Salz Review - Wall Street Journal

Salz Review
An Independent Review of Barclays’ Business Practices
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considers its particular expertise to outweigh the lack of independence, Barclays
should disclose publicly a summary of all the services provided by the remuneration
adviser and the process by which the appointment was made. And the Remuneration
Committee should also confirm publicly that it is satisfied that the adviser has
provided objective and independent advice to the Committee.
11.69 The Board Remuneration Committee has a critical role to play in leading Barclays’
response to the remuneration issues the bank has faced. In doing so it should ensure
that Barclays’ remuneration practices comply with not only the letter but also the
spirit of the Financial Stability Forum’s Principles for Sound Compensation Practices
– as embraced by the FSA in its Remuneration Code.
11.70 We believe that, in view of its sensitivity, Barclays should aim to be open in its
approach to describing pay. Prior to 2012, Barclays had not apparently adopted such
an approach, particularly for its senior executives and its highly paid investment
bankers. In particular, we would have preferred to see greater clarity about the actual
payouts made under LTIPs. We are encouraged, however, by Barclays recent more
transparent approach to reporting remuneration; for example, disclosing the number
of employees in a series of pay bands and adopting a year early many aspects of
proposed UK regulation on directors’ remuneration reporting. 236
Recommendation 27: Board’s role in compensation oversight
Barclays Remuneration Committee should establish, and the Board validate,
clear remuneration principles and a robust framework to assess the impact of
pay arrangements on culture and all elements of risk management. These
should be reviewed regularly. From time to time, the Remuneration Committee
should require internal assurance of the remuneration process, including the
implementation of the remuneration principles.
The Committee’s terms of reference should require it to be satisfied that there
have been rigorous reviews of remuneration proposals relating to high earners.
Barclays should have a bias towards open disclosure of the most important
characteristics of its compensation system design and application.
The Remuneration Committee should work closely with other Board Risk
Committees and also take advice from its own compensation advisers who
should be appropriately independent of management.
11.71 Bankers’ pay excites significant public emotion. We have tried to point out certain
issues with the way pay structures at Barclays were designed and operated. But for
pay structures and pay processes to work effectively, it is critical that they be part of
a much larger armoury of people management processes. Training, development,
mentoring, coaching, evaluating, providing honest feedback, imposing performance
improvement plans and disciplining are just some of the tools at Barclays' disposal.
As we discussed in Section 10, such tools matter a great deal in embedding the right
236 Department for Business Innovation & Skills, Draft Statutory Instrument on Directors’ Remuneration: the Large
and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013, 11 March 2013.