MPs attack Barclays over its 'obscene' pay culture - The Times (subscription)

The man responsible for setting boardroom pay at Barclays was hammered by MPs and peers yesterday and warned not to pay a £1 million bonus to the new chief executive.

Sir John Sunderland, one of Britain's most eminent industrialists and a for- mer CBI president, was hit by a barrage of hostile questioning and accused of a significant misjudgment in approving a £2.7 million bonus to Bob Diamond, the bank's former chief, last year.

He was also told that the embattled bank's claim to have undergone a big shift in culture and standards since the Libor scandal last summer would be dismissed as PR spin if it pushed on with plans for a big bonus for the new chief, Antony Jenkins.

Sir John's grilling by the Parliamentary Commission on Banking Standards came hours after an explosive written statement from his predecessor as chairman of the Barclays remuneration committee, Alison Carnwath, who broke her silence to say that she had recommended Mr Diamond get no bonus at all last year, but received no support from any other board member.

Sir John, who was a member of the committee underneath Ms Carnwath last year, sparked disbelief from MPs when he said that even with hindsight he would still have voted to pay the bonus, though it might have been smaller.

Ms Carnwath, who is chairman of Land Securities, the property group, said she was "amazed" when Marcus Agius, the chairman of Barclays then told her that he wanted to pay Mr Diamond the bonus. "I thought it was wrong," she told the commission. But after "a number of conversations in corridors" between board members, it was decided to pay the bonus because Mr Diamond as regarded as the type "who needed recognition in this sort of way", she said.

He ended up being paid a total of £6.3 million for 2011, while his total package including deferred bonuses in respect of previous years was £25 million by one measure. He was ousted in July after pressure from regulators.

Ms Carnwath, who resigned from the board soon after, said in her written evidence that bank pay in a minority of cases had reached "obscene" levels and that a "culture of entitlement" had grown up. She also said that Mr Diamond had been reluctant to take a leadership position on curbing pay.

Sir John was told by one commission member, Lord Turnbull, the former Cabinet Secretary, that, "subsequent history has shown that she was completely right and you were completely wrong".

But Sir John, while acknowledging that Barclays had made less than its cost of capital in the year, argued that Mr Diamond deserved extra on top of his base salary of £1.35 million because of his "great energy, enthusiasm and skill" and because he had achieved some of the targets set for him.

Sir John also raised the ire of the commission by saying that most of the mis-selling of payment protection insurance by Barclays had been in the distant past — a claim dismissed as "rubbish" by Lord Turnbull.

Asked by Pat McFadden, MP, whether he understood how the bank's claims that its culture had changed would be regarded if it paid a bonus anywhere near £1 million to Mr Jenkins, Sir John said: "I understand the implications of your question very well."

In spite of her initial opposition to Mr Diamond's bonus, Mr Carnwath belatedly voted in favour of it, The Times understands. "If the commission had been a little less Oprah and a bit more forensic, they might have found that out," one friend of Mr Diamond said.

Barclays is due to decide overall bonuses within two weeks and must disclose Mr Jenkins' bonus by March.