COMPANIES UK: Barclays buys in staff options

£185m in the first half of this year - or £211m minus the £26m exercise price

COMPANIES UK: Barclays buys in staff options

By: By Jim Pickard, Financial Times
Published: Aug 28, 2006

Barclays' asset management division has spent £211m in the first half of this year buying back share options awarded to staff three years ago, the bank admitted last night.

The generosity of Barclays Global Investors (BGI) to its staff is underlined by new figures showing it has spent hundreds of millions buying back share options from its employees since it launched its incentive scheme in 2000.

Under the scheme, staff are awarded options which after three years are bought back by the group.

The amount of money spent on this has been on the increase. In 2004 BGI spent £60m on share buy-backs, which rose last year to £160m.

A report by analysts at Evolution Securities, the stockbroker, said the scheme would constitute a "growing, but largely unseen" headwind for the group.

"One number you won't have seen in Barclays' recent results is the £211m cash cost of buying back BGI shares from BGI employees in the half year. You don't see it, because this is a cost that doesn't touch the profit and loss account."

Employees received £185m in the first half of this year - or £211m minus the £26m exercise price on the options.

Barclays would not comment on the specific figures yesterday. But it defended the scheme, saying that the purchase of shares wasnot a "cash outflow against which there is no value in return".

Analysts from Keefe, Bruyette & Woods said the figures were "not fresh news" and had been indicated in several ways through BGI's report and accounts.

The group, which has $1,600bn under management, is chaired by Bob Diamond, who is also head of Barclays Capital, the group's investment banking arm.