Barclays was accused of attempting to silence criticism of its bonus culture after one of the bank's directors slapped down a major shareholder for speaking out against its pay practices.
Sir John Sunderland, chairman of the bank's remuneration committee, was angrily heckled by shareholders after he told Standard Life's Alison Kennedy that it "would be good in future if these points could be made during the consultation phase".
His criticism of Standard Life for publicly voting against the Barclays remuneration report - which increased the bank's bonus pool despite falling profits - will fuel public suspicion of "backroom" City pay deals.
In total, a third of shareholders withheld their support for the bank's executive pay plan at a stormy AGM on Thursday, with nearly a quarter of those who voted actively opposing the board.
It is the biggest major shareholder protest since 32 per cent of BP shareholders failed to back its pay policy last month, and demonstrates the growing concern about boardroom excess.
Support for Standard Life and criticism for Barclays came from both left and right - with the Institute of Directors urging the bank to reconsider its bonus plans.
Ms Kennedy said Standard had not taken the move to oppose the bank's pay report lightly. "We are unconvinced that the amount of the 2013 bonus pool was in the best interests of shareholders," she said. "We also believe that this decision has had negative repercussions on the bank's reputation."
One shareholder shouted "you don't care" after Sir John said it had been anticipated the decision to hike bonuses by 10 per cent despite profits falling would be controversial.
"Compensation in the financial services industry is far too high but we cannot take the risk of acting unilaterally," said Sir John, a former boss of Cadbury. "Do you imagine we want to pay anyone in the bank more than we have to? Do you imagine I and the chairman seek the level of invective that has been poured upon us?"
Barclays chairman Sir David Walker defended the outburst and claimed Standard Life's intervention was a "broadside which came late in the process".
He said: "We had a substantive consultation with shareholders. Sir John did that impeccably but he had just a degree of irritation that they did not make their concerns known earlier in the process."
But that did nothing to placate many of the 800 shareholders at the meeting, who queued up to attack Barclays bosses over the decision to hike bonuses.
"We are paying for Manchester United but we are getting Colchester United," said shareholder Phil Clarke. "We are a very large bank and in a position to exhibit leadership over pay."
Another shareholder called for Barclays' entire remuneration committee - which approved the bonus bonanza - to be sacked, asking: "Who needs more than £1m a year to live on?"
When former fund manager and Conservative supporter Patrick Evershed sought to defend the bonus payments he was heckled by his fellow shareholders. One shouted: "Taxi for Mr Evershed."
Sir David told investors that Barclays hiked the bonus pool to £2.38bn despite a 32 per cent fall in pre-tax profits partly because there had not been the scale of clawbacks seen in 2012 as a result of various fines and settlements with regulators.
He claimed the bank needed to pay up to stop its investment bankers in the US from being lured away by rivals and said soaring salaries paid by rivals in America were making it tough to recruit.
But commentators lined up to support Standard Life in the wake of the ill-tempered meeting and the high-handed response of Sir John to critics.
Roger Barker, of the Institute of Directors, said: "The board of Barclays must now consider what actions it intends to take to understand the reasons behind today's significant shareholder vote. Fund managers like Standard Life have shown a willingness to act as responsible owners. A more active approach to stewardship amongst shareholders is essential if the UK is to sustain its leadership role in corporate governance."
TUC general secretary Frances O'Grady said: "Barclays may not like fund managers speaking out in public but this is the only way that clients and the general public can see whether the institutions who look after their pensions and investments are acting in their interests.
"Sadly, this kind of engagement is all too rare among institutional investors, who need to do a far better job of hold companies to account, particularly on soar-away boardroom pay."
Deborah Hargreaves, of independent think tank High Pay Centre, said: "It's good to see major shareholders finally waking up to the fact that their customers are getting ripped off by the bankers' pay racket.
"They should keep up the pressure for a reform of the bonus policy and if top bankers threaten to leave Barclays should train up more people to take their place. The banks should also find other ways to reward people rather than outrageous bonuses."
- UK Independent