Fury over £20m exit deal for HSBC boss Geoghegan
HSBC is bracing itself for a political backlash today after details of departing Michael Geoghegan's severance package emerged over the weekend, showing that the bank's chief executive could walk away with more than £20m when he leaves the bank next year.
The Government has urged the banks to show restraint on pay awards as the feeble economic recovery struggles to gain traction and the public sector prepares for thousands of job losses following next month's Comprehensive Spending Review.
Last Friday, the bank confirmed that Mr Geoghegan would leave next March after it broke with 30 years of tradition and passed him over for the chairmanship.
In a statement to the Stock Exchange, the UK's largest company said Mr Geoghegan would be paid £1.42m, "pursuant to the notice provisions of his service contract".
He will also be eligible for a bonus, which will be calculated by the remuneration committee later in the year.
Last year, Mr Geoghegan donated his £4m bonus to charity.
However, it emerged over the weekend that Mr Geoghegan will receive multiples of the amount announced by the bank on Friday, when longer-term incentive plans are added into the equation.
The final value of the incentive plan is unknown and will depend on HSBC's performance in the next few years, but estimates over the weekend ranged from £20m to £36m.
A spokesman for HSBC yesterday described the suggested levels as "inaccurate and sensationalist". He said that Mr Geoghegan would receive the contractual £1.42m, a £200,000 "consultancy fee" and a bonus of as much as £4.28m. He added that it was impossible to predict how much Mr Geoghegan would then receive from the long-term incentive plans.
Lord Oakeshott, the Liberal Democrat Treasury spokesman, said: "HSBC has come through the banking crisis better than most, but this silk-lined parachute for someone that's leaving the bank highlights that HSBC has little interest in British public opinion, and shows why the Banking Commission needs to concentrate on getting the banks to lend to British business and homebuyers."