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Did Antony Jenkins really receive no bonus?

Ben Chu

jenkins 150x150 Did Antony Jenkins really receive no bonus?There’s a popular image of bankers as the kind of folk who could lose a couple of million quid down the back of the sofa and not notice.

It seems that in the case of the Barclays chief executive Antony Jenkins (right) that’s rather close to the truth.

Last month Jenkins announced that he would be waiving his bonus for 2013.

Apparently, to trouser a performance-related award of up to £2.75m “would not be right” in a year in which Barclays profits fell and it was forced to tap shareholders for an extra £6bn. That announcement won him some praise from George Osborne, among others.

But buried on page 114 of Barclays’ annual report yesterday is the fact that in March 2013 Jenkins was awarded £4.4m of shares under the bank’s “Long-Term Incentive Plan”:

ltip1 Did Antony Jenkins really receive no bonus?
Isn’t that, er, a bonus?

Barclays says no, pointing out that these shares will not be delivered to Jenkins until March 2016 and only if the bank’s performance is satisfactory between 2013 and 2015. He will also be required to hold the shares until 2018 (although he will be able to sell some shares immediately upon vesting to pay for the income tax due) incurring the risk of the share price falling.

All OK then?

Not really.

This ignores the fact that bonuses now have rather similar restrictions. Barclays’ report says that bonuses for managing directors are “100% deferred”, meaning that recipients have to wait to get their hands on them.

How long? The report adds (on p102) that “deferred share bonuses normally vest in three equal portions over a minimum three-year period”. Further “should the deferred awards vest, the shares are subject to an additional six-month holding period (after payment of tax)”.

They are both subject to various (opaque) performance evaluations. Deferred bonuses at Barclays are also now 50 per cent paid in shares, rather than cash.

This all means that the practical difference between an “LTIP” award and an annual bonus has eroded considerably. To get the full benefit from an annual bonus a banker would have to wait 3.5 years. For an LTIP the waiting period is 5 years.

A bonus is certainly more valuable in that it delivers more benefit sooner – but the difference is not enormous. Arguably, it’s a semantic point.

The Parliamentary Banking Commission, by the way, thinks 10 years is an appropriate deferral period for bonuses.

The report also says that Jenkins is set to receive another LTIP award this year (2014) worth 400 per cent of his £1.1m salary. It doesn’t spell it out, but that would potentially mean another £4.4m, vesting in March 2017.

Rolling LTIP awards provide a nice cushion, keeping total remuneration topped up even in times of discretionary “restraint” on bonuses.

And this is all leaving aside the fact that from 2014 Jenkins will receive an extra £950,000 in “role-based pay” in order to side-step the impact of the European Union’s bonus cap.

Readers are welcome to check all of this out for themselves in the annual report. But I wouldn’t recommend it: there’s so much small print in there that you’re liable to go blind. It’s almost as if Barclays want to keep this stuff hidden.

Anyway: the moral? Next time shareholders hear a banker talk about waiving his bonus, they should check their wallets – and remember the LTIPs.

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