Backing for HSBC’s executive pay as chief takes home £7.5m

Chief executive Stuart Gulliver took a 14 per cent pay cut in 2011, after earning £8.4m in pay in 2010 when he was in charge of the investment banking division.

But 10.1 per cent of investor votes went against HSBC’s remuneration report following criticism from shareholder body Pensions & Investment Research Consultants (Pirc).

However, this is down on the near 19 per cent of shareholder votes that went against the 2010 pay report. HSBC said 86.3 per cent of votes cast were in favour of the resolution on remuneration while 13.7 per cent of shareholders either voted against the plan or withheld their votes.

HSBC chairman Douglas Flint appeared to defend the bank’s high rewards during the meeting.

He said: “We continued to develop a truly meritocratic culture because as international competition for the best talent intensifies, we need to ensure that HSBC is making the most of the skills and abilities of our people and encouraging them to reach their full potential.”

HSBC warned that the eurozone crisis and increased regulation could affect its performance. It said it was looking to deploy capital in markets where it can expect higher growth.

“There remain factors affecting our performance that are beyond our immediate control – from the eurozone to the future regulation of the industry – we have gained real traction over the past year in those areas we can control,” Mr Gulliver told the annual meeting.

HSBC re-affirmed its target of doubling the annual revenue boost it expected from its turnaround plan to $2bn.

The group, which reported a 15 per cent rise in profits to £13.8bn in 2011 but saw its share price slide 23 per cent, is the latest company to be stung by shareholders following discontent over pay.

In its alert note, Pirc advised members to vote against the remuneration report.

It said: “It is not clear, in the remuneration report, why a bigger emphasis was made on rewarding the chief executive for still being employed after a few years, rather than for leading the bank to outperform.”

The so-called ‘shareholder spring’ that has rocked boardrooms over recent weeks has been driven by anger that huge salaries and even bigger bonuses are out of kilter with falling share prices and pressure on profits. Business Secretary Vince Cable and his department have finished a consultation on binding shareholder votes, which would mean pay deals require the support of 75 per cent of votes, and will update on progress next month.

There has been a round of high profile shareholder rebellions over executive pay at companies like Inmarsat and Prudential in the phenomenon dubbed the ‘shareholder spring’.

Investor resistance to big pay rises at major firms has also led Aviva boss Andrew Moss, and Sly Bailey, head of newspaper group Trinity Mirror, to quit this month.

Last month, more than a quarter of Barclays’ shareholders voted down the bank’s pay plans at a heated meeting where angry investors heckled and shouted at the bank’s top brass.

Barclays said 26.9 per cent of its investors opposed its plan. Including abstentions, the number who chose not to back the resolution was 31.5 per cent.

The shareholder fury reflects public concern that an industry whose excesses led to the global downturn is still awarding multi-million pound payouts.

Chief executive Bob Diamond sparked anger among shareholders when it emerged he would receive £17.7m in salary, bonus, benefits and vested long-term share awards last year, despite admitting his bank’s performance was “unacceptable” in 2011.

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