HSBC to reduce pension contributions for executive directors
HSBC is to slash the amount of cash executives at the bank can receive in lieu of pension following shareholder unease.
Any new executive director that joins the banking giant will be entitled to 10% of their base salary instead of a contribution to their pension, down from the current 30% level.
The lender said that current executive directors have asked for their pension allowance to also be brought in line with the new proposed policy, which will voted on by investors at the annual shareholder meeting on April 12.
The move comes after HSBC was criticised for paying chief executive John Flint £372,000 a year in lieu of contributing to his pension, which formed part of his £4.58 million pay packet last year.
In a letter to shareholders, HSBC argued that Mr Flint pays tax and national insurance on the £372,000 and therefore he is receiving 16% on the amount.
But critics were reportedly angry that it created a two-tier system as it widens the gap in benefits between executives and ordinary staff.
Ordinary staff at HSBC can contribute up to 16% of salary to their pension pot, which is tax free if their lifetime pension saving is below £1.03 million.
Pauline van der Meer Mohr, chairwoman of HSBC’s remuneration committee, said: “Today we are announcing an important clarification of our new remuneration policy to reduce executive director pension contributions following consideration of emerging market practice.
“We have consulted closely with shareholders and listened to their views. Our guiding principle has been to create a policy that is simple, transparent and in the interests of all stakeholders.
“We believe this is the right thing to do for the business, for our employees and for our shareholders. I would like to express the committee’s appreciation for the engagement by our shareholders on this issue and, in particular, the request made by the current executive directors to conform their pension allowance with the new remuneration policy.”