Barclays PLC (ADR) (BCS): Three Things to Hate About It

LONDON — There are things to love and loathe about most companies. Today, I’m going to tell you about three things to loathe about Barclays PLC (ADR) (NYSE:BCS).

I’ll also be asking whether these negative factors make the bank a poor investment today.

Transparency
Since their appointments last year, Barclays PLC (ADR) (NYSE:BCS) chairman, Sir David Walker, and chief executive, Antony Jenkins, have been banging on about creating the highest standards of transparency at the bank.

Barclays PLC (ADR) (NYSE:BCS) announced a 38.5 million-pound payout of bonuses for its top bankers on 20 March this year — budget day. Whether the timing was a tactic to attempt to keep coverage of the bonuses off the front pages or a crass lack of appreciation that it was likely to be interpreted that way, the episode wasn’t exactly the best demonstration of a commitment to the highest standards of transparency.

Bonus culture
In addition to the timing of the budget-day bonuses announcement, the size of the bonuses also attracted criticism from many quarters.

Rich Ricci, Barclays PLC (ADR) (NYSE:BCS)’ investment bank chief, was awarded 17.5 million pounds of shares, which he immediately cashed in. The provocatively named banker — who owns a string of racehorses including the also-provocatively named Fatcatinthehat — will be leaving the bank in the summer.

Nevertheless, Barclays PLC (ADR) (NYSE:BCS)’ chief executive has recently said: “We operate in a highly competitive market for talent and unilaterally reducing compensation without risking the franchise is very difficult,” adding that “a further rebalancing of reward between shareholders and colleagues … will not happen overnight.”

Head of remuneration
Cynics who argue that Barclays’ executives are giving ground to shareholders only inch by inch, and grudgingly, have been afforded further ammunition by the company’s retention of the services of Sir John Sunderland — associated with the company’s old guard — and head of the remuneration committee.

Earlier this year, before a parliamentary commission, Sir John defended the bonuses paid to disgraced ex-CEO Bob Diamond. The chairman of the commission told Sir John that his comments showed the “bank’s culture has not changed at all.”