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London - Barclays chairman David Walker defended pay levels at the bank on Thursday, telling shareholders that it needed to raise bonuses to stop an exodus of senior executives.
Speaking at Barclay's annual general meeting - at which a significant minority of investors led by Standard Life are expected to vote against plans to bump up salaries.
Walker said Barclays was losing people critical to its development because US rivals are upping pay by at least 15%.
The resignation rate for senior Barclays employees in the United States almost doubled in 2013, he said, and there had been a marked increase in the number of people turning down offers of employment at the bank.
"The challenge was the need for damage limitation and franchise protection... Despite all the reservations that have been expressed, I remain confident in my view that we took the right decision," Walker told around 840 shareholders at the meeting in London on Thursday.
Alison Kennedy, governance & stewardship director at Standard Life, which has a 1.9% stake in Barclays, told the meeting the bank's decision to pay out £2.4bn in bonuses for 2013 - up 10% on the year before despite a one-third drop in profit - had damaged its reputation.
"We are unconvinced that the amount of the 2013 bonus pool was in the best interests of shareholders, particularly when we consider how the bank's profits are divided amongst employees, shareholders and ongoing investment in the business," she said.
British Business Secretary Vince Cable this week wrote to banks and other big companies warning them to rein in excessive executive pay or face tighter rules. His said banks, and Barclays in particular, needed to address "dangerous levels" of pay.
However Barclays is expected to easily win a binding vote on being allowed to pay up to twice the level of employees' salaries as bonuses under new European Union rules that cap pay.
Drop in revenue
Ahead of the meeting, Barclays said its first-quarter profit fell after a "significant" drop in revenue from its investment bank's fixed-income operations, extending an industry slump across that business.
A cost-cutting program was starting to show a "material benefit", however, and would help offset the drop in investment bank profits, the bank said.
Barclays said it would report a "small reduction" in adjusted pretax profit compared with a year ago when it publishes first-quarter results on May 6.
Barclays' CEO Antony Jenkins is reviewing the size and shape of Barclays' investment bank and will unveil details of his plan on May 8. He is expected to axe thousands of jobs to cut costs and improve returns.
Tougher regulations have made many areas of investment banking less profitable. Many bankers and analysts say the drop in fixed income, credit and commodities (FICC) revenues is permanent and banks need to take more aggressive action to shrink their businesses.
US rival JPMorgan reported its FICC revenues fell 21% in the first quarter from a year ago, while Goldman Sachs reported an 11% drop and Citigroup posted an 18% fall.
Barclays could cut as many as 7 500 staff, mainly by shrinking its European fixed-income business, Bernstein analyst Chirantan Barua estimated this week.
Barclays said its equities and investment banking advisory businesses in the first quarter performed broadly in line with a year ago.
