Barclays board up for re-election

25-11-2008

Barclays board up for re-election
The board of Barclays has announced a 'put up or shut up' plan to quell a shareholder rebellion.

Executive directors at the bank have put themselves up for re-election at the annual shareholders' meeting in April.

Many shareholders – including several major institutional investors – have expressed their concerns with a £7 billion deal to raise capital involving Qatar Holding and HH Sheikh Mansour Bin Zayed Al Nahyan.

Barclays claimed the deal would be beneficial to shareholders as it meant the bank would not be forced to take government cash, which comes with strings attached.

This would enable the bank to remain independent and pay dividends to existing shareholders, according to Barclays, although some also pointed out that it meant there would be no restrictions on paying bonuses to directors.

Shareholders were critical of the terms offered to the Middle Eastern investors and queried why they had not been offered the opportunity to increase their own investment.

Threatened with being voted down on the deal, Barclays is now making £500 million in high-yielding securities available to other institutional investors and has offered shareholders the opportunity to sack the board.

Barclays also said no annual bonuses will be paid to executive directors of the bank for 2008.

However, the Association of British Insurers (ABI), whose members own about 20 per cent of the FTSE All Share Index, are not enthusiastic about the deal.

The ABI's Institutional Voting Information Service (IVIS), which researches corporate governance for institutional shareholders, has upgraded Barclays' report to a 'red top' signifying shareholders should treat the forthcoming vote with concern.

Peter Montagnon, the ABI's director of investment affairs, said: "We have been grateful for the opportunity to discuss the issues with Barclays and recognise the changes they have made to their proposal as well as the commitment of all the board to stand for re-election and of the executive directors to forgo bonuses this year.

"However, these changes cannot offset the concern of shareholders at the serious breach of the pre-emption principle, especially on an issue with a large discount. Other concerns include the preferential terms available to some investors, and the overall cost of the issue to existing shareholders.

"After careful consideration we therefore felt we had no choice but to proceed with a red top."

A red top is not advice to vote against the proposals, but sinifies "the presence of an issue of grave concern", IVIS said.

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