HSBC forced to defend city bonuses
HSBC has been forced to defend bonuses for City high-fliers as it revealed its boss received an annual pay package worth a potential £7.2 million.
Profits rose 15% to £13.8 billion in 2011 - among the biggest ever recorded by a British company - after a strong performance in emerging markets and a resilient performance in the UK.
But chief executive Stuart Gulliver came under fire after it emerged his £1.3 million salary will be boosted by a £2.2 million bonus and long-term incentives possibly worth up to £3.8 million.
The report revealed that 170 members of staff earned more than 1 million US dollars (£629,800) last year while 205 key employees in the UK earned a total of 84.2 million US dollars (£53 million).
The pay figures have sparked a fresh row over City pay as the group, which employs 50,000 people in the UK and 288,000 globally, last year announced plans to cut 30,000 jobs over the next two years in a cull that will affect 10% of its workforce.
David Fleming, national officer at union Unite, said: "How can Stuart Gulliver have a clear conscience over his reward package of £7.2 million, while thousands of staff face uncertainty about their jobs?"
There was further controversy because the bank is set to fund the cash parts of its larger bonuses by creating and selling shares. This will help it build up its cash reserves, as called for by Bank of England governor Sir Mervyn King, but runs the risk of angering investors by diluting their stake in the bank.
Chairman Douglas Flint, who is himself set to receive £3.4 million for 2011, admitted that "a few people" were paid "extraordinarily well" but insisted it needed to attract and retain the best staff. He added that HSBC was the second biggest payer of dividends in the UK and said its success helped boost people's long-term savings and pensions.
And Mr Gulliver said there was "puzzlement" over anti-business sentiment in the UK, saying: "If you really want to get growth to offset the austerity measures, you need investment and you need banks to continue to lend, which is what we are trying our hardest to do."
The group, which is based in London, said it paid 1.5 billion US dollars (£944.7 million) of tax in the UK, equivalent to about two thirds of the profits made in the UK bank. There are fears that the bank may uproot its head office to Asia after the Government announced a costly shake-up of the industry, which will force banks to separate their retail and investment banking arms and a levy on banks' balance sheets.