By Robert Barr
UK bank Barclays has agreed a resignation package with ex-chief executive Bob Diamond where he will forfeit up to £20 million in bonuses and incentives but receive a year's salary, pension and other benefits worth £2 million.
Diamond resigned last week after Barclays was fined $453 million by US and UK agencies for making false reports of its borrowing costs between 2005 and 2009.
Barclays said Tuesday that Diamond had agreed that all of his unvested deferred bonus awards and long-term incentives would lapse, that he would not receive any future bonus or incentive awards or compensation for the termination of his employment.
The bank's outgoing chairman, Marcus Agius, in his testimony to the House of Commons Treasury Committee, said Diamond had waived a potential £20 million in bonuses and share awards. Agius added that as part of the resignation deal, Diamond will receive 12 months' salary and pension contributions worth 2 million pounds.
Barclays' shares were up 2.5 percent at 167.45 pence following the announcement.
"It is my hope that my decision to step down and today's agreement on my remuneration will help close this chapter and allow Barclays to move forward and prosper," Diamond said, according to the bank's announcement.
The agreement is "something that the board of Barclays welcomes and I am glad that he has done it," Agius told the committee.
Diamond's lavish compensation has long been a sore point with the bank's critics.
Barclays said the ex-CEO's pay package last year was £6.3 million, including 2.2 million pounds in deferred incentives. He was also given £5.7 million for tax equalization, which the bank says doesn't count as remuneration.
Agius has announced his intention to step down as soon as his successor is in place. Meanwhile, he is serving as executive chairman and is leading the search for a new chief executive.
Agius announced his resignation on Monday, July 2, hoping to ease pressure on the bank.
That evening, however, Agius said he and deputy chairman Michael Rake were invited to meet the governor of the Bank of England, Mervyn King.
"It was made very plain to us that Bob Diamond no long enjoyed the support of his regulators," Agius said, adding that King made it clear that he had no power to order Diamond's dismissal.
Agius said he was shocked, because the Financial Services Authority had made no suggestion that it had lost confidence in Diamond when the final settlement of the LIBOR issues was announced on June 29.
"Clearly what had happened was that the public outcry had been far greater than we had thought, my own resignation which I had sought to offer in order to alleviate some of the pressure was inadequate and clearly the regulators decided more was necessary," Agius said.
Agius then discussed King's message with non-executive directors. "We concluded that we had no choice but to call for his resignation," Agius said.
After making interim arrangements for the company, he and Rake then met Diamond.
"The conversation was not long. He asked for time to talk to his family. We left confident that if he hadn't already made the decision, that he would make the right decision," Agius said.
AP