And, doubtless helped by the very public stand taken by Citigroup investors against Vikram Pandit’s pay, it looks like they have won at least one concession from the famously smooth-talking Diamond: he has agreed to defer half of his £2.7m 2011 bonus until Barclays profitability improves.
But a week before what is expected to be a stormy AGM, it looks increasingly unlikely that this modest bone will be enough to make the bank's backers roll over and have their tummies tickled. According to Robert Peston between a third and a half of its largest shareholders - pension funds and institutional investors - will register a protest vote next week.
And really you can hardly blame them - Barclays' return on equity is running at around 6.6%, way below both its own stated target of 13% (to be achieved by next year), and its 11% cost of equity. What that means is that the bank is earning 4.3% less on the funds provided by its investors than it would cost to raise those same funds in current market conditions. It is effectively relying on investor goodwill in other words.
While it’s hardly the only bank in this position at the moment, it is very easy to see how accusations of rewards for failure can be aimed at its remuneration policy. Exactly how bad would things have to get before directors’ pay stopped rising? Or even, perish the thought, fall?
The argument is doubly interesting as it points to a deeper truth - that the pay row isn’t really about pay, but about how Barclay’s and other banks like it are structured and run. For while return on equity is an important indicator of bank performance, many investors are against its being used as a formal target because it is too easy to game. The quickest way to improve a bank’s equity returns is to lend more in proportion to that equity - the dreaded leverage, and we all know where that got us, right?
Those same institutional investors are also unhappy at what they see as Barclays' over-reliance on its investment banking arm Barclays Capital (set up and run for many profitable years by Diamond himself of course). They would rather the business was more widely spread and its revenues more stable, and they certainly wouldn’t miss the need to pay all those extremely expensive i-banker salaries.
So in a way the row over the bosses’ pay is symptomatic of something much bigger - a potentially major clash between investors and executives over strategy. It will be very interesting to see who wins…