Barclays, the UK's second-biggest bank apologised to shareholders for its handling of chief executive Bob Diamond's controversial pay package, as 27 percent of shareholders voted to reject it during Friday's annual general meeting in London.
The bank, which received the most banking customer complaints in 2011 according to regulators the Financial Services Authority (FSA), will hand Diamond £17.7m in a mixture of salary, bonuses, share-awards, and tax equalisation payments.
"On some matters we should have communicated earlier and more clearly," Barclays chairman Marcus Agius will say, according to an extract from his speech published by PA.
"For this I apologise and I assure you that in the future we will be engaging differently and more purposefully with shareholders in order to ensure that we obtain a broader level of support on remuneration policy and practice."
Shareholders will vote on Diamond's 2011 pay package at the AGM, being held at the Royal Festival Hall in London, and are facing calls to reject the pay deal.
Barclays had acknowledged the "strength of opinion expressed by some shareholders" over executive remuneration after a series of meetings with those who hold major stakes in the bank in a 19 April statement.
Diamond, who is the second highest paid banking chief in the UK, and Chris Lucas, group finance director, agreed to halve their bonuses if Barclays' return on equity does not exceed its cost of equity.
The bank said that the 6.6 percent dividends paid to its shareholders in 2011 were "unacceptable on an absolute basis, even though they were strong on a relative basis."
"Barclays has taken, and continues to take, measures to improve returns [and] remains firmly committed to delivering a 13 percent return on equity as soon as possible," it said, adding with caution that this would be a difficult task given the Eurozone debt crisis and extra reserve capital requirements of UK banks, among other factors.
Barclays has taken, and continues to take, measures to improve returns [and] remains firmly committed to delivering a 13 percent return on equity as soon as possible.
"Achieving this target of 13 percent return on equity will allow the portion of post-tax profits that are distributed as dividends to normalise at a level much higher than today, and Barclays intends to continue to make steady progress towards that as the return on equity improves," the bank said.
"The combination of higher earnings and a higher dividend payout ratio will allow a significant increase in the absolute level of dividends received by shareholders."
An organisation that represents the interests of pension fund investors urged those with a stake in Barclays to vote down the remuneration packages.
"The announcement does not address the fundamental issue of rewards for failure," said Pensions Investment Research Consultants Ltd.
"The proposed change acknowledges a problem with the bonus scheme, but still keeps it in place."