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* Barclays: 34 pct of investors oppose or withhold vote onpay
* Big investor Standard Life votes against 2013 pay
* Chairman Walker says bank was losing people critical tofuture
* Barclays says Q1 profit down after fixed income revenuesslump
* Barclays shares up 1.1 pct (Adds vote results, comments from shareholders, chairman)
By Steve Slater and Matt Scuffham
LONDON, April 24 (Reuters) - More than a third of Barclays' investors declined to back its pay policy on Thursday,tipping the British bank into an open row with one of itsbiggest shareholders.
In a rare gesture of public opposition, Standard Life said it had voted against Barclays' decision to pay out 2.4billion pounds in bonuses for 2013 - a 10 percent increase on2012 despite posting profits a third lower.
"We are unconvinced that the amount of the 2013 bonus poolwas in the best interests of shareholders," said Alison Kennedy,governance & stewardship director at Standard Life, which has a1.9 percent stake in Barclays. The decision had damaged thebank's reputation, she added.
The vote, while a slap in the face for the bank, means itcan still go ahead and pay staff bonuses worth up to twice theirsalaries. Overall 24 percent of shareholders who voted opposedits remuneration report. Including withheld votes the share ofinvestors failing to back its pay policy was 34 percent.
The head of Barclays' remuneration committee John Sunderlandsaid Standard Life - the bank's sixth largest shareholder -should have raised its concerns earlier in private discussionsit had over pay.
Chairman David Walker told reporters: "There was a bit ofirritation that some of the concerns (Standard Life) expressed,they didn't express at an earlier stage... When you get abroadside at a late stage in the process it may be too late."
Walker said Barclays' pay plan was the right decision, inorder to halt an exodus of senior staff. Last year the bank lostpeople in its U.S. investment bank arm that were critical to itsdevelopment, he said, because it had cut bonuses too sharply in2012 and last year U.S. rivals had increased pay by at least 15percent.
In the middle of last year Barclays' profitable U.S. bondtrading desk faced losing its co-heads and more than two-thirdsof the senior team, Walker said, while overall the resignationrate for senior Barclays employees in the United States almostdoubled in 2013.
"It would not have been in the interests of shareholders ifsignificant parts of the investment bank were allowed to witheron the vine because we had lost and failed to replacesignificant teams of people, in particular in the United Stateslast year," Walker said.
But other shareholders were unconvinced, saying pay levelsdid not reflect current performance.
"We're paying for Manchester United but we're gettingColchester United," said Phil Clarke, a private shareholder.
Barclays' pay decision adheres to new European Union ruleslimiting bankers' bonuses, but may prompt closer scrutiny fromthe UK government.
British Business Secretary Vince Cable this week wrote tobanks and other big companies warning them to rein in excessiveexecutive pay or face tighter rules. His said banks, andBarclays in particular, needed to address "dangerous levels" ofpay.
DROP IN REVENUE
Barclays said its first-quarter profit fell after a"significant" drop in revenue from its investment bank'sfixed-income operations, extending an industry slump across thatbusiness.
A cost-cutting program was starting to show a "materialbenefit", however, and would help offset the drop in investmentbank profits, the bank said.
Barclays said it would report a "small reduction" inadjusted pretax profit compared with a year ago when itpublishes first-quarter results on May 6.
Barclays' Chief Executive Antony Jenkins is reviewing thesize and shape of Barclays' investment bank and will unveildetails of his plan on May 8. He is expected to axe thousands ofjobs to cut costs and improve returns.
Tougher regulations have made many areas of investmentbanking less profitable. Many bankers and analysts say the dropin fixed income, credit and commodities (FICC) revenues ispermanent and banks need to take more aggressive action toshrink their businesses.
U.S. rival JPMorgan reported its FICC revenues fell21 percent in the first quarter from a year ago, while GoldmanSachs reported an 11 percent drop and Citigroup posted an 18 percent fall.
Barclays could cut as many as 7,500 staff, mainly byshrinking its European fixed-income business, Bernstein analystChirantan Barua estimated this week.
Barclays said its equities and investment banking advisorybusinesses in the first quarter performed broadly in line with ayear ago.
Barclays shares were up 1.2 percent at 251.8p by 1515 GMT,outperforming a slightly higher European banking index. (Editing by Sophie Walker)
