HSBC seeks new non-executive directors in wake of tax evasion scandal

HSBC is preparing to bring in new non-executive directors to overhaul a board that has faced intense scrutiny following revelations of its Swiss arm’s involvement in tax evasion.

The appointment of headhunters MWM Consulting sparked expectations that one of the new non-executives could ultimately replace Douglas Flint, who has been on the board of the bank since 1995, and chairman since 2010.

The bank would not comment on a report by Sky News that Flint would step down as chairman no later than the annual meeting in 2017.

Even before the scandal inside its Swiss banking arm was exposed by the Guardian and other publications, the bank had promised shareholders it would break with tradition and appoint its next chairman from outside its ranks.

The bank has been scrambling to repair its reputation since the revelations in February about the way its Swiss banking arm was helping customers avoid tax in 2005 and 2007. These events have also promoted scrutiny of its board composition, including the role of Rona Fairhead, the former Pearson executive who now chairs the BBC Trust.

Fairhead, who receives a £500,000-a-year fee from HSBC, is among those who would be expected to leave the board, where she has had a seat for nine years – the point at which shareholders traditionally no longer regard non-executive directors to provide independent scrutiny.

Sir Simon Robertson, the former Goldman Sachs banker, has already been on the board for more than nine years. He had originally intended to step down at this year’s annual shareholder meeting on 25 April, but will now stay on a year.

Sam Laidlaw, the former boss of Centrica who was recently appointed to chair the committee that sets pay deals at the bank, is another long-standing non-executive director. He is taking over as chair of the bank’s remuneration committee from Robertson.

To head off any protest votes at next week’s meeting, the bank has already defended the tenure of Fairhead and Robertson. HSBC said in March the board regarded the two non-executives as “independent in character and judgment”.

The board is expected to face questions at the meeting, being held a month earlier than usual, about the activities of its Swiss banking arm and its broader strategy. Chief executive Stuart Gulliver has been cutting back the number of countries in which the bank operates and reorganised its structure in an attempt to bolster performance.

Gulliver has admitted to being shamed by the Swiss bank scandal and defended his status as being non-domiciled in the UK for tax purposes.

Ahead of last year’s annual meeting, HSBC was forced to reconsider a potential bonus for Flint and in this year’s annual report had said it was reviewing his £1.5m salary – which could be interpreted as indicating a rise.

Powered by article was written by Jill Treanor, for on Tuesday 14th April 2015 19.24 Europe/ © Guardian News and Media Limited 2010


JefferiesAnd the Best Place to Work in the global financial markets 2018 is...

Register for HITC Business News