LONDON - Barclays PLC (BCS) executives, speaking at an annual meeting peppered with angry outbursts from shareholders, Friday said that staff at the U.K. bank must take paycuts to counter the effect of regulatory costs on shareholder returns.

Chairman Marcus Agius, apologizing to shareholders for not taking their views on board when settling executive remuneration, said the bank would work to change the balance of rewards in favor of investors.

Agius said bank pay must be adjusted in the light of higher capital requirements and lower returns for the sector. "In the future, we will be engaging differently and more purposefully with shareholders in order to ensure that we obtain a broader level of support on remuneration policy and practice," he said.

In a pre-emptive move to quell rising shareholder anger over pay, the bank last week said that Chief Executive Bob Diamond will tie half of his long-term bonus awards to the U.K. bank's future profitability.

Diamond and Finance Director Chris Lucas will forgo 50% of their deferred bonuses, which are paid out over three years, until Barclays' return-on-equity exceeds its cost-of-equity, the bank said. If the condition isn't met within the three-year time frame, the potential payout—which amounts to £1.35 million for Diamond and £900,000 for Lucas—will be scrapped.

Friday at the AGM, Diamond echoed Agius' remarks and said the bank would keep addressing concerns on pay. Diamond also said the bank was working hard to rectify the damage caused by the misselling of Payment Protection Insurance. Reporting first-quarter earnings Thursday, the bank said it had set aside an additional provision of £300 million for compensation, after setting aside about £1 billion last year.

Shareholders at the meeting heckled the two executives, and remuneration committee Chairman Alison Carnwath, on the pay issues, and are expected to register a sizeable "no" vote later Friday on Barclays' remuneration report.

Barclays and the U.K.'s other major banks have been accused by politicians and the broader public of failing to adequately address pay structures that are widely seen as having helped to cause the 2008-09 financial crisis.

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