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American criticized for high salary to become Barclays CEO
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LONDON (AP) — Robert E. Diamond Jr., who built Barclays PLC into a global powerhouse in investment banking and has been criticized for his lavish pay, will become chief executive next year, the company announced Tuesday.
Mr. Diamond, branded “the unacceptable face of banking” by a former government minister, will succeed John Varley, who guided Barclays through the credit crisis without resorting to a government bailout.
Mr. Diamond will take over as CEO on March 31 after 14 years with the company.
The 59-year-old American’s rise comes as governments review regulation, including a possibly momentous move in Britain to force lenders to divorce investment banking from retail operations. At home, Barclays may also feel pressure from the government’s austerity drive which will shrink public spending.
Barclays Capital now commands 60 percent of the company’s capital needs, a share that may increase due to regulatory changes, yet is likely to be less profitable than the Barclays retail side, Evolution Securities said in a research note.
Mr. Diamond’s salary will be 1.35 million pounds ($2.08 million) with bonuses of up to 250 percent of that figure. The bank said it also intended to award a long-term, performance-based share incentive of 500 percent of base salary in 2011.
Mr. Diamond was paid 250,000 pounds last year and waived his bonus, but he reportedly also gained 26.8 million pounds from his shares in Barclays Global Investors when it was sold to Blackrock fund manages.
Peter Mandelson, the business secretary in Britain’s previous government, said in an interview with the London Times in April that Mr. Diamond hadn’t earned the money, “he has done so by deal-making and shuffling paper around.”
“That to me is the unacceptable face of banking,” Mr. Mandelson said.
Barclays‘ chairman Marcus Agius told reporters in a conference call that Mr. Diamond’s compensation was “well benchmarked” against the pay of other chief executives of major banks, but the pay package may be politically sensitive.
“In times of austerity, industry compensation continues to sit uncomfortably with politicians and the electorate, while questions over broader European banking strength have resurfaced,” said Keith Bowman, analyst at Hargreaves Lansdown Stockbrokers.
Still, experts say Mr. Diamond is highly respected in the industry for his development of the investment banking operations over 14 years.
“We believe his appointment as group CEO reflects progress delivered at BarCap and the importance of the investment banking operations in the group’s future strategy,” said Danny Clarke, analyst at Shore Capital.
Under Mr. Varley’s leadership, Barclays secured private investment in the Middle East to shore up its capital position during the credit crisis, and he led Barclays‘ move to expand its investment banking business by acquiring the U.S. operations of Lehman Brothers following its collapse.
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