HSBC Exec Pay in Crosshairs

Pressure to downsize pay packages of HSBC directors has increased in anticipation of its annual meeting next week. Corporate governance experts have questioned the size of HSBC director pay packages compared to their performance targets, according to a Times Online story.

 

PIRC, a leading corporate governance advisor in the U.K., is recommending that shareholders vote against HSBC's remuneration plan at the bank's annual meeting next Friday. “We consider the combined level of potential awards to be excessive. Average salaries are currently at the top end of the U.K. sector,” PIRC said.

 

The bank's maximum pay package is 250 percent of salary for the annual bonus plan and 700 percent of salary for the HSBC share plan. The share plan uses earnings per share and total shareholder return over a three-year period as performance measures, which Pirc called “poor targets.”

 

"Although the scheme use two performance measures, they are not utilised concurrently, which we consider to be best practice.”

 

Last week, the Association of British Insurers (ABI) issued an amber warning on HSBC's pay proposals, which identified areas of potential concern and advised shareholders to carefully consider the scheme.

 

HSBC has been under attack from Knight Vinke, the activist investor, since last year primarily over its strategy. However, the investor has highlighted concerns about HSBC's pay package, in particular the 2005 bonus worth millions to directors in spite of slow profits growth.

 

Pirc said that it was also opposed to HSBC's proposed amendments to the Share Plan performance conditions, describing them as not sufficiently chall