Barclays boss faces 10-year wait for bonus

Jes Staley

The new boss of Barclays has become the first chief executive of a British bank to have a decade-long “claw-back” clause written into his contract as lenders are forced to toughen the rules allowing them to reclaim bonuses from senior managers even if the problems emerge long after an award has been made.

Jes Staley, who started yesterday as chief executive of Barclays, will face a ten-year wait after every bonus round to be sure that he does not have to pay back some or all of the shares or money handed to him as part of the bank’s annual compensation awards, reports The Times.

According to a copy of Mr Staley’s contract viewed by The Times, the American-born banker has become the first top financier to have the Bank of England’s new clawback rules written into the terms of his employment with the lender.

Mr Staley is eligible for an annual bonus worth £2.2 million, as well as a long-term incentive award of £3.3 million.

Under the Bank rules announced in June, senior City staff can have their bonuses taken back up to a maximum of seven years after they are announced, and as long as ten years if regulators bring an investigation into an individual over their conduct.

The specific wording of Mr Staley’s contract dispenses with this formulation and states that Barclays can enforce clawback on his variable pay “at any time during a period of up to ten years from the date on which any variable remuneration is awarded to you in respect of a period for which you are a MRT [material risk taker]”.

Industry observers have warned that the Bank of England’s rules are a potential legal minefield, raising the prospect of executives entering into messy legal disputes long after a bonus has been paid out because of behaviour subsequently uncovered.

In the case of Mr Staley, the contract states that his “actions or omissions” must have contributed to the problems and that Barclays has suffered a “material failure of risk management”.

The employment contract of Bill Winters, the recently appointed chief executive of Standard Chartered, does not contain any specific reference to a ten-year clawback but does say that his bonuses are subject to the bank’s standard clawback policy, which could mean that he faces a similar wait.

Future bonuses for other senior bankers will also have to take into account the rules that come into force next March.

Regulators have said the clawback provisions will make senior bankers more accountable and address public and political concerns in the wake of the financial crisis about the inability of lenders to ask their managers to pay back bonuses in the light of their near-failures.

On top of their ordinary pay, top bank bosses, like other senior executives, also receive a range of perks from their jobs. In the case of Mr Staley, he and his immediate family will be entitled to first-class airline tickets to the United States, as well as private medical care paid for by Barclays.

However, his contract is rather less lucrative than those of some of his predecessors, most obviously Bob Diamond, another former American investment banker, who incurred criticism from shareholders after it emerged that, on his becoming chief executive of Barclays, the bank would cover the £5.75 million “tax equalisation” charge for his relocation from the US to the UK.

Mr Staley’s own relocation package appears more modest, with the bank covering the cost of moving his possessions across the Atlantic and providing accommodation for 90 days while he looks for somewhere to live longer term. Unfortunately for Mr Staley, who owns his own 90-foot yacht, Barclays will not pay for the cost of shipping “pets, plants, wines, spirit, boats, pianos or other objects that require special handling”.