Barclays share price: Hidden £170m payment to trader revealed

on May 25, 2015
Updated: Oct 21, 2019

Barclays (LON:BARC) paid a star trader £170 million in the five years following the financial crisis, The Sunday Times yesterday revealed, citing court papers. Jonathan Hoffman, earned the vast sum at a time when banks were under pressure to reign in exorbitant bonuses in an effort to de-incentivise bankers away from the more risk averse behaviour that dominated financial sectors prior to the global economic meltdown.

Hoffman’s payment out-strips the £120 million paid to Barclays’ former chief executive Bob Diamond over a similar period and gives a rare insight into the hidden payments made to top performers at investment banks. Traders’ rewards are usually kept confidential, with only the salaries of top boardroom executives’ being publicly released.
The £170 million pay cheque was revealed during a court battle between Hoffman and the now-defunct Lehman Brothers over £53 million in unpaid bonuses. The trader worked for the US investment bank until it collapsed in 2008. The fact that Hoffman could continue to command pre-crises pay levels following the Lehman Brothers’ collapse is worrying, particularly in light of well publicised claims made from within the industry that there has been a cultural change in the financial sector towards the awarding of salaries and bonuses.
Lehman’s trustee, James W Giddens, has accused Hoffman of “double-dipping”, saying the payment from Barclays had already compensated him for the lost Lehman bonuses. However, Hoffman, who left Barclays in 2013, has argued his payment was related to the UK bank’s desire to secure his services of a high-rolling Lehman trader after buying out the group’s investment arm.
His lawyer Douglas Baumstein told the Guardian yesterday: “Hoffman was not paid for his Lehman bonus by Barclays. Rather, as the contemporaneous evidence shows, the payments made to Mr. Hoffman were retention payments, made to induce Mr. Hoffman to accept employment and to remain at Barclays for a period of years.” He added that his client had earned Barclays more than $1.25 billion. The London-listed lender declined to comment on the matter.
In separate Barclays news from the weekend, the bank has lost its highly respected and long-serving head of corporate broking, Alisdair Gayne, after he was poached by UBS. According to the Sunday Times, Gayne, who joined Barclays in 2010, quit the bank on Friday and is expected to be named chairman of UBS’s UK investment bank shortly. The newspaper noted that corporate broking is unique to Britain, with banks acting as unpaid advisers to companies in the hope of taking a fee for potential fundraisings or deal making.
As of 09:05 BST, Monday, 25 May, Barclays share price is 270.15p.

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