HSBC escapes the shareholder spring effect

HSBC yesterday sidestepped the shareholder backlash over corporate pay with just 10.2 per cent of investors rejecting the bank’s remuneration policy at its AGM.

The figure was also well down on the 18.7 per cent of votes cast against last year’s pay report at Europe’s largest bank.

Shareholder body Pensions & Investment Research Consultants (Pirc) had advised members to vote against the remuneration report which included an £8 million pay package for chief executive Stuart Gulliver last year.

Ahead of yesterday’s meeting it had raised concerns over a pay structure which it said placed a bigger emphasis “on rewarding the chief executive for still being employed after a few years, rather than for leading the bank to outperform”.

But John Thornton, head of HSBC’s remuneration committee, defended the bank’s strategy on pay.

“We believe we have now got a system where the interests of the senior people are now tied very closely to the shareholders,” Thornton said after the meeting.

Shareholder rebellions have hit companies as diverse as Aviva, Barclays, Cairn Energy and Trinity Mirror in recent weeks. Smaller firms including Aberdeen-based Faroe Petroleum have also seen large votes against their pay reports.

Business Secretary Vince Cable recently finished a consultation on binding shareholder votes on executive pay, which would require salary packages to have the support of 75 per cent of votes.

PERRY GOURLEY