Barclays

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• base salary;
• annual bonus including mandatory deferral into Barclays shares (the Executive Share Award Scheme (ESAS));
• the Performance Share Plan (PSP); and
• pension and other benefits.

The Committee reviews the elements of reward relative to the practices of other comparable organisations. Reward is benchmarked against the markets in which we compete for talent. This includes benchmarking against other leading international banks and financial services organisations and other companies of similar size to Barclays in the FTSE 100 Index.

The combined potential earnings from bonus and PSP outweigh the other elements and are subject to performance conditions, thereby placing the majority of total reward at risk. The relative weighting of each of the key elements of executive Director remuneration (excluding pension and benefits) is shown in the table on the next page.

This is a fixed cash sum, payable monthly. The Committee reviews salaries each year as part of the total reward package, recognising market levels and individual performance.

The annual bonus for executive Directors is linked to both current financial performance and lead indicators of future financial performance. 75% of annual bonus is delivered as cash. The remaining 25% is delivered as a provisional allocation of shares under ESAS which will normally not be released for at least three years and are subject to potential forfeit if the individual resigns and commences employment with a competitor business.

The PSP was approved by shareholders at the 2005 AGM. Performance shares are ‘free' Barclays shares for which no exercise price is payable and which qualify for dividends. Performance share awards are communicated to participants as an initial allocation. This initial allocation is the ‘expected value' of the award and is up to the higher of 150% of base salary or 75% of base salary and target annual bonus. Barclays performance over a three-year period will determine the final number of shares that may be released to participants. After three years the trustee of the PSP considers the release of performance shares based on the outcome of two performance conditions:

• Before any shares are released, Barclays cumulative EP over the performance period must normally be greater than the total for the previous three-year period.
• For 2005 awards, a multiplier applies to the initial allocation based on Barclays total shareholder return compared to a peer group of 11 other major international banks^(a) measured over the three-year performance period (2005 to 2007).

For 2006 awards, 50% of each award will be subject to a relative TSR metric and 50% subject to an EP metric. Relative TSR and EP are both considered to be good measures of value creation to shareholders.

The performance scale for the 2005 allocation is illustrated in the table on the next page. There is no vesting unless Barclays is ranked above median for relative TSR.

A pension is payable on retirement (normally 60) and is calculated either by reference to an executive Director's length of service and pensionable salary or to a money purchase arrangement, depending upon date of hire. Annual performance-related bonuses are not included in pensionable pay.

The Group has service contracts with its Chairman and executive Directors. The service contracts do not have a fixed term but provide for a notice period from the Group of one year and normally for retirement at age 60. The Committee's policy is that executive Directors' contracts should allow for termination with contractual notice from the Company, except in circumstances of gross misconduct when notice is not given.

The Committee's approach when considering payments in the event of termination is to take account of the individual circumstances including the reason for termination, contractual obligations and share scheme rules.

The Board determines the fees of non-executive Directors and the fees are reviewed annually. Non-executive Directors receive a basic fee of £55,000, with additional fees payable for Chairmanship or membership of the principal Board Committees. £20,000 of each Director's basic fee of £55,000 is used to buy shares in the Company. These shares, together with reinvested dividends, are retained on behalf of the non-executive Directors until they retire from the Board. Non-executive Directors do not receive awards in share schemes for employees, nor do they accrue pension benefits from Barclays for their non-executive services.

Each non-executive Director's appointment is for an initial six-year term, renewable for a single term of three years thereafter, with the exception of Sir Nigel Rudd, whose appointment as Deputy Chairman is reviewed annually.