HSBC Holdings is to hand its new chief executive a pay package potentially worth more than £15m as part of an overhaul of its bosses’ remuneration triggered by the government’s scrapping of the EU bonus cap.
Sky News has learnt that Europe’s biggest lender, which has a market capitalisation of more than £147bn, is putting the finishing touches to an overhaul of CEO Georges Elhedery’s pay deal ahead of its annual results this month.
HSBC is understood to have been consulting leading shareholders on the plans, which will involve increasing his maximum pay to just over £15m, in recent weeks.
City sources said the proposals would see Mr Elhedery’s fixed pay roughly halved, but with significantly more generous maximum variable pay awards.
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When he was named as Noel Quinn’s successor last July, HSBC said he would receive a base salary of £1.38m, a £1.7m fixed pay allowance, a maximum annual bonus opportunity of roughly £3m and a maximum long-term share award of close to £4.5m.
That amounts to a total of approximately £10.5m.
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Investors said they have been briefed that Mr Elhedery’s new package would scrap the fixed pay allowance altogether but incorporate higher multiples of bonus and long-term share awards.
The bank’s new finance chief, Pam Kaur, will also see her remuneration package amended along similar lines.
The changes have been drawn up by Dame Carolyn Fairbairn, the former CBI director-general, who chairs HSBC’s boardroom pay committee.
HSBC’s move to overhaul its directors’ remuneration policy, which is expected to be put to a vote of shareholders in the spring, follows that of its UK banking peer, Barclays.
Sky News revealed last month that Barclays was increasing CEO CS Venkatakrishnan’s maximum pay package to just over £14m.
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By comparison, HSBC’s market capitalisation is about three-and-a-half times that of Barclays, making it the London stock market’s third-largest company.
The decision by leading UK banks to increase their CEOs’ pay suggests that the industry is entering a more permissive climate as far as investors are concerned.
One person close to HSBC pointed out that Mr Elhedery now ran Europe’s biggest bank, but would continue to be paid less than many of his continental peers.
By comparison, the major US banks also pay their chiefs significantly higher sums.
Brian Moynihan, the boss of Charlotte, North Carolina-based Bank of America, earned $29m in 2023, while Goldman Sachs, JP Morgan and Morgan Stanley all pay their CEOs substantially more than Mr Elhedery will earn even as a maximum payout.
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It comes as searching questions continue about the attractiveness of London’s stock market for international companies, with executive pay at the forefront of that debate.
Mr Elhedery took up the role of HSBC CEO in September, since when he has announced a sweeping overhaul of the bank’s operations, reorganising it along geographically distinct lines, a move which raised questions about the future of parts of its sprawling international empire.
Last month, he announced surprise cuts to parts of HSBC’s investment banking operations which will affect a significant number of its UK-based dealmakers.
In a statement issued to Sky News, an HSBC spokesman said: “The Remuneration Committee’s objective is for the pay outcomes for our executive directors to be strongly aligned with performance and shareholders’ interests.
“We will publish details with our YE results on 19 February.”
This year’s annual report will not provide an accurate comparison with Mr Elhedery’s likely pay from this year because he spent much of 2024 in the role of chief financial officer.
