By Steve Slater
LONDON: Barclays (BARC.L) will pay incoming chief executive James "Jes" Staley up to 8.24 million pounds a year after appointing the former JPMorgan (JPM.N) investment bank boss to one of the most prominent posts in British business.
Staley will join Barclays at the start of December, having been widely expected to be appointed after sources and other media reports this month said he had been chosen pending regulatory approval.
The American-born Staley, 58, faces a number of challenges at Barclays, including improving its reputation after a series of scandals, cutting costs to lift profitability and deciding how big an investment bank it should keep in the face of tougher regulations.
Staley said on Wednesday that he planned to complete a restructuring of the investment bank and that Barclays must avoid an adversarial relationship with regulators.
"We will complete the necessary transformation and repositioning of the investment bank to a less capital-intensive model," Staley said in a memo to staff.
Barclays Chairman John McFarlane said that Staley had the appropriate leadership talent and wide-ranging experience to improve shareholder value and take the bank forward.
"In particular, he understands corporate and investment banking well, the repositioning of which is one of our major priorities," McFarlane said.
Investors and analysts have said Staley should improve morale and set a clear strategy for the investment bank after years of uncertainty, but they warned against building it back up aggressively.
"We had warmed to Barclays on the basis that it was de-emphasising the relatively low-return investment banking business ... and we would see a material reversal of this strategy as a negative to the investment case," Shore Capital analyst Gary Greenwood said.
Staley's appointment is the second time in recent years that Barclays has named an investment banker as CEO, the last one being Bob Diamond, who quit in 2012 over the Libor scandal.
That has drawn concern the bank will put riskier activities back at its heart, though McFarlane has described Staley as "a client guy" who wasn’t a trader and whose background is in commercial banking.
Barclays shares were down 0.5 percent at 1259 GMT, against a 0.7 percent decline for the European banking sector (.SX7P).
Staley's annual pay will consist of a salary of 1.2 million pounds, a role-based "allowance" of 1.15 million pounds in shares, a cash allowance of up to 400,000 pounds and up to 5.5 million pounds in annual bonus, the bank said.
"NOT ADVERSARIAL"
He will be granted about 1.9 million pounds of Barclays shares to compensate for an unvested award granted by JPMorgan and will also receive standard benefits such as medical cover, life assurance and relocation costs.
Pay at Barclays is a sensitive issue after past criticism from politicians and investors for outsized bonuses.
Staley's package is potentially similar to that of HSBC (HSBA.L) boss Stuart Gulliver, who received 7.6 million pounds last year. Standard Chartered (STAN.L) is paying its new American CEO Bill Winters up to 6.9 million pounds a year.
Lloyds (LLOY.L) drew the deepest criticism from UK bank shareholders this year after paying CEO Antonio Horta-Osorio 11.5 million pounds last year.
The bosses of U.S. banks are typically receive more and JPMorgan CEO Jamie Dimon was paid $20 million for each of the past two years.
Staley, a keen yachtsman, previously ran JPMorgan's investment bank and asset management business and had been at the U.S. bank for 34 years before leaving in early 2013 to join U.S. hedge fund firm BlueMountain Capital Management.
Previous Barclays CEO Antony Jenkins was fired in July after losing the support of non-executive directors in a clash over style and the pace of the bank's turnaround.
The bank is just over halfway through a three-year plan to cut 19,000 jobs, including 7,000 in the investment bank, still faces litigation issues and is trying to improve returns.
McFarlane said he knew Staley well and the pair were in agreement on the way forward, particularly the need to accelerate improvement to shareholder returns.
Staley understood the business and "also the importance of cultural reform and the need to conduct our business in a way that we can all be proud of", McFarlane said.
Barclays has run into trouble with authorities and regulators over past conduct issues, including alleged rigging of Libor benchmark rates and foreign exchange manipulation. Staley said his respect for the role of regulators was unequivocal.
"Core to that objective is having relationships with regulators that are collaborative, not adversarial," he said in the memo. "We must therefore complete the cultural transformation of the group. There can be no retreat from becoming a values-driven organisation which conducts itself with integrity at all times."
He also acknowledged the need to generate better returns for shareholders, saying: "They have been patient and now we must deliver for them."
Staley, who said he will move with his family to Britain, joined JPMorgan in 1979 and spent eight years in its Brazilian business. He helped to found its equities business and later became CEO of asset management. He was long seen as a possible successor to Dimon, but was sidelined after a management reshuffle in 2012 and left a year later.
Staley joined the board of Swiss bank UBS (UBSG.VX) in May but will step down from that role with immediate effect.
Reuters
