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* Former JPMorgan exec Staley to start as Barclays CEO onDec. 1
* Says will complete necessary transformation of investmentbank
* Relations with regulators not "adversarial" - Staley
* Barclays shares up 0.1 pct (Adds investor comment on pay level)
By Steve Slater
LONDON, Oct 28 (Reuters) - Barclays will payincoming chief executive James "Jes" Staley up to 8.24 millionpounds ($12.6 million) a year after appointing the formerJPMorgan investment bank boss to one of the mostprominent posts in British business.
Staley will join Barclays at the start of December, havingbeen widely expected to be appointed after sources and mediareports said he had been chosen pending regulatory approval.
American-born Staley, 58, faces challenges includingimproving Barclays' reputation after a series of scandals,cutting costs and deciding how big an investment bank it shouldkeep in the face of tougher regulations.
Staley said on Wednesday he planned to complete arestructuring of the investment bank and Barclays must avoid anadversarial relationship with regulators.
"We will complete the necessary transformation andrepositioning of the investment bank to a less capital-intensivemodel," Staley said in a memo to staff.
Barclays Chairman John McFarlane said Staley had theleadership talent and wide experience to improve shareholdervalue and take the bank forward.
"In particular, he understands corporate and investmentbanking well, the repositioning of which is one of our majorpriorities," McFarlane said.
Analysts say Staley should improve morale and set a clearstrategy for the investment bank after years of uncertainty, butwarned against aggressively building it back up.
"We had warmed to Barclays on the basis that it wasde-emphasising the relatively low-return investment bankingbusiness ... and we would see a material reversal of thisstrategy as a negative to the investment case," Shore Capitalanalyst Gary Greenwood said.
Staley's appointment is the second time in recent years thatBarclays has named an investment banker as CEO, the last beingBob Diamond, who quit in 2012 over the Libor scandal.
That has drawn concern the bank will put riskier activitiesback at its heart, though McFarlane has described Staley as "aclient guy" who wasn't a trader and whose background iscommercial banking.
Shares in Barclays, which reports its third-quarter resultson Thursday, were up 0.1 percent at 1425 GMT.
Staley's annual pay will consist of a salary of 1.2 millionpounds, a role-based "allowance" of 1.15 million pounds inshares, up to 5.5 million pounds in annual bonus and up to400,000 pounds instead of a pension contribution, the bank said.
SENSITIVE ISSUE
Pay at Barclays is a sensitive issue after past criticismfor outsized bonuses even when the bank performed badly.
"Whilst Mr Staley may well be the best person for the job,any recruitment awards should include performance targets toremove the risk of a return to the culture of reward forfailure," said Ashley Hamilton Claxton, corporate governancemanager at Royal London Asset Management, a Barclaysshareholder, adding: "We also think a pension payment of 33percent of his salary, paid in cash, is overly generous."
Staley will be granted about 1.9 million pounds of Barclaysshares to compensate for an unvested award granted by JPMorgan.
Staley's package is potentially similar to that of HSBC boss Stuart Gulliver, who received 7.6 million poundslast year. Standard Chartered is paying its new CEOBill Winters up to 6.9 million pounds a year.
Lloyds drew criticism from UK bank shareholdersafter paying CEO Antonio Horta-Osorio 11.5 million pounds lastyear. But bosses of U.S. banks typically receive more andJPMorgan CEO Jamie Dimon was paid $20 million for each of thepast two years.
Staley, a keen yachtsman, previously ran JPMorgan'sinvestment bank and asset management business and had been atthe U.S. bank for 34 years before leaving in early 2013 to joinU.S. hedge fund firm BlueMountain Capital Management.
Previous Barclays CEO Antony Jenkins was fired in July aftera clash with non-executive directors over style and the pace ofthe bank's turnaround.
The bank is just over halfway through a three-year plan tocut 19,000 jobs, including 7,000 in the investment bank, stillfaces litigation issues and is trying to improve returns.
Barclays has run into trouble with authorities andregulators over conduct issues, including alleged rigging ofLibor benchmark rates and foreign exchange manipulation. Staleysaid his respect for the role of regulators was unequivocal.
"Core to that objective is having relationships withregulators that are collaborative, not adversarial," he said inthe memo. "There can be no retreat from becoming a values-drivenorganisation which conducts itself with integrity at all times."
Staley, who will move with his family to Britain, joinedJPMorgan in 1979 and worked his way up its ranks to become apossible successor to Dimon, but was sidelined after amanagement reshuffle in 2012 and left a year later.($1 = 0.6535 pounds)
(Additional reporting by Sinead Cruise; Editing by DavidGoodman and David Holmes)
