Executive pay continues to rankle many shareholders. So I’m reading the remuneration reports of leading FTSE 100 companies to help you decide whether your investments are being run by herd of ‘fat cats’. I’ve just looked at the 2013 annual report of HSBC (LSE: HSBA) (NYSE: HSBC.US) and here’s what I discovered:
The chief executive of HSBC has during the past five years earned anywhere between £7.5m and £8m including all benefits. In contrast, the average HSBC staff member in 2013 earned almost £46,000. At least the boss’s base salary was held last year, while other employees enjoyed an average 2% pay rise.
New boardroom pay proposals for 2014 could see the chief exec collect a minimum of £4.2m and a maximum of £11.2m. However, his base pay will once again be frozen at £1.25m.
The bank’s three executive directors collected an aggregate £14.8m in 2013, and 15 other senior managers at HSBC took home a further £45.3m between them. At least five senior managers were paid £3m or more last year.
Some £2m was paid by HSBC as fees to no less than 13 non-executive directors last year. The same non-execs also collected a further £205,000 as benefits, which included travel-related expenses relating to the attendance of board and other meetings.
HSBC distributed about £5.9bn as dividends during 2013 (up 11%), compared to £12.3bn paid to staff (down 6%). The chief exec owns around 2.7 million ordinary shares, which last year delivered an annual dividend income of about £810,000 – some 35% less than his basic pay.
During the AGM in May, shareholders approved HSBC’s new board pay policies with a 79% vote. The remuneration report was 84% approved and a cap to limit director variable pay was accepted with a 98% vote.
Of course, whether HSBC’s senior directors are truly worth their wage slips – or are simply trousering the bank’s cash at your expense – is something only you can decide.
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Maynard does not own any share mentioned in this article.