HSBC faces rebellion over £120m executive bonus plan

HSBC is set to be the next big British company to feel the wrath of its shareholders over directors' pay, when plans to make as much as £120m in bonuses available to its executive team will be presented at the bank's annual general meeting on Friday.

The payments, available over the next three years in cash and shares, would be linked to performance but a number of investors are already raising the stakes of the meeting by criticising the move in advance. Eric Knight, who runs Knight Vinke Asset Management, and who last year wrote to HSBC's chairman Stephen Green saying he thought the bank was as much as 50 per cent undervalued, will be at the meeting and has already been critical of the package.

Mr Green, who earns a basic salary of £1.25m a year, will not benefit from the bonus scheme. The bank's chief executive, Mike Geoghegan, could earn as much as 4m in bonuses, on top of his £1m-a-year salary, and up to £7m as part of the bank's long-term incentive plan, according to the proposals. Douglas Flint, the fin-ance director, the Asia chief executive Sandy Flockhart and chairman Vincent Cheng are also proposed beneficiaries. Stuart Gulliver, HSBC's markets head, and the highest paid executive at the bank, is not included in the new structure.

The bank said in a letter to shareholders that the move would put it on a more equal footing with the world's biggest banks and that "the objective was to ensure closer alignment of remuneration arrangements with HSBC's business strategy, taking into account competitive market practice". Mr Knight said on his website that this did not take shareholders' interests into account, adding: "This means that HSBC is measuring itself against the largest banks instead of measuring itself against the best performing banks." HSBC did not return calls yesterday.

The decision to increase senior executives' bonuses will be taken just a week after Hector Sants, the chief executive of the Financial Services Authority, said that the City watchdog is planning to take bankers' bonuses into account when it assesses banks' exposure to risk.

Shareholders at a number of FTSE 100 companies have expressed anger at pay awards in recent weeks. Last Wednesday, GlaxoSmithKline stockholders protested at a 2.5m retention payment made to its head of pharmaceuticals Chris Viehbach-er, who lost out to Andrew Witty in the race to succeed Jean-Pierre Garnier as chief executive. Only 61 per cent of votes cast were in favour of the payment.

Royal Dutch Shell shareholders also protested last week at plans to give three directors 1m each. A third of those voting on the plan last Tuesday rejected it.

While HSBC shareholders are likely to mount a protest on Friday, the resolution will almost certainly be backed. A spokesman for Mr Knight said that while the issue of directors' pay was important, more of an objection would be made about other areas where the bank was underperforming, such as the United States.

The bank reported this month than first-quarter profits were up on last year after growth in its emerging markets business. In March, it reported writedowns of $17.2bn, largely from its exposure to the US housing market.

Meanwhile, Knight Vinke's European Corporate Governance Fund underperformed the FTSE All World Europe Index in the fourth quarter of 2007 as its investments in HSBC and Project Adriatica investments in four European energy companies weighed on returns, according to data prepared for Calpers, the California pension fund. The return in the fourth quarter was -1.2 per cent compared with a benchmark return of 0.3 per cent, the report said.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'