HSBC in clash with shareholders over bonus to relocated ceo
HSBC, the global bank that has been praised for its handling of the financial crisis, has clashed with shareholders over a proposed pay rise for its executive team.
Investors are understood to be particularly unhappy with the sum that HSBC wants to pay Michael Geoghegan, its chief executive, who relocated his office to Hong Kong earlier this month. Geoghegan was reportedly paid GBP1.7 million in 2008, down from GBP3.5 million in 2007.
The bank said the move to Hong Kong recognised that Asia was a significant source of growth, but onlookers have pointed out that Michael Geoghegan’s relocation comes as the UK prepares to introduce a 50 per cent income tax in April for high earners.
It is unclear whether Geoghegan’s new pay deal will fall under the Hong Kong tax regime, making it even more lucrative. Hong Kong’s top rate of personal income tax is 15 per cent. HSBC’s showdown with investors will add to the storm about bonuses, which has been the focus of the banks’ reporting season for 2009.
Barclays added to the tensions yesterday when the bank announced a compensation pool of about GBP4.5 billion, which includes a bonus pot of GBP2.3 billion, alongside record profits of GBP11.2 billion.
HSBC will reveal details of its 2009 pay when it publishes its annual report on March 1 alongside its full-year results. An HSBC spokesman said: “We have an excellent record of transparency — one of very few banks to publish our remuneration report on our results day.
“HSBC has not taken taxpayer money and we have been profitable, generated capital, paid dividends and very much remained open for business throughout the crisis.” HSBC’s executive directors did not take a bonus in 2008 and have not received rises in base pay for three years.
Barclays, like HSBC, avoided a government bailout and has insisted on determining its own pay policies. However, Barclays will still attempt to avoid a public backlash by emphasising that it has restricted staff costs to 38 per cent of revenue, the lowest ratio for a decade.
