Barclays directors today issued a “back us or sack us” ultimatum, and the top four executives agreed not to take a bonus this year as they sought to put to rest a damaging scrap with shareholders.

The board, led by chief executive John Varley, will put itself up for re-election at next April's annual meeting — a bold move that could cause concern among regulators desperately trying to stabilise the banking system.

Although the likely outcome is a seal of approval for Varley's running of the bank, some scalps could be claimed, with chairman Marcus Agius perhaps under most pressure.

Varley, global retail boss Frits Seegers, finance director Chris Lucas and president Bob Diamond will not get a bonus this year. Last year Varley picked up £1.4 million, Seegers £1.3 million and Lucas £450,000.

Diamond took home more than £20 million last time — this year he will get a mere £250,000.
Barclays will also make available to its UK shareholder base £500 million of the £3 billion in reserve capital instruments (RCIs) it is selling to Abu Dhabi and Qatari investors. In all, it is getting a £5.8 billion cash injection from the Middle East in return for a 31% stake in the company.

Investors including Legal & General were furious at seeing their own stakes diluted, and irritated they were not also offered a chance to get hold of RCIs paying a coupon of 14% a year.

Varley said putting his neck on the block was “the right thing to do”. He added: “The shareholder world is democratic. I understand why investors have had a certain amount of conversations with us. Normally speaking, we would have raised money on a pre-emption basis, but it takes time. Time has proved fatal to some banks in 2008. It was a risk we should not run.”

Varley has been keen to avoid taking funds from the UK Government, moving swiftly several times to bolster the balance sheet from overseas. Some UK investors worried this was just to keep out of Government control and continue to pay huge bonuses — a concern laid to rest today.

But investor body the ABI remains unhappy, though it concedes a vote to oust the board would have serious implications.

It issued a “red top” alert on the Barclays move, indicating its highest level of concern about the “serious breach of the pre-emption principle”, under which existing shareholders should be favoured over new ones.

This comes a day after corporate governance adviser Pirc said shareholders should vote down Barclays' fundraising plans. The shareholders worry that Barclays has had to overpay to ensure its independence, offering plum deals to Gulf investors rather than taking cheaper funds from the UK Government.

Varley has won praise for the speed with which he has moved to keep Barclays above the fray that has harmed rivals such as HBOS and RBS.
Barclays shares today slipped 13.1p to 144p.