BARCLAYS bank was stung by shareholders yesterday after nearly one-third of them failed to back bumper executive pay awards.

Following a heated annual meeting, Barclays revealed that 32% of investors voted against or withheld votes for the bank's pay report, while one-quarter failed to back remuneration committee chairwoman Alison Carnwath.

The protest came in the wake of chief executive Bob Diamond receiving £17.7 million last year in salary, bonus, benefits and vested long-term share awards, even though he admitted his bank's performance was "unacceptable".

Ms Carnwath told the annual investor gathering at the Royal Festival Hall on London's South Bank: "We will continue to seek to push down remuneration levels in the context of the environment in which we operate."

However, her claim was laughed down as the hall, packed with small investors, most of them elderly, demanded lower executive rewards and called for more of the bank's profits to be directed instead to the private investors and pension funds who own its shares.

"We reduced total incentive awards at Barclays significantly in 2011," Ms Carnwath, a former investment banker, told the hall to retorts of "not enough". To loud applause, one heckler shouted: "They all belong to the same club."

Ms Carnwath was only greeted with applause when she promised that investors would receive more of the profits generated by the bank in future.

"The balance of rewards between shareholders and employees has to change in favour of shareholders," she said.

Ms Carnwath saw 23.6% of shareholders fail to support her re-election. Typically, only 1% of directors ever receive a vote against them of more than 20%, according to data from shareholder adviser body, Pensions and Investors Research Consultants (Pirc).

Mr Diamond was subjected to booing as the hall was filled with the shouts of disgruntled shareholders. "We have to balance the pace of change against the need to attract the very best people to ensure that we perform competitively," he said.

Barclays' chairman, Marcus Agius, appealed to hecklers to act in an "adult and orderly fashion".

He apologised for Barclays' failings on pay. The bank has been attacked from usually business-friendly organisations such as the Institute of Directors.

Mr Agius said: "The board recognises and accepts that remuneration levels across the industry have to adjust to the reality of higher capital and lower returns." He added: "We have not done a good enough job in articulating our case. On some matters we should have communicated earlier and more clearly. For this I apologise."

Investor Malc Stephen asked: "How does this board justify any bonus being paid?"

Not all investors were hostile. One man insisted to the meeting that Mr Diamond had earned his bonus.

Former fund manager, Patrick Evershed, said of Barclays: "It is clearly one of the strongest and best managed banks in the world." But he added: "All the good work has been damaged by the pay packages that have gone out."

Mr Agius said: "We do not sit in a closed room and think, 'What can we get away with?'. We will strive to do better next year."

The company sought to win over some dissatisfied investors by setting additional conditions on Mr Diamond's incentive payments.

But investors holding 26.9% of Barclays' shares, including Edinburgh and London-based F&C Asset Management, voted against the company's pay report. Others withheld their support.

George Dallas, director of corporate governance at F&C, said: "This is a significant statement of investor concern about the company's remuneration practices.

"We would hope that the board will clarify its interpretation of this vote, and how this may affect the company's remuneration structure and implementation."

Edinburgh-based Standard Life Investments and Scottish Widows Investment Partnership declined to comment on how they voted.

David Paterson, head of corporate governance at the National Association of Pension Funds, said: "The vote may have been passed, but the level of dissent about executive pay at Barclays needs to be taken seriously by the company and by the rest of the banking industry."

At Westminster, the influential Commons Treasury Committee set out the terms of reference for its new inquiry into corporate governance and pay.

Last night, Andrew Tyrie, its Tory chairman, pointed out how the UK could benefit from taking a lead on improving how businesses are run as the global financial marketplace would locate to where there was high-quality corporate governance.