HSBC Boosts CEO Gulliver's Pay as Bank's Bonus Pool Drops 12%

(Bloomberg) -- HSBC Holdings Plc boosted Stuart Gulliver’s total potential pay to 9.7 million pounds ($12 million) as the chief executive officer was rewarded for cutting costs, while the bank’s bonus pool dropped.

Gulliver, 57, saw his annual incentive pay for 2016 raised to 1.7 million pounds from 1.1 million pounds a year earlier as he hit targets for paring expenses and assets, even as he fell short of a profit goal, the bank said in its annual report Tuesday. He received 64 percent of his potential bonus, while he will also get a new long-term incentive that could be worth 4 million pounds for 2016 if all targets are met by 2019.

HSBC cut its total annual bonus pool 12 percent to $3.04 billion, as revenue fell for a fifth consecutive year. Gulliver has stepped up efforts to slash expenses and return capital to shareholders as the bank faces hits to revenue this year from unfavorable currency moves and record-low U.K. interest rates.

The bank’s remuneration committee said it reduced Gulliver’s annual bonus by 2.5 percent, as well as the pay of other executives, because of issues tied to standards, risk and compliance. This was based on feedback received from a monitor installed by U.S. Department of Justice, as well “matters arising from risk and compliance incidents, and a number of unsatisfactory internal audits” related to anti-money laundering and sanctions-related issues, the company said.

Dealmaker Bonuses

At the investment bank, the 2016 variable pay pool fell to $954 million from $1.1 billion a year earlier. The number of senior staff across the bank earning more than 1 million euros in 2016 decreased to 363 from 453 a year ago, the annual report shows. HSBC said 598 of its material risk takers and senior managers earned a combined $613 million in fixed and variable pay.

The bank is widening divisions within its investment banking pool by providing more lucrative awards to top performers, while cutting compensation for those ranked at the bottom, people with knowledge of the matter said in January. The change, brought in by co-head of banking Matthew Westerman, is designed to make the division more competitive, they said.

Gulliver’s long-term incentive compares with the 2 million pounds he received under the prior "group performance share plan" last year. His salary and share allowances were unchanged at 2.95 million pounds.

HSBC’s highest-paid senior executive, who wasn’t identified in the annual report, was awarded total pay and bonuses worth between 10 million euros and 11 million euros. Chairman Douglas Flint, who is due to be replaced this year, received total pay of 2.1 million pounds compared with 2.5 million pounds last year. Finance Director Iain Mackay saw his annual bonus drop 9 percent to 987,000 pounds, while he also received a long-term incentive worth as much as 2.23 million pounds if targets are met.