HSBC shareholders have approved the removal of a limit on bankers’ bonuses, as top bosses faced anger from pensioners for clawing back parts of their payments
HSBC shareholders have approved the removal of a limit on bankers’ bonuses, as top bosses fielded anger from pensioners for clawing back parts of their payments.
The vote took place at HSBC’s annual general meeting (AGM) in London on Friday. The indicative outcome means that HSBC employees classified as “material risk takers” could be pocketing bigger bonuses, having been previously restricted to double their fixed salary.
Following a regulatory shift by the UK’s financial watchdogs last October, the path was cleared for the elimination of the cap on bankers’ yearly bonuses. HSBC has argued that axing the bonus limit will allow the bank greater leeway to lower base salaries and instead reward staff based on sustained performance.
The bank also contends that this move is crucial for attracting and keeping top talent from non-EU global markets where there are no restrictions on variable compensation. However, HSBC’s board faced disgruntled pensioners during the AGM due to the decision to increase bonuses while simultaneously cutting pension payments.
The bank’s executives recommended voting against a proposal put forward by the Midland Clawback Campaign, which sought to abolish a clause in the pension scheme that diminishes payouts for some retirees. The bank has been embroiled in a long-standing dispute with campaigners regarding the “clawback” provision for former members of Midland Bank, which was acquired by HSBC back in the ’90s.
Clawback refers to the policy of reducing the company pension scheme for an employee when they start receiving their state pension. During the AGM, Nancy Ball, leader of the campaign, confronted the board, labelling the feature as a complete “shambles”, insisting that members were not told about it when they worked at the bank.
In response, group chairman Mark Tucker acknowledged: “We understand this is an important and emotional subject and many of those devoted significant parts of your working lives in Midland Bank and HSBC.”
He went on to defend the practice, quoting several legal reviews, studies, and findings from the Equality and Human Rights Commission over the years, maintaining that the clawback feature “is not discriminatory and it was properly communicated to scheme members”.
However, another HSBC stakeholder slammed the feature as a “stealth deduction”, highlighting that about 10,000 individuals part of a Facebook campaign group feel they were kept in the dark about the clawback issue. In response to questions around his personal awareness of the feature during his stint at Midland Bank, HSBC’s chief executive Noel Quinn admitted he was “well aware”.