Financial News

  • 24 February 2014, 16:08

HSBC Chief Exec Gulliver Lands 1.8m Bonus

HSBC is to hand its chief executive a bonus of 1.8m as part of a 7m-plus overall pay deal for 2013, Europe's largest bank will disclose on Monday.

Sky News can reveal that Stuart Gulliver will receive the annual incentive award, which will be lower than the one given to him last year despite an improvement in the bank's pre-tax profits.

Underlying pre-tax profits at HSBC are forecast by analysts at Standard Chartered to have risen from $18.8bn (11.3bn) 2012 to $22.2bn (13.3bn).

Under the terms of his contract, Mr Gulliver receives a basic salary of 1.25m, and is eligible for an annual bonus of up to three times that sum, as well as a deferred share award under HSBC's long-term incentive plan (LTIP) of up to 7.5m.

A City source close to the bank said on Saturday that HSBC's remuneration committee had decided to award Mr Gulliver just over half his maximum bonus, equating to about 1.8m, as well as approximately 3.7m under the LTIP arrangements.

As in previous years, Mr Gulliver is understood to have received a cash payment in lieu of pension contributions, taking his package to more than 7m in total, the majority of which is deferred and subject to clawback arrangements.

In addition, he receives a number of other allowances such as those related to his bank-owned accommodation while he is in Hong Kong.

The decision to reduce Mr Gulliver's annual bonus from 1.95m to about 1.8m is likely to be welcomed in the City given that HSBC is expected to hand out higher dividends to investors on Monday.

Douglas Flint, the bank's chairman, is expected to say that the decisions on executive remuneration underline HSBC's commitment to aligning rewards for employees more closely with the long-term interests of investors.

Mr Gulliver's LTIP award, which is larger than the one last year of 3m, is based on strict criteria relating to the financial performance of HSBC as well as the effectiveness of the bank's compliance functions and other behavioural factors.

In 2012, Mr Gulliver's bonus and LTIP award were reduced partly to take account of a 1.2bn fine by US authorities for violating anti-money laundering laws.

The chief executive's pay deal will form part of a 2bn-plus bonus pot revealed by Sky News on Friday and which will be confirmed on Monday.

The move to lower the overall group payout ratio from 17% last year to in the region of 15% this time has been led by Sir Simon Robertson, the deputy chairman of HSBC, who chairs the bank's remuneration committee.

That ratio includes fixed as well as variable pay, and comes as major banks are drawing up schemes to pay senior staff to combat the impact of new European Union remuneration rules.

Around 1,000 staff at HSBC, including Mr Gulliver, will receive new quarterly share allowances which count towards fixed pay for the purpose of calculating annual variable pay awards.

HSBC will become the first bank to detail the quantum of these equity allowances, which are not expected to increase the aggregate potential pay of executives such as Mr Gulliver.

The decisions on bonuses at HSBC are likely to be contrasted in the City with those made earlier this month by Barclays, which sparked fury among some leading shareholders by increasing bonuses despite a significant fall in profits.

Despite the fact that HSBC is predicted to have made approximately two-and-a-half times as much profit as Barclays in 2013, the two banks' bonus pools are almost identical.

HSBC also compares favourably to Barclays on rewards for shareholders, paying out a substantially higher proportion of profits to the bank's owners than its British rival.

HSBC declined to comment on Saturday.

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