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HSBC sketches out remuneration revamp

Bank puts to investors a plan to limit bonuses and long-term incentive schemes

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HSBC laid out on Friday some of the plans it is putting to shareholders for a revamp of its remuneration structure, which was the source of so much discontent among investors 12 months ago.

Last year’s investor meeting was marred by protests about the amounts of money Europe’s biggest bank pays its managers in bonuses but shareholders are now set to vote on limiting annual bonuses to ten times basic salaries.

A longer vesting period on share rewards for employees is also proposed in an effort to cut down on managers cashing in on their holdings.

“We believe these proposals will lead the way on better alignment of employee incentivisation with strategy and long-term sustainable value creation for shareholders,” HSBC said in a statement on Friday.

Awards can also be clawed back, in line with regulatory requirements on pay being imposed across Europe. HSBC has no plans to impose a limit on salary levels.

The new plan puts a tighter cap on the value of potential share awards granted as part of a long-term incentive plan, restricting these to six times salary from seven times.

Bonus payouts, made in shares and cash, would be capped at three times salary rather than four.

Guy Jubb, head of governance and stewardship at UK funds firm Standard Life Investments, one of HSBC's fiercest critics on pay in recent years, swiftly welcomed the proposals and said they deserved support from other long-term investors.

“It demonstrates that HSBC has taken to heart the lessons from the banking crisis and provides a platform to reward and incentivise prudential and profitable growth,” Jubb said.

HSBC's proposed changes comes a day after shareholders in BP challenged its remuneration report at its first annual meeting since the Gulf of Mexico oil spill.


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