Barclays – comply or explain

The UK Corporate Governance Code, best practice advice for the UK’s listed companies, states that “There should be a clear division of responsibilities at the head of the company between the running of the board and the executive responsibility for the running of the company’s business. No one individual should have unfettered powers of decision” – in other words companies should not combine the roles of Chief Executive and Chairman.

In firing  its Chief Executive, Antony Jenkins and appointing Chairman John McFarlane as acting Chief Executive, Barclays Bank are flouting this key principle of the code by having one man in charge of both the board and the business.

Mr McFarlane, who took over the day-to-day running of Barclays on July 17, said there had been some “rumblings and concerns” from non-executive directors over the past few weeks and the decision was taken at a board meeting last night with the announcement made this morning (08/07/2015).

Antony Jenkins leaves the bank with 12 months’ notice and will receive his current annual salary of £1.1 million, £950,000 in role-based pay and a pension of £363,000 a year.

Sir Michael Rake, Barclay’s senior non-executive director (SID), said: “I reflected long and hard on the issue of Group leadership and discussed this with each of the Non-Executive Directors. Notwithstanding Antony’s significant achievements, it became clear to all of us that a new set of skills were required for the period ahead.”

The board does not have a clear timetable for recruiting a new Chief Executive and would seem to be in no hurry to fill the role. It will be interesting to see what pressure is exerted by the Financial Reporting Council, the guardians of UK Corporate Governance, on the Barclays board to encourage them to resolve this unsatisfactory situation in a timely manner.

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