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HSBC shareholders back £7.3m pay package for chief executive

Published 22/04/2016

HSBC is holding is AGM
HSBC is holding is AGM
Douglas Flint is group chairman of HSBC.

HSBC shareholders have overwhelmingly backed a pay package of £7.3 million for chief executive Stuart Gulliver at the bank's annual general meeting (AGM).

The banking giant saw 90.49% voting in favour of the firm's remuneration report, which also included a pay deal for chairman Douglas Flint worth £2.49 million for 2015.

However, the lender said it would take steps to review pay packages for executive directors following concerns from shareholders.

The lender said at its AGM that it is looking to reduce the amount of money handed to executive directors in lieu of a pension from 50% to 30% of their base salary, while also making long-term incentives subject to a three-year forward-looking performance period.

It said the new policy could reduce the maximum amount its executive directors could earn by 7%.

Mr Flint said at the AGM: "We had expected that the remuneration policy you approved back in 2014 would not need to be refreshed until it expired next year.

"However, regulatory changes as well as responding to shareholder feedback have caused us to make some revisions to this, and so we are bringing it back for your consideration this year.

"The impact of the new policy is to lower the maximum opportunity for the executive directors by around 7%."

Mr Flint was handed a total pay package worth £2.49 million for 2015, down on £2.53 million in 2014, according to HSBC's annual report.

Mr Gulliver received remuneration - including salary, pension and bonuses - worth £7.34 million for 2015, down from £7.61 million the year before.

HSBC saw annual pre-tax profits rise 1% to 18.9 billion US dollars (£13.2 billion) when it announced its annual results in February, but fell short of analyst expectations of 21.8 billion dollars (£15.2 billion).

The lender came in shy of full-year predictions after positing a fourth-quarter loss of 858 million dollars (£604 million), partly driven by legal costs and the decision to dispose of its business in Brazil.

It comes as shareholders in oil giant BP voted to reject its remuneration report for the last year, which included a pay deal of 19.6 million dollars (£13.8 million) for chief executive Bob Dudley.

Mining giant Anglo American has also faced investor protests after 42% of shareholders voted against chief executive Mark Cutifani's £3.4 million pay package for 2015.

Speaking about Britain's forthcoming referendum on Europe, Mr Flint said the vote remained for the British people, but the bank's economic research was "very clear about the advantages of Britain being at the heart of a reformed EU".

He said: " From our own narrow perspective, a decision to leave could require a restructuring of some of HSBC's wholesale operations based in the UK.

"This would clearly depend upon the terms on which the UK would have access prospectively to European markets should the UK vote to leave.

"We have a major bank in France so have the option to move some staff currently in London to Paris if required."

He added: "We believe that the UK would enter a period of great economic uncertainty in the event of a vote to leave and should the UK economy slow and economic conditions deteriorate as our research suggests, in at least the short to medium term, this would affect many of our customers in the UK and the economic environment we operate in.

"This is likely to have a negative impact on HSBC."

HSBC, which was featured in the Panama Papers leak, denied allegations at the beginning of this month that it was helping clients to avoid tax by using complicated offshore structures.

Mr Flint said: "The so-called Panama Papers have highlighted once again how perfectly legal corporate structures can be abused to facilitate money laundering and tax evasion or to obscure ill-gotten gains."

He said: "We have already made great strides to enforce transparency and full disclosure as a consequence of the issues we have been dealing with in our Swiss private bank."

He added: "While there are lessons to be learned from the revelations, the circumstances alleged in the Panama Papers with regard to HSBC are largely historical, in some cases dating back 20 years, and so pre-date the tough financial crime, regulatory compliance and tax transparency standards which HSBC has put in place in recent years."

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