EXECUTIVE PAY

Corrected: HSBC rewards its top 15 managers with HK$186 million in stock options

PUBLISHED : Wednesday, 02 March, 2016, 5:20pm
UPDATED : Friday, 04 March, 2016, 4:54pm

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The bonus season has arrived at Britain’s largest bank, HSBC. Despite posting the worst return to shareholders since the global financial crisis, many more millionaires were made at the bank, with HSBC paying out some HK$186 million worth of stock options to its 15 most senior managers, according to a filing with the Hong Kong Stock Exchange.

Over the past week since HSBC’s result announcement, three brokerages including Bernstein have downgraded HSBC’s shares, rating them either “underperform” or “sell”.

As part of the awards, the bank issued HK$47.5 million worth of non-deferred shares to the senior executives, a sizeable chunk of that withheld for tax purposes.

Most shares granted to the executives must be held for at least six months. Some of the shares can only be sold when the holder ends their employment with the bank.

An HSBC spokesman in Hong Kong contacted by the South China Morning Post declined to comment.

The awardees include some of the most senior managers of the business units that group chief Stuart Gulliver is counting on to deliver profits.

HSBC has struggled in recent years, delivering a return on equity at below the cost of capital in each of the past five years.

Gulliver has vowed to improve things, laying out a target to raise returns on equity to more than 10 per cent by 2017. This pledge appeared in its latest results announcement, and has been broadcast internally to HSBC staff as the bank proceeds with its cost-cutting measures.

But analysts are not optimistic that a turnaround is possible in the next three years. The current average analyst forecasts for returns in 2016, 2017 and 2018 are 7.1 per cent, 7.5 per cent and 8.7 per cent, according to data from Thomson Reuters. HSBC last week posted an annual return on equity of 7.2 per cent, its lowest since the global financial crisis.

In terms of the size of the packets, Gulliver was in the top spot with share options worth HK$26.6 million. In second was investment banking chief executive Samir Assaf, who received HK$17.8 million. Chief finance officer Iain Mackay took the third spot with a share bonus package worth HK$17.4 million. Marc Moses, group chief risk officer and Patrick Burke, president and chief executive of HSBC USA, received HK$16 million and HK$14.5 million respectively.

The non-deferred share awardees included Assaf, who received HK$5.8 million of non-deferred shares. Other awardees included John Flint, chief of staff to the group chief and HSBC’s head of strategy, Burke, Stuart Levey, chief legal officer, and Andy Maguire, the group chief operating officer.

Peter Wong, HSBC’s Asia Pacific chief, took home HK$14.3 million.

Corrections & clarifications

The original version of this story published on March 3 stated erroneously that most senior executives of HSBC who recently received non-deferred shares "chose to sell a good portion back to the bank”, that it was unclear why they had done so, and that their actions were not very reassuring to retail investors. HSBC’s filing in fact stated that a good portion of the shares were withheld for tax purposes, as occurs routinely with such transactions, and the sale thus did not reflect directors’ views on the company outlook.

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