Bonus Question Dogs Barclays’ CEO Bob Diamond

Bob Diamond, chief executive of Barclays, faced a barrage of questions about his bonus as the bank announced its results Friday.

CNBC.com Bob Diamond

The chief executive, who was reputedly one of the City’s best-remunerated bankers during his time at the bank’s investment banking division Barclays Capital, repeatedly declined to comment on his own bonus.

Barclays warned it may miss its medium-term profitability target for 13 percent return on equity after the end of 2011 went worse than expected. It reported a pretax profit of 5.9 billion pounds ($9.3 billion) for 2011, down 3 percent on the year and below analysts' forecast of 6.1 billion pounds.

Barclays is the first big British bank to report its full-year results, and their results come weeks after Royal Bank of Scotland CEO Stephen Hester said he would not take his bonus for 2011 despite improving performance at the state-backed bank, after pressure from politicians and a public outcry.

The issue of bonuses has caused a political storm in the UK in recent weeks. Like many other banks, Barclays is moving towards offering smaller cash sums and more shares which can only be sold after a certain time period as bonuses.

Barclays bankers will have their bonuses capped at 65,000 pounds for the year, and bonuses are down by 26 percent on average, the bank announced today. The bank’s investment banking division dragged down profits this year, but workers there are still likely to get higher bonuses than other employees.

Diamond told journalists: “We are being responsive to shareholders. We have to balance their views with the need to stay competitive.”

Business as Usual?

Diamond and other senior executives at Barclays have had the cash part of their bonuses reduced by 48 percent on average. Last year, he received 1.8 million pounds worth of shares and a deferred award of 4.7 million pounds in shares and contingent capital.

Robert Talbut, investment committee chairman at the Association of British Insurers, whose members oversee 1.7 trillion pounds of stocks, criticized the cut to bonuses in a statement as “not the signal of the change required in order to improve the investment case.”

“This appears to be very close to business as usual,” he added.

The bank emphasized the importance of “citizenship” in Friday’s results and Diamond told CNBC.com that this was not just window-dressing.

“It did come to me somewhat during the financial crisis, when I was in the US during the Dodd-Frank decisions. A White House official asked me if bankers could be good citizens, and I said: ‘Absolutely’,” he said.

“It caused all of us to step back. We have to go out of our way on this. We have to do more to explain what banks do to create jobs and economic growth.”

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