A controversial bonus scheme which could net five senior directors of banking giant HSBC more than £120m (€152m) over the next three years received substantially less than unanimous backing from shareholders today.
About 82% of the bank’s investors voted in favour of awarding chairman Stephen Green and four other executive directors a chance to earn cash and share bonuses up to 11 times their salary.
It could see chief executive Michael Geoghegan – whose salary is more than £1m (€1.2m) - around £36m (€45.7m) over the next three years if various “stretching” targets are met.
The compensation scheme was outlined in a remuneration report voted on by shareholders at HSBC’s annual general meeting in London today.
About 11% of shareholders voted against the package, with nearly 8% choosing to abstain.
Other votes taken during the meeting relating to matters such as the approval of the accounts and re-election of directors secured virtually unanimous agreement.
Corporate governance body Pensions Investment Research Consultants was urging investors to vote against the remuneration report.
And the Association of British Insurers also gave the pay structure an “amber” warning, denoting an area of potential concern and advising shareholders to carefully consider the scheme.
Mr Green defended the proposals, saying the approval level registered today had been “strong”.
He said: “I think it’s a very strong vote for, at just over 80%.
“In terms of remuneration reports, gone are the days when they would sail through. That’s a very strong vote.”
Mr Green, who earned a total of £3m (€3.8m) in salary and bonuses last year, added: “We do believe that market-based awards are necessary.
“HSBC has been behind the global market for some years.”
He went on: “I am acutely conscious we are talking about pay packages which are very high compared to the standard of humanity.
“There’s no question in my mind that high levels of pay carry high levels of responsibility.”
HSBC, which is Europe’s biggest banking group, has been one of the worst-affected British banks by the sub-prime lending crisis in the US.
Its North American consumer finance division, HFC, suffered a $3.2bn (€2bn) bad debt charge in the first quarter of this year as it continued to suffer from the country’s housing market woes.
That was on top of a $11.9bn (€7.6bn) write-off during 2007.
But the group’s overall profits last year rose 10% to £12.2bn (€15.5bn) thanks to booming emerging markets.