Barclays on Tuesday confirmed Bob Diamond, head of its fast-growing investment bank, as its next chief executive.
Mr Diamond, who is based in New York but will move back to London to take up his new post, will be paid an annual salary of £1.35 million ($2.07 million), up from the current £250,000. His annual bonus will be two and a half times his salary or £3.375 million and he will also receive a long-term incentive plan of five times his annual salary.
The generous remuneration package has been benchmarked against rival global international banks and financial institutions, Barclays said. Pay is likely to be a point of friction for Mr Diamond who has come under attack before on remuneration levels.
In March, only weeks after apparently showing restraint on his bonus for 2009, it emerged that Mr Diamond had only waived his cash entitlement and that he had been awarded a long-term incentive worth up to £6 million by 2012.
Last year he earned an extra £27 million from selling his shares in the group’s asset management arm.
Mr Diamond, a former teacher who has built Barclays Capital from scratch into a multibillion-pound operation, will take over from John Varley at Barclays’ annual meeting next March.
Mr Varley will become a senior adviser to the board on regulatory issues until September 2011.
Mr Varley had told colleagues he wanted to concentrate on charitable work and his range of non-executive directorships. However, he has been mooted by some for a potential role in government. He insisted on Tuesday he had no plans for a move into another role outside of his charity and advisory work.
Having steered Barclays through the financial crisis without recourse to government bail-out money, and overseen a bounce-back in profitability and the bank’s share price Mr Varley believes now is a good time to step down from his job.
In recent months he has also begun an overhaul of the bank’s structure, splitting out corporate banking into a separate unit and prioritizing it and the bank’s underdeveloped wealth management operation for growth.
The succession plan, overseen by chairman Marcus Agius, has been widely forecast for several years.
After building BarCap steadily for years, Mr Diamond’s succession to the chief executive role is widely seen as having been secured when he masterminded the bold acquisition of the defunct Lehman Brothers’ US assets at the end of 2008.
From that base he has spent the past 18 months building out a global investment banking operation to match the acquired US assets, with a mass recruitment program across Europe and Asia.
Barclays insiders said there would be no change to the bank’s strategy under its new leadership. Both men are firm believers in the universal banking model, with an investment bank and retail bank under the same roof.
However, Mr Diamond – who locked horns with the last UK government when he and Mr Varley refused to take government money at the height of the financial crisis despite pressure to raise capital fast – may soon find himself at odds with the new Con-Lib administration.
A government appointed commission on banking is weighing the arguments for breaking up Britain’s universal banks, such as Barclays and HSBC .