Boss gets 127% bump in pay – 182 times the average bank employee
Hot on the news that the major mortgage lender has started offering sub-4% mortgages again, Barclays has reported a significant rise in net profit for the fourth quarter, reaching £1 billion, marking a notable turnaround from the £111 million net loss recorded in the same period last year. This comes a year after CEO CS Venkatakrishnan introduced a three-year strategy to overhaul the bank’s operations.
The figures exceeded analysts’ projections of £989 million, with group revenue surging by 24% to £7 billion, surpassing the expected £6.7 billion. In February last year, Barclays set out plans to drive growth while returning £10 billion to shareholders by strengthening its UK presence and moderating capital consumption in its investment banking division.
Despite a strategic shift, the investment banking arm has remained a strong contributor to earnings. Increased market volatility in the US, ahead of the upcoming elections, led to a substantial boost in equities and fixed income trading. Equities trading revenue climbed 40% year on year to £604 million, while fixed income trading earnings increased 29% to £934 million.
Read more: Barclays matches Santander with sub-4% mortgages
Investment banking fees also grew by 22%, though the debt capital markets sector saw a more subdued 9% rise, attributed to lower involvement in investment-grade issuance. However, Barclays has allocated £90 million to cover costs linked to an investigation and subsequent court ruling concerning potential mis-selling of car finance loans. The bank, which fully exited that market in 2019, follows Close Brothers, which announced on Wednesday that it expects to set aside £165 million for similar provisions in its half-year results.
Shares in Barclays declined 4.7% in early London trading.
“Overall a solid set of results, but little new to get excited about either,” commented Citibank analyst Andrew Coombs. “This, plus the strong run up in the share price over the past year, may temper any initial reaction.”
Executive pay under scrutiny
Meanwhile, Barclays’ latest remuneration report revealed that CEO CS Venkatakrishnan’s total remuneration package for the year soared to £10.53 million - an increase of 127% from the £4.64 million he received in 2023. This figure makes his earnings 182 times higher than the median salary of £57,854 for Barclays UK employees.
Read more: Barclays set to slash CEO's salary
The increase was largely driven by long-term incentive payments (LTIPs), according to the bank’s remuneration committee, which stated it was “satisfied that the single total figure for 2024 remuneration for the group chief executive, the total pay and fixed pay outcomes for UK employees, and the resulting pay ratios, reflect the application of the group's remuneration philosophy.”
A breakdown of Venkatakrishnan’s remuneration showed he received a base salary of £2.935 million, a bonus of £2.219 million, and LTIP payments amounting to £5.137 million. Additionally, he was awarded a pension top-up of £147,000 and benefits worth £95,000, including private medical cover, life assurance, and the use of a company car and driver.
However, Barclays is considering altering its executive pay structure to significantly reduce Venkatakrishnan’s fixed salary while introducing performance-linked incentives. Under the proposed changes, his fixed salary would be cut from £2.95 million to £1.59 million, but he could receive up to £9 million in bonuses and stock awards if Barclays meets its 12% return on tangible equity (RoTE) target by 2026. According to reports, the bank’s total remuneration cap for the CEO would be set at £14 million, contingent on Barclays achieving an RoTE above 14%. The move follows Barclays’ decision to abolish the EU-imposed bonus cap post-Brexit, enabling senior executives to earn variable remuneration up to 10 times their base salary.
At the World Economic Forum in Davos, Venkatakrishnan struck an optimistic tone, stating, “There’s a lot to be optimistic about in the UK,” pointing to the resilience of the country’s financial services sector. The bank’s remuneration committee is expected to finalise any potential changes in its 2024 annual report, set for release on February 13.
Overall, while savers are facing lower returns, Barclays’ mortgage customers are hopeful that the recent trickle of rate cuts will soon turn into a steady stream.
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