HSBC shareholders in pay revolt over board remuneration

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Nearly one in four shareholders voted against HSBC’s pay and bonus deals at the bank’s annual general meeting in London today, as its directors faced angry questions from shareholders about its Swiss banking arm and the composition of its board.

The deputy chairman of the bank, Sir Simon Robertson , was forced to speak out in support of both the chairman and the chief executive after questions from shareholders about their position.

He told the packed meeting that the board backed Douglas Flint, the chairman, and Stuart Gulliver, the chief executive who was paid £7.6m in 2014. “I want to make it absolutely clear the board has full confidence in both Douglas and Stuart and the rest of the management team,” Robertson said.

“We have no plans to change any of them,” said Robertson, who is beginning his tenth year on the board.

Robertson, along with two other directors, then witnessed a protest vote against his own re-election to the board - because the three sit on the committee that sets director pay.

Questions about the position of Rona Fairhead, the non-executive who sits on the bank’s risk committee and received £513,000 in pay last year, were also raised. Flint said Fairhead was standing for election to the board for just one more year - so that she could then focus on her other role running the BBC Trust.

One shareholder shouted “resign” as Fairhead stood for her vote for re-election to the board. One shareholder described her pay as “obscene”. However, she was re-elected with 96% support.

The agm took place just hours after the bank stunned the City by announcing a review of whether it should remain headquartered in the UK, where it has been based since 1992 following the takeover of Midland Bank. The review was revealed in Flint’s formal statement to the agm.

Flint said the decision to consider leaving Britain was made after discussions with investors in Hong Kong earlier this week: “I said at our informal meeting in Hong Kong on Monday, we are beginning to see the final shape of regulation and of structural reform, including the requirement to ringfence in the UK. As part of the broader strategic review taking place, the board has therefore now asked management to commence work to look at where the best place is for HSBC to be headquartered in this new environment.”

He added: “The question is a complex one, and it is too soon to say how long this will take or what the conclusion will be; but the work is underway.”

Robertson told reporters after the AGM that the review was partly due to the requirement on banks to ringfence their high street operations away from their investment banking operations - the so-called Vickers reforms.

He also acknowledged that he and fellow directors Sam Laidlaw and John Lipsky had received votes against their relection to the board - of around 13% - because they are on the remuneration committee. Board directors usually expect to be elected with near total backing of shareholders.

Flint apologised to shareholders for the scandals which have emerged at the bank, most recently the leak of account details of Swiss bank customers showing they were helped to evade tax.

The leaked files also showed that Gulliver, who benefits from non-dom tax status, had had an account in Panama.

Shareholder Michael Mason-Mahon , a regular attendee at the bank’s agm, sparked a moment of humour when he asked his series of questions in a Panama hat. There was laughter - including from the members of the board assembled on the stage - when he said he had brought one as a present for Gulliver.

Flint said: “HSBC has paid a heavy price. Our reputation has been damaged and the financial burden of the unacceptable behaviour has been borne by you, our shareholders, in fines, penalties, additional costs and the opportunity costs arising from diversion of management time - this is clearly wrong”.

Outside the agm, there were protests from tax campaigners who arrived in a small yellow car and dressed as champagne-swilling City workers.

Powered by Guardian.co.ukThis article was written by Jill Treanor, for theguardian.com on Friday 24th April 2015 16.33 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010

 

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