England’s oldest financial institution has replaced ousted CEO Anthony Jenkins. The latest in a string of high profile appointments at European banks was confirmed when Barclays informed the London Stock Exchange that Jes Staley will commence employment at the FTSE 100 financial institution on December 1, 2015. Mr. Staley has been poached from hedge fund Blue Mountain Capital, having spent 30 years at Barclays’ American counterpart JPMorgan Chase & Co. It is the second time Staley has been considered for arguably the most prominent role in British business; he was passed over in favour of a home grown selection in 2012, after an acrimonious end to Bob Diamond’s tenure.
Mr. Staley will join a host of new appointments at big European banks, 
reflecting the attempts of financial institutions to implement strategic change in the face of the lasting effects of Europe’s financial crisis. New leaders have been appointed at each of Deutsche Bank, Credit Suisse, Banco Santander and Standard Chartered; it remains a challenging time for many European lenders, with reorganisation firmly on the agenda, and Barclays is no exception. In response to the challenges, the axe is to wielded on many jobs at Standard Chartered and Deutsche Bank, with the former posting a loss for the fifth consecutive quarter, and the latter recently announcing a €6 billion loss for the third quarter of 2015.
Commenting on the appointment, Barclays chairman, John MacFarlane said: “In Jes Staley we believe we have an executive with the appropriate leadership talent and wide-ranging experience to deliver shareholder value and to take the Group forward strategically. In particular, he understands corporate and investment banking well, the re-positioning of which is one of our major priorities.”
Staley’s appointment was originally mooted to begin in February, but tumbling profits may have served to hasten his start. Indeed, one of the major challenges facing the new CEO will be how he deals with the investment banking arm at the Company, parts of which have been underperforming and causing a drag on overall financial performance. However, the tests will not end there, as Barclays has been engulfed by scandals in recent years, including the Libor, Euribor and Forex debacles, an issue Mr. Staley alluded to on his appointment: “We will be committed to preserving and enhancing the trust that is the foundation of Barclays’ reputation. Stability and long-term orientation are cornerstones for this great institution. We must recognise Barclays’ special obligation to those principles.”
While it appears that even the dogs on the street were aware of Mr. Staley’s impending appointment, what remained unknown- until now- was the pay package under which he would be appointed. Pay packages, and particularly those of incoming executives, have been under intense scrutiny by UK shareholders during the past year, with a spate of revolts surfacing at FTSE 350 issuers over recruitment awards.
Compared to US issuers, golden hellos are generally less common (and generous) in the UK; nonetheless, it seems the board at Barclay’s felt that Mr. Staley was worth the extra incentives needed to entice him to the UK, and he will certainly be well remunerated at his new employer. In announcing his appointment, the Company communicated the terms of his remuneration, which will include a one-off grant designed to compensate him for an award forfeited at JPMorgan Chase & Co., based on that Company’s share price as at December 1, 2015; the current estimation values the award at approximately £1.93 million, and it will come on top of fixed pay of £2.35 million and annual variable entitlements of up to twice that amount.
Given the growth in investor apprehension toward recruitment/buy-out awards, Barclays may risk the ire of shareholders at next year’s AGM, an issue that may also surface at Barclays’ UK competitor, Standard Chartered. Upon joining the Asia focused bank, Bill Winters, another JP Morgan disciple, received a more significant buyout award, worth approximately £6.9 million at grant. It remains to be seen whether such generous recruitment awards can be successfully justified to shareholders, by the need to appoint experienced and highly valued leaders to prominent roles.