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The Barclays executive who presided over the falsification of the bank's Libor submissions is to receive a cash pay-off worth almost £9m in a move that will spark a political outcry.
I can exclusively reveal that Jerry del Missier, who resigned as Barclays' chief operating officer earlier this month, negotiated a severance deal worth at least £8.75m in the days before he quit, according to people close to the bank.
I'm told that the £8.75m figure represents just over half of a £17m potential long-term incentive award made to Mr del Missier some years ago, and which matured in March.
City sources say he was asked by senior colleagues to defer receipt of the award in the spring because Barclays executives intimated that it was an inappropriate climate for such a lavish bonus to be paid out.
Insiders say that Mr del Missier verbally agreed the outline of his pay-off with Marcus Agius, the outgoing chairman of Barclays, in the days before the former's departure was announced on July 3.
The cash element of the deal was settled upon in an attempt to secure Mr del Missier's signature on a severance agreement, one source said.
The bank is understood to have felt that there was no legal basis for forcing Mr del Missier to forego the cash payout once he resigned because he was entitled to have taken receipt of it in March.
What is less clear is the fate of share options held by Mr del Missier that could be valued at tens of millions of pounds. A large chunk of these options - which analysts estimate could be worth up to £40m - were subject to clawback provisions contained in his contract and I expect that he will not be able to cash in many, if any, of them in addition to the £8.75m cash pay-off.
By deciding not to waive the £8.75m award, Mr del Missier risks becoming the latest lightning rod for public anger over bankers' pay.
And the news that the Canadian former head of Barclays' investment banking arm could receive such a gargantuan golden goodbye threatens to plunge the bank deeper into chaos just 36 hours before it reports its financial results for the first half of 2012.
A political outcry over the severance terms is inevitable, particularly given that Mr del Missier conceded to MPs on the Treasury Select Committee last week that he had instructed Barclays traders to lower the bank’s Libor submissions in the autumn of 2008. That instruction followed a telephone call between Bob Diamond, who at the time ran Barclays Capital, and Paul Tucker, the senior Bank of England official who is now its deputy governor.
The falsification of those submissions came amid deep concern within the upper ranks of Barclays' management that other banks were being dishonest about the rate at which they could borrow from their peers. Email correspondence between the banks, regulators and industry bodies reveals concerns about the integrity of the Libor-setting regime but shows that little effort was made to tackle those perceptions at the time.
In his evidence to MPs, Mr del Missier denied that he was carrying the can for the Libor-rigging activities.
"I've resigned for the good of the bank but I’m not a fall guy for anyone," he said.
The terms of Mr del Missier's contract that would dictate the remainder of any pay-off are unclear. His contract was not available for public scrutiny prior to his resignation because he was not a director of Barclays.
In Barclays' most recent annual report, the remuneration of eight senior executives who were not on the board was anonymously disclosed under the Government's Project Merlin deal with the banking industry.
People close to Barclays said that Mr del Missier was one of two executives who received a total pay package for 2011 of at least £6.5m, although at least £5.8m was awarded in the form of deferred cash and share bonuses and a long-term incentive award that would pay out subject to performance conditions over a three year period. It is unlikely that Mr del Missier would now receive any of those deferred bonuses, I'm told.
Alison Carnwath, the non-executive director who chaired Barclays' remuneration committee, has now resigned with immediate effect, citing personal reasons that meant she would not be able to commit to continuing in the role.
One person close to Barclays said, however, that Mrs Carnwath had disagreed with the pay-off being awarded to Mr del Missier and that she had had little choice but to resign because the remuneration committee had been able to exert little influence over it.
It follows her attempts to curtail the £2.7m annual bonus awarded to Bob Diamond, Barclays' former chief executive, for 2011.
At the bank's annual meeting in April, Mrs Carnwath, who also chairs the property company Land Securities, suffered significant opposition to her re-election. At the time of that vote, her dissatisfaction with Mr Diamond's bonus was not public.
Mrs Carnwath subsequently helped to shape the terms of Mr Diamond's exit, which saw him forfeit almost £20m in deferred share awards when he left earlier this month. He still walked away with a package worth approximately £2m.
Mr del Missier's departure was announced 11 days after he was promoted to the role of chief operating officer at the bank and just six days after Barclays announced that it was paying £290m to settle various Libor-rigging cases with regulators in the UK and US.
Barclays has so far refused to comment on Mr del Missier's pay-off because he was not on the bank’s board, but it will now come under enormous pressure to give a public account of his severance package.
On Tuesday, the bank confirmed that it was appointing Anthony Salz, a respected City lawyer, to undertake a review of Barclays' business practices and culture. The inquiry is likely to examine, among other things, the extent to which the bank’s remuneration policies influenced employees’ behaviour.
