Almost a third of investors refuse to back HSBC pay

Investors delivered a bloody nose to HSBC over executive pay on Friday, as almost a third refused to approve the bank's remuneration report at its annual meeting.

A chorus of complaints from small shareholders highlighted a range of issues at the bank, from pay and bonuses to the many allegations of misconduct hanging over the bank.

This shareholder rebellion came in spite of an attempt by the bank to adjust levels of variable pay to reflect the penalties and fines it incurred last year.

Sir Simon Robertson, deputy chairman, said the bank had imposed a $22m cut in its $3.7bn bonus pool to reflect recent fines - including a settlement last year for foreign exchange rigging.

He pointed out that this had resulted in a £1.1m deduction from the pay packet of Stuart Gulliver, chief executive, which was slightly down on the previous year at £7.6m.

However, investors seemed unconvinced that the bank was listening to their concerns, and their opposition to the bank's pay proposals increased markedly compared with last year.

In total, 23.7 per cent of votes were cast against the bank's remuneration report, up from 16 per cent and 11 per cent in the previous two years.

Including votes that were withheld, almost 30 per cent of investors declined to give their support to the bank in the non-binding vote.

Speaking after the poll, Sir Simon sounded resigned to the scale of the protest, saying: "Pay is such a controversial issue nowadays, it is almost expected."

He also suggested that the high level of votes against his re-election to the board reflected the fact that he chairs the remuneration committee. "I've learnt to live with it," he said.

More than 10 per cent of investors voted against his re-election, as well as that of fellow board members Sam Laidlaw and John Lipsky.

Sir Simon told shareholders that the board had given its full support to both Stuart Gulliver, chief executive, and Douglas Flint, chairman.

"I thought this might come up, so I want to make it clear," he said. "We have no plans to change any of them." Mr Gulliver's re-election was backed by 99 per cent of investors.

But Mr Flint did say that Rona Fairhead, an HSBC non-executive director and chair of the BBC Trust, would step down from the bank's board next year.

Investors have been tested by HSBC's faltering financial performance, its underperforming share price, and a tax evasion scandal at its Swiss unit.

Both Mr Flint and Mr Gulliver were questioned by MPs over the bank's activities recently, with the latter also facing scrutiny over his personal tax affairs.

Politicians criticised Mr Gulliver's past use of offshore structures in Panama and Switzerland, which he said were to hide the size of his pay cheque from colleagues.

One shareholder raised a laugh when he offered to give Mr Gulliver a Panama hat, saying it was "in case he wasn't given one when he opened his account in Panama".

Mr Gulliver confirmed an earlier report in the Financial Times that he would present a new strategic update to shareholders on June 9.

The chief executive, who is expected to announce plans to retreat from some key retail banking markets including Brazil and Turkey, said: "The cost of operating a global business model has increased significantly."

He said the bank would seek to invest in growth, increase its dividend, tighten its controls and culture and "continue the process of simplifying the business, making it easier to manage and control".

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