LONDON (Reuters) - Barclays (BARC.L) will pay incoming chief executive James “Jes” Staley up to 8.24 million pounds ($12.6 million) 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 media reports said he had been chosen pending regulatory approval.
American-born Staley, 58, faces challenges including improving Barclays’ reputation after a series of scandals, cutting costs and deciding how big an investment bank it should keep in the face of tougher regulations.
Staley said on Wednesday he planned to complete a restructuring of the investment bank and 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 Staley had the leadership talent and wide 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.
Analysts say Staley should improve morale and set a clear strategy for the investment bank after years of uncertainty, but warned against aggressively building it back up.
“We had warmed to Barclays on the basis that it was de-emphasizing 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 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 commercial banking.
Shares in Barclays, which reports its third-quarter results on Thursday, were up 0.1 percent at 1425 GMT.
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, up to 5.5 million pounds in annual bonus and up to 400,000 pounds instead of a pension contribution, the bank said.
Pay at Barclays is a sensitive issue after past criticism for outsized bonuses even when the bank performed badly.
“Whilst Mr Staley may well be the best person for the job, any recruitment awards should include performance targets to remove the risk of a return to the culture of reward for failure,” said Ashley Hamilton Claxton, corporate governance manager at Royal London Asset Management, a Barclays shareholder, adding: “We also think a pension payment of 33 percent of his salary, paid in cash, is overly generous.”
Staley will be granted about 1.9 million pounds of Barclays shares to compensate for an unvested award granted by JPMorgan.
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 CEO Bill Winters up to 6.9 million pounds a year.
Lloyds (LLOY.L) drew criticism from UK bank shareholders after paying CEO Antonio Horta-Osorio 11.5 million pounds last year. But bosses of U.S. banks 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 a clash with non-executive directors 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.
Barclays has run into trouble with authorities and regulators over 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. “There can be no retreat from becoming a values-driven organization which conducts itself with integrity at all times.”
Staley, who will move with his family to Britain, joined JPMorgan in 1979 and worked his way up its ranks to become a possible successor to Dimon, but was sidelined after a management reshuffle in 2012 and left a year later.
($1 = 0.6535 pounds)
Additional reporting by Sinead Cruise; Editing by David Goodman and David Holmes