yields to shareholders on pay as flags Brexit danger
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[April 22, 2016] By
Lawrence White and Sinead Cruise
LONDON (Reuters) - HSBC changed its pay
policy for executive directors on Friday, bowing to shareholder concerns
triggered by a drop in the bank's share price and worries over its
The overhaul of HSBC's pay, which it said would lower the maximum
amount its executive directors could earn by 7 percent, follows
investor revolts at BP and Anglo American over remuneration
Europe's biggest bank told shareholders at its annual meeting in
London on Friday that it would cut the amount of cash given to
executive directors in lieu of a pension from 50 percent to 30
percent of their base salary.
It will also make long-term incentives subject to a three year
forward-looking performance period, in line with other FTSE
At the meeting, 96 percent of shareholders who voted approved the
new measures which had been proposed earlier.
"We had expected that the Remuneration Policy you approved back in
2014 would not need to be refreshed until it expired next year,"
Chairman Douglas Flint told them before the vote.
"However, regulatory changes as well as responding to shareholder
feedback have caused us to make some revisions to this," he said.
HSBC also said it could be forced to restructure its wholesale
operations in the UK if Britain voted to leave the European Union in
"Our own economic research is very clear about the advantages of
Britain being at the heart of a reformed EU," Flint said. "We
believe that the UK would enter a period of great economic
uncertainty in the event of a vote to leave."
U.S. LICENSEFlint said the bank was doing everything it had promised
to do to avoid the loss of its U.S. banking license, following
alleged failures to impress a monitor supervising a reboot of its
anti-money laundering (AML) compliance program.In 2012, HSBC was
fined $1.9 billion by the U.S. government, who said it had become a
"preferred financial institution" for drug cartels and money
launderers and had conducted transactions for customers in several
countries subject to U.S. sanctions.
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"The DOJ (Department of Justice) in its most recent letter would
echo that although HSBC has made significant progress, the bank
continues to face significant challenges in implementing AML
prevention," Flint said in response to an investor's question at the
"So we have work to do but at same time, the DOJ said that, overall,
HSBC continues to take significant steps."
The chairman also sought to play down the bank's links to the
"Panama Papers" scandal, which exposed the role played by scores of
global banks in helping clients hide wealth in secretive offshore
Flint said that less than 5 percent of 2,000 offshore structures it
helped to create still existed.
(Additional reporting by Andrew MacAskill; Editing by Rachel
Armstrong and Alexander Smith)
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