Barclays has hired a new finance director. Tushar Morzaria, formerly chief financial officer at J.P. Morgan's corporate and investment bank is joining as the UK bank's CFO.
So far, so standard. What's notable about Morzaria's appointment is that - for all Antony Jenkins' moralizing, Morzaria is being paid a lot of money. - Up to £6m to be precise. And what's more notable about Morzaria's money is that its structure seems to completely disregard the European Union's bonus cap.
To recap: the EU bonus cap will be introduced in January 2013 and will apply to bonuses paid for 2013 in 2014. The EU cap says that bonuses can't exceed 100% of salaries unless most of the board vote in favour of higher bonus payouts. If the board is in favour, bonuses can be increased to more than 100% of salaries if a greater proportion is paid in long-deferred stock. However, even in this instance bonuses will be capped at 250% of salaries.
As the Wall Street Journal points out, Morzaria's pay comprises an £800k salary, a bonus of up to £2m, and share awards of up to £3.2m. Mozaria's bonus is therefore equivalent to 250% of his salary and adheres to the EU cap. But when his share awards are added in Mozaria's total variable pay hits 650% of salary - which clearly infringes the EU's dictates.
There are several conclusions to be drawn from this. Either Barclays doesn't care about the EU bonus cap, or it plans to amend Morzaria's pay on January 1st 2013, or it (mistakenly) thinks that deferred stock bonuses are discounted entirely by the European Union and that the cap applies only to bonuses paid immediately. Whatever Barclays is up to, it looks weird.
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