ISS urges Barclays shareholders to question board over Staley support

Proxy adviser ISS has said shareholders should use Barclays’ upcoming annual meeting to question the board over its support of Jes Staley, its former chief executive that directors continued to back despite revelations about his close friendship with deceased sex offender Jeffrey Epstein.

Staley was CEO for almost six years before stepping down in November 2021, when British regulators disclosed preliminary findings of a probe into whether he was sufficiently transparent about the nature of his relationship with Epstein, who died by suicide in 2019.

At the time, the board said it was “disappointed at this outcome” and allowed Staley to leave with £2.4mn of his pay and substantial relocation expenses, which some top investors opposed.

“The decision to support Staley in the period between the death of Epstein and Staley’s resignation will draw scrutiny,” ISS said in a report on Monday. “There are questions over the judgement exercised during this period, given the particularly disturbing nature of the charges against Epstein, and their potential for reputational damage.”

Barclays’ annual general meeting will be held in London on May 3.

Chair Nigel Higgins has started to distance himself from his previous position after a series of disclosures in US court cases brought by the US Virgin Islands and Epstein’s victims against JPMorgan Chase, where Staley used to run its private bank.

The cache of emails from Staley’s time at JPMorgan include unexplained references to “Snow White” and “Beauty and the Beast”, while others contain what the US Virgin Islands lawsuit describes as “photos of young women in seductive poses”.

In a letter last month, Higgins called the allegations “serious and new” and said he would “consider further action as appropriate”.

ISS stopped short of recommending votes against any board members or Higgins, reasoning that it first needed to see the results of continuing regulatory investigations.

The proxy adviser also flagged that it was not the first scandal through which the board had stuck by Staley. The report references a 2018 probe into Staley’s attempts to determine the identity of a whistleblower that resulted in a £642,000 fine.

“Staley had had previous occasion to defend his ethical conduct and the board to investigate his behaviour,” ISS said. “The question could be asked: ‘Was the board correct in supporting Staley (ie not dismissing him) for a second time?’”

Earlier this month, fellow proxy shareholder adviser Glass Lewis told investors to vote against pay proposals for Barclays’ top executives following other scandals that have cost the bank hundreds of millions in fines and settlements.

Barclays was hit with a penalty by regulators in September for accidentally selling $17.7bn of structured financial products for which it did not have authorisation. It settled for $361mn with the US Securities and Exchange Commission and set aside £450mn to compensate investors, helping drive down annual net income 19 per cent.

It also set aside $200mn to settle a US regulatory probe into employees’ unauthorised use of messaging apps WhatsApp and Signal.

Glass Lewis said a reduction of executive pay by only a combined £1mn was insufficient punishment. The adviser specifically objected to long-term awards close to £3mn that vested last year for former chief financial officer Tushar Morzaria, meaning he was awarded more than two-thirds of his potential pay package.

Barclays declined to comment.