2015 remuneration policy and structure
Our remuneration policy details the principles that govern our remuneration approach. They ensure that remuneration is competitive, provides appropriate risk-adjusted incentives for performance and reflects regulatory requirements. Remuneration decisions must:
- Support the objective of attracting, retaining and competitively rewarding employees with the ability, experience, skills and values to deliver our strategy.
- Reward business results that are achieved in a manner consistent with our Values.
- Protect and promote shareholder interests by incentivising employees to deliver sustained performance and create long-term value through the delivery of the Group’s strategy. Remuneration decisions will reflect the performance for individuals and in aggregate.
- Create a direct and recognisable alignment between remuneration and risk exposure, as well as adjusting current and deferred incentives for current and historic risk, including malus adjustments, where appropriate.
- Be simple and clear for employees and stakeholders, with a focus on ensuring the link between pay and performance is well understood.
- Ensure that the balance between shareholder returns and remuneration is appropriate, clear and supports long-term shareholder interests.
These principles are unchanged, and underpin the 2015 GRHRC remuneration decisions.
2015 remuneration structure
While we apply a common remuneration structure across the Group, delivery is sometimes differentiated according to local market practice and statutory or regulatory requirements. We apply a holistic and balanced approach to reward. Remuneration for top performers is positioned at the market median or higher to attract highly talented individuals with outstanding track records.
Our approach includes providing:
- an environment where employees can do their best work and optimise their potential;
- a fixed salary based on the role, individual specific skills, experience and track record;
- an annual incentive award subject to affordability and performance;
- benefits that reflect the lifestyle needs of employees, including pension and insurance; and
- a recognition scheme where employees are commended for their contribution.
Some customer-facing employees participate in formulaic incentive plans aligned with objectives as measured through the Balanced Scorecard, with a focus on business performance and customer service metrics.
Composition of total remuneration
Our total remuneration comprises fixed and variable components. The delivery of the remuneration components is illustrated below.
Fixed remuneration reflects the role, location, responsibilities, skills and experience.
|Salary||Reflects an individual’s skills and experience and provides the basis for a competitive remuneration package.||Market competitive remuneration.||All employees.|
|Role based pay||Fixed remuneration not considered as salary for pension and benefit purposes, unless legally required in a particular geography.||Market competitive total remuneration while complying with CRD IV.||Executive directors, prescribed officers and material risk takers.|
|Benefits||Competitive benefits (including pension, insurance etc.) appropriate to an employee’s role and location.||Competitive market practice and legislative compliance.||All employees.|
Variable remuneration rewards the achievement of Group, business unit, team and individual objectives.
|Non-deferred||Cash||For executive directors, prescribed officers and material risk takers, 50% of the non-deferred incentive award is delivered in cash. For all other employees, 100% of the non-deferred incentive award is delivered in cash. All non-deferred incentive awards are paid at the end of the performance year in March.||Performance execution.||All applicable employees.|
|Share Incentive Award||For executive directors, prescribed officers and material risk takers, 50% of any non-deferred incentive award is delivered as shares at or around the time that the award is paid. This releases after six months, in September.||Performance execution. Shareholder alignment. Regulatory requirements.||Executive directors, prescribed officers and material risk takers.|
|Deferred1||Cash Value Plan||50% of the deferred annual incentive award releases in three equal annual tranches subject to continued service and malus provisions.||Regulatory requirements.||All employees, subject to deferral.|
|Share Value Plan||At least 50% of any deferred annual incentive award vests in three equal annual tranches subject to continued service and malus provisions. An additional six-month holding period and clawback provision applies for executive directors, prescribed officers and other material risk takers.||Shareholder alignment. Regulatory requirements.||All employees, subject to deferral.|
|1||The deferred annual incentive award is delivered 50% Cash Value Plan and 50% Share Value Plan. Employees can elect 100% Share Value Plan.|
Performance measures for in-cycle, long-term incentives (in which executive directors and prescribed officers participate)
The Barclays Africa Long-Term Incentive Plan 2013 – 2015 is the last remaining long-term incentive arrangement and will vest in October 2016. This is a share-based plan with awards vesting after three years, subject to three specific performance metrics based on the 2013 to 2015 medium-term plans. The performance metrics of the scheme are:
- Finance: From 10% to a maximum of 60% can vest, subject to average return on risk-weighted assets of 1.99% (at threshold) to 2.99% (at maximum) on a straight-line basis.
- Risk: From 5% to a maximum of 30% can vest, subject to performance against the annual impairment ratio of 1.55% (at threshold) to 1.13% (at maximum) on a straight-line basis.
- Sustainability: Up to 10% of awards can vest, at the discretion of the GRHRC considering performance against our Balanced Scorecard.
Vesting: Based on actual 2013 – 2015 performance, 55% of the maximum vests, as detailed below:
- Finance: Average return on risk-weighted assets is 2.19%, therefore 20% of the maximum vests.
- Risk: Average impairment ratio is 1.09%, therefore 30% of the maximum vests.
- Sustainability: The GRHRC assessed and determined that 5% of the maximum vests.
Vesting conditions, malus and clawback
All deferred awards are subject to continued employment and malus provisions. Under these provisions, the GRHRC may reduce the level of vesting of deferred awards, including to zero where (but not limited to):
- a participant deliberately misled the Group, the market and/or shareholders in relation to the financial performance of the Group;
- a participant caused harm to our reputation or where their actions amount to misconduct, incompetence or negligence;
- there is a material restatement of the Group’s financial statements;
- there is a material failure of risk management in the Group; and/or
- there is a significant deterioration in the Group’s financial health.
The RRP is an executive sub-committee of the GRHRC from which it derives its authority and to which it regularly reports. The RRP makes recommendations to the GRHRC on risk management, compliance and control matters relating to remuneration. In particular, the RRP makes recommendations to the GRHRC on adjustments to incentive pools, individual awards and malus adjustments.
The GRHRC determined, following the recommendation of the RRP, that certain bonus pools and/or individual awards be reduced after considering risk and conduct events within the business.
Clawback applies to any variable remuneration awarded to a material risk taker on or after 1 January 2015. The GRHRC may apply clawback, at any time during the seven-year period from the date on which variable remuneration is awarded, if:
- there is reasonable evidence of employee misbehaviour or material error; and/or
- the Group or business unit suffers a material risk management failure, taking account of the individual’s proximity to and responsibility for that incident.