir Michael looks likely to
the Barclays role although he would not step
from the telecoms group’s board until his replacement
joined.
- The brief for Mr Diamond’s successor
Barclays' chief executive will entail identifying a candidate who has a strong relationship with
US and UK financial regulators.
Barclays was unavailable
comment.
Adapted from: Sky News, July 7, 2012.
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