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Barclays to Cut Investment-Bank Bonuses as Bramson Looms: FT

Dan Reichl and Donal Griffin
Barclays to Cut Investment-Bank Bonuses as Bramson Looms: FT

(Bloomberg) -- Barclays Plc plans to cut bonuses for investment bankers in a bid to improve performance and ward off activist investor Edward Bramson, who wants the lender to rethink expansion in this business, the Financial Times reported.

Bonuses for the first quarter at the investment-bank division may decline by double digits from a year earlier, the newspaper reported, citing people it didn’t identify who were briefed on the plans. The payments will be more closely tied to performance as the London-based bank seeks to cut costs, the Financial Times said.

Barclays Chief Executive Officer Jes Staley, in charge since 2015, has pushed a strategy of expanding the firm’s investment-banking operations -- a plan that has come under increased pressure since Bramson’s Sherborne Investors began buying up shares and agitating for change. The division that houses trading and investment banking has the lowest return on equity, a measure of profit, of any unit at the U.K. bank.

Simon Hailes, a spokesman for Barclays in London, declined to comment.

The bonus shake-up is part of efforts to oppose Bramson before Barclays’ annual meeting on May 2, the newspaper reported. The investor is seeking to get a seat on the bank’s board, a move that directors have opposed. Shareholder advisory firm Glass Lewis & Co. has also recommended against his nomination.

In a letter on April 8, Bramson said Barclays could be forced to raise capital, sell lucrative businesses or cut dividends if it persists in prioritizing its investment bank. The abrupt departure of Tim Throsby, who ran this division until last month, put the business under the direct control of Staley.

Separately, Institutional Shareholder Services has recommended that investors vote against Staley’s proposed pay package. The investor advisory group highlighted the CEO’s attempts to unmask a whistleblower in 2016, a scandal that triggered a regulatory probe and a fine for him. Barclays’ remuneration committee, headed by Crawford Gillies, has recouped 500,000 pounds ($650,400) of Staley’s bonus for that year, yet ISS said this response wasn’t enough.

“The remuneration committee’s response is considered inadequate, given the loss of shareholder funds and the broader reputational damage and additional regulatory oversight incurred by the group as a result of this issue,” the ISS report said.

The FT reported the ISS recommendation earlier today.

(Adds ISS recommendation from seventh paragraph.)

To contact the reporters on this story: Dan Reichl in San Francisco at dreichl@bloomberg.net;Donal Griffin in London at dgriffin10@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Marion Dakers, Ross Larsen

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