Diamond received £5.7m from the British bank to offset the American being taxed by both Britain and New York state on some of his long-term bonuses, giving him a total package last year of about £19m.
However, sources said that lucrative long-term incentive plans for the Diamond, former head of Barclays’ investment bank BarCap, fall away this year.
They said institutional investors have been told by the company, chaired by Marcus Agius, that the chief executive is unlikely to get more than £5.5m in 2012 by comparison.
Diamond’s bonus last year amounted to 200 per cent of his salary, even though he described the trading performance and returns in 2011 as “unacceptable”.
The bank also paid a bonus worth 225 per cent of salary to finance director Chris Lucas.
It is said that Agius, wrongfooted by the storm around Diamond, has also promised institutions that they will be consulted more fully on remuneration rather than just relying on the publication of the annual report ahead of the shareholder AGM.
It is understood a string of big investors had threatened to vote against Barclays’ remuneration report, including Scottish Widows, Fidelity and Standard Life.
Sources said they were also considering voting against the re-election of Alison Carnwath, chairwoman of the bank’s remuneration committee, at the annual meeting on 27 April.
The Association of British Insurers, the trade body for investors speaking for 15 per cent of the stock market, issued an “amber top” warning last week denoting its “concerns” about Barclays’ pay policies for a second year.
One City banking analyst commented: “In the medium term, institutions are more concerned with returns on equity, dividends and share price performance.
“If Barclays can do better in those areas, I think the controversy at the bank around remuneration will die away.”
Diamond sparked controversy early in 2011 when he told MPs on the Treasury Select Committee that it was time for the banking industry to “move on” from remorse about the financial crisis that plunged much of the world into recession.