HSBC chief's pay bonanza cancelled
HSBC chief executive Michael Geoghegan may have relocated to Hong Kong but he has not escaped the long arm of the British government, which has indirectly scotched the banking giant's plans to give him a pay rise.
The bank has shelved its goal to raise Geoghegan's salary 40 per cent to GBP1.5 million (HK$18 million) from GBP1.07 million, British media reported. This followed a shareholder revolt evidently inspired by the government, which has been eager to punish bank chiefs for the nation's financial crisis.
The HSBC chief was not paid a cash bonus last year after the bank's dismal performance in 2008.
Earlier this month, Britain's City minister Lord Myners fired off a strongly worded letter to 50 of the country's leading investment funds demanding that they urge banks to show restraint on executive pay.
An HSBC spokesman declined to comment. The bank's remuneration committee will formally recommend a salary package for Geoghegan and the rest of HSBC's board tomorrow, before revealing its decision on Monday alongside the bank's 2009 financial results.
But a person familiar with Geoghegan's personal affairs said: 'The British government has been keen for banks to toe the line.'
The bank was set to increase HSBC group finance director Douglas Flint's salary to GBP900,000, the Financial Times said, but is now likely to freeze his base pay.
The HSBC chief is also facing pressure to waive his annual bonus for the second year running.
In the past week, chief executives at Barclays, RBS and Lloyds Banking Group have all said they will forgo their bonuses for 2009.
This comes after a long-running media storm in Britain over 'fat cat' banker pay, which has escalated in the run-up to the country's general election, expected in May.
A year ago, the Daily Mirror, which broadly supports the incumbent Labour Party, branded Lloyds Banking Group chief executive Eric Daniels an 'arrogant bank boss' and an 'out-of-touch fat cat'. British public figures from former deputy prime minister John Prescott to left-wing folk singer Billy Bragg have also led online campaigns against British bank chiefs taking bonuses.
Geoghegan, along with Flint and HSBC's asset management head Stuart Gulliver, elected not to take any bonus for 2008, a year in which the bank performed dismally after racking up losses at its US subprime mortgage lender Household Finance. RBS chief executive Stephen Hester, waived his expected GBP1.6 million bonus for 2009. RBS, which came unstuck after previous chief executive Fred Goodwin's ill-fated decision in 2007 to overpay for Dutch lender ABN Amro, has offloaded GBP325 million of toxic assets onto the British government and is now 95 per cent owned by British taxpayers.
Lloyds Banking Group, which was formed by a shotgun wedding of conservative bank Lloyds TSB with the stricken Halifax Bank of Scotland in 2008 and is now 43 per cent owned by British taxpayers, has made the same move as RBS on bonuses.
Last week, Lloyds' Daniels agreed to give up the GBP2.3 million bonus he anticipated receiving for 2009. Sir Win Bischoff, Lloyds' chairman, said Daniels' move was an act of sympathy with the bank's 30 million customers, many of whom are experiencing financial hardship.
HSBC has never accepted any British government assistance. But Barclays, whose president Bob Diamond and chief executive John Varley said last week they would turn down their performance awards for 2009, did not accept any taxpayer assistance either.
Muffled roar
From GBP1.07 million, the annual pay of HSBC chief executive Michael Geoghegan was supposed to rise to: GBP1.5m
