Barclays CEO Set for 45% Pay Boost to Over £14 Million Under New Plan
Barclays CEO CS Venkatakrishnan, may see his maximum pay rise by 45% to an eye-watering £14.3m per year under a proposed deal currently being reviewed by the bank’s board. The package, which drastically increases potential performance bonuses while cutting fixed pay, reflects changes in the post-Brexit banking landscape.
Barclays has reportedly informed its largest shareholders of the potential overhaul in executive pay structures. The pay revision, which includes a comparable package for its finance chief, Anna Cross, would bring sweeping changes to the bank's remuneration approach.
Cutting Fixed Pay in Exchange for Higher Bonuses
The revised pay package would see Venkatakrishnan’s fixed salary nearly halved, slashing it from £2.95m to £1.59m. However, this reduction would unlock new opportunities for bonuses, allowing him to earn up to eight times his reduced salary in annual and long-term incentive payouts. Should Barclays achieve significant profitability gains – surpassing its current targets under the "return on tangible equity" measure – Venkatakrishnan’s maximum earnings could rise to £14.3m. This is a marked increase from his previous maximum pay of £9.8m.
The decision to adjust the pay structure comes on the heels of regulatory changes and the feedback from certain stakeholders. Barclays' remuneration committee, responsible for reviewing these proposals, is expected to share its conclusions in the annual report released this February. Shareholders will also have a chance to vote on the proposed changes at a later date.
A Barclays spokesperson commented, “The remuneration committee meets with stakeholders throughout the year to gather feedback on our remuneration policy. Whether or not the committee chooses to propose any change to our current directors’ remuneration policy in 2025, the policy will continue to focus on rewarding sustainable performance, and close alignment with shareholders’ interests.”
The Impact of Repealing the EU Bonus Cap
To understand the context of Barclays’ proposed pay structure overhaul, it’s important to recognise the aftermath of the EU bonus cap repeal. The cap, formerly a cornerstone regulation introduced in 2014, restricted banker bonuses to no more than twice their fixed salaries. This regulation arose in response to the reckless financial behaviours that contributed to the 2008 financial crisis. While intended to curb risk-taking, the cap inadvertently prompted UK banks to inflate their fixed salaries to compensate for the restricted bonus potential.
However, following Brexit, UK regulators sought ways to restore London’s appeal as a hub for global finance. The repeal of the bonus cap in late 2023 was a key part of this effort, marking a new era of flexibility in executive compensation.
Barclays led the charge in adapting to these new rules. At the bank’s AGM in May 2024, shareholders approved the removal of the bonus cap, allowing senior staff to earn up to 10 times their fixed salaries in bonuses. According to Barclays, the removal of the cap "does not alter the way Barclays sets its incentive pool," which is still tied to the overall performance of the group.
Shareholder Reactions and Customer Concerns
Barclays’ proposal to further increase executive pay is likely to spark debates among shareholders, many of whom have been scrutinising remuneration policies in light of the cap removal. Last year, an unnamed institutional investor urged the bank to cut fixed pay for senior staff, arguing that exorbitant salaries undermined efforts to ensure fair compensation in a post-cap era.
The bank must also tread carefully in balancing shareholder satisfaction with public and customer perception. Executive pay in the banking sector is often a flashpoint for critics who argue it exacerbates economic inequality, especially as households face rising costs of living.
Challenges Ahead for Barclays’ Leadership
Venkatakrishnan and Cross face additional scrutiny as they work to meet the profitability requirements underpinning the new pay plan. Exceeding Barclays’ current "return on tangible equity" targets is no small challenge amidst fluctuating global markets. However, if they deliver on these ambitious goals, Barclays could emerge as a leader in driving performance excellence, thus potentially justifying its compensation strategy to stakeholders.
The bank’s remuneration committee will outline its final decisions in the forthcoming annual report, due for release on 13 February. Shareholders will soon have their say, voting on just how far the pendulum should swing towards performance-driven rewards.
Source
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