HSBC becomes latest firm to surrender to shareholder pressure over pay

The giant bank says it will cut maximum remuneration for executives by 7 per cent

The bonus of HSBC chief executive, Stuart Gulliver, was reduced from £3.4m to £3m (Reuters)

Britain’s biggest bank, HSBC, has become the latest major UK firm to yield to investor pressure over the amount of money it pays its top brass.

At its annual general meeting today HSBC said it would slash the maximum amounts its directors could earn by 7 per cent.

This follows major shareholder revolts over pay this reporting season at BP and Anglo American, which have forced the boards of both companies to promise to reconsider their approach.

As well as cutting potential pay-outs, HSBC pledged to reduce the amount of cash given to bosses in lieu of a pension from 50 per cent to 30 per cent of base salary. The bank also said it would make bonus packages for executives subject to a “three year forward-looking performance period”, meaning pay-outs will not be made until three years after they are awarded.

“We had expected that the Remuneration Policy you approved back in 2014 would not need to be refreshed until it expired next year” HSBC’s chairman Douglas Flint told shareholders. “However, regulatory changes as well as responding to shareholder feedback have caused us to make some revisions to this.”

The reforms were approved by 96 per cent of the HSBC shareholders who voted.

Chief executive Stuart Gulliver was awarded £7.34m for his work in 2015, down from £7.62m in 2014. His bonus fell from £3.4m to £3m. The chair Douglas Flint’s total remuneration was flat on last year at £2.5m. Both men are expected to leave the bank within the next two years.

Pay for HSBC bankers was also reduced, reflecting a torrid year for the bank in which revenues fell and it was embroiled in a host of scandals including accusations of facilitating money laundering through its Swiss subsidiary. The bank said last year’s bonus pool had been reduced by $431m (£300m) to “reflect fines, penalties and the cost of customer redress” in 2015.

The bank was charged $1.9bn over the year by various regulators around the world. Last June it paid a record $34m to the Geneva authorities in order to avoid prosecution over laundering.

Earlier this month 59 per cent of BP shareholder rejected a proposed 20 per cent increase in pay for its boss Bob Dudley, after a year in which the oil giant posted a record loss. And yesterday 42 per cent of Anglo-American shareholders voted against the £3.4m remuneration package for chief executive Mark Cutifani.

Asia-focused HSBC said in February that it had decided against moving its domicile out of the UK and said it would keep its headquarters in Britain for decades to come. The bank has a market capitalisation of $134bn. Its shares have fallen 13 per cent since the start of the year and were trading around 1.6 per cent lower this afternoon.