We’ll be making a rare change to our Biznews Global share portfolio next week, selling all our shares in Barclays Plc. Events of the past week exposed an ugly side to the new management team, creating considerable doubt in their ability to achieve the promised turnaround. You might easily believe the rotten culture ahead of the GFC has actually gotten worse.
After months of denials, it is now common knowledge that CEO Jes Staley broke every possible rule in his efforts to hunt down a whistleblower who sent two anonymous letters exposing “concerns of a personal nature” about one of Staley’s fellow executives. In clear contravention of whistleblower rules, the Barclays CEO instructed the bank’s security team to track down the source. When they got nowhere he turned to a “US law enforcement agency.”
The Barclays board sanctioned Staley by removing his bonus and issuing him with a “reprimand”. That knuckle rap tells us as much about the internal culture of the 73,000 employee business as does the CEO’s own actions. Barclays obviously fails to understand that being paid the big bucks brings even bigger responsibility.
Source of the problem is how executive remuneration has ballooned beyond all comprehension. In 1976, the average CEO of a US-listed company was paid 36 times as much as the average worker. By 1993 that had risen to 131 times. It is now 300 times. Little wonder people like Staley believe they live in a different world – with different rules.