HSBC, Standard Chartered bosses forego bonuses in mea culpa to calm rebel shareholders in dividend fight

South China Morning Post 發布於 04月09日04:04 • Chad Bray chadwick.bray@scmp.com
  • Rebel shareholders have demanded HSBC eliminate pay to top management for a year
  • Move comes after UK regulator told banks not to pay bonuses to senior staff
People walk past the HSBC logo in Hong Kong on April 2. Photo: Sam Tsang

HSBC and Standard Chartered said on Thursday that their top executives would waive their bonuses this year and donate part of their salaries to helping fight the coronavirus pandemic.

The move came just over a week after both banks said they would cancel their dividends and not pursue share buy-backs after a request from the Prudential Regulation Authority (PRA), an arm of the Bank of England and their chief regulator. The PRA also said it expected banks would not pay "any cash bonuses to senior staff" including all material risk-takers.

Rebel shareholders, incensed at the loss of dividends, have demanded that the bank eliminate pay to top management for a year.

In an internal memo released on Wednesday afternoon London time, HSBC said that its chief executive, Noel Quinn, and its chief financial officer, Ewen Stevenson, would waive their cash bonuses for 2020 and donate a quarter of their salary for the next six months to charity. The donation would equal about GBP159,000 (US$197,300) for Quinn and GBP93,000 for Stevenson.

Mark Tucker, the HSBC chairman, also would donate his entire fee for 2020 " GBP1.5 million " to charity, according to the memo seen by the South China Morning Post.

"All three of us will donate to charities supporting health care workers and vulnerable people in the UK and Hong Kong," Quinn said in the memo.

On March 31, the PRA asked the United Kingdom's biggest lenders to cancel their final unpaid dividends for 2019 and not pay any dividends through at least the end of 2020 to support the economy in light of the pandemic, which has infected more than 1.5 million people worldwide.

The novel coronavirus, known as SARS-CoV-2, has disrupted daily life, with cities locked down from New York to Singapore and many businesses are asking employees to work from home. Tens of millions of people have lost their jobs as the pandemic has disrupted air travel and economic activity on an unprecedented scale and likely pushed the global economy into a recession.

Cancelling the annual dividends at both banks has set off a firestorm among shareholders. As of Wednesday's close, HSBC's shares had fallen 9.6 per cent since the announcement. Standard Chartered's shares dropped 4.9 per cent in that period.

A group of rebel shareholders is trying to band together enough investors to force an extraordinary general meeting and pressure the bank to reinstate the dividend. The group, which claims it has garnered support from about 3 per cent of HSBC's shareholder base, has demanded that the bank make the final interim payout for 2019 and eliminate pay to top management for the year.

About a third of HSBC's shareholders are retail investors, and many of those investors depend on the regular income they receive from HSBC's dividends. HSBC was due to make its final payout of US$0.21 a share on April 14.

Some shareholders have said HSBC and Standard Chartered should move their headquarters from London to Hong Kong, rather than be subject to a regulator 6,000 miles away from their largest market, Hong Kong. Both banks generate more than half of their revenue in Asia.

HSBC was founded in Hong Kong 155 years ago but moved its headquarters to London in 1993 after acquiring Midland Bank. Four years ago, the bank decided to keep its home base in London after a nearly year-long review.

In a stock exchange announcement early Thursday, Standard Chartered said its CEO Bill Winters and its chief financial officer Andy Halford would forgo any cash bonus for 2020 and would make "significant personal donations" to funds assisting the pandemic.

Standard Chartered's chairman, directors and management team also will make personal donations, the company said.

"The remuneration committee has committed to ensure that decisions regarding 2020 remuneration will be taken in the light of the group's overall performance and the challenges faced by the group's various stakeholders resulting from the spread of Covid-19," the bank said.

Covid-19 is the disease caused by the coronavirus.

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