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HSBC FACES REVOLT ON £120M DIRECTORS' PAY

Britain's biggest bank is facing a shareholder backlash

Monday May 26,2008

By David Shand

HSBC, Britain’s biggest bank, faces a shareholder backlash this week over a controversial pay package in which five directors could share £120million over three years.

The proposed cash-and-shares deal could face a significant protest vote at a shareholder meeting on Friday, even though it would be awarded in full only if the executives hit performance targets well ahead of City forecasts.

Chief executive Mike Geoghegan would potentially reap the biggest reward, quadrupling his £1million salary with a bonus as well as benefiting from a long-term incentive plan equivalent to seven times his salary.

Finance director Douglas Flint would be on the same remuneration scheme. Chairman Stephen Green would benefit from the long-term incentive plan but not the bonus scheme.

The new pay deal is designed to bring HSBC, which describes itself as the world’s local bank, close to an equal footing with international rivals such as US giants Citigroup and Bank of America.

HSBC said it wanted to prevent its executives being paid “below the average of their peers at other global institutions”.

But corporate governance group PIRC said the plan was excessive and recommended shareholders vote against it.

The Association of British Insurers showed its concern by issuing an “amber-top” alert to investors.

HSBC’s remuneration committee can block a payout if it feels the directors are not acting in the long-term interests of shareholders.

Among dissenting voices is likely to be Eric Knight, of activist investor Knight Vinke, which also wants HSBC to dispose of its US consumer loans business HFC.

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