HSBC makes u-turn on chairman Douglas Flint's pay package

HSBC has cut its chairman Douglas Flint’s controversial bonus plan to a one-off maximum payment of £1m to head off what could have been an embarrassing revolt over pay at its annual meeting.

The bank had been seeking permission to pay Flint a share-based bonus amounting to up to 100 per cent of his fixed pay, to reflect what it argued was an enhanced workload as a result of sweeping changes to the way banks are regulated.

That could have meant the former finance director would be awarded up to £2.25m – his current fixed pay is made up of a £1.5m salary plus pension contribution worth £750,000.

However, after last ditch talks with shareholders ahead of the meeting on Friday week, the bank has cut the amount down to £1m and made clear in its pay policy – on which shareholders now have a binding vote – that any payment agreed will be a one-off.

A deal was put together after talks with the Association of British Insurers, whose members are now set to back the bank.

Shareholders had been unhappy over the plans because Flint was not supposed to be part of the bank's various bonus plans when he stepped up to become chairman in 2010.

But HSBC this year said in its annual report that he would be made part of the group performance share plan in "exceptional circumstances". The remuneration committee had pointed to his "executive role in leading the group's interactions on regulatory policy and providing leadership and tone to drive an improvement in the group's compliance, conduct and behaviour".

But part of his role when he took on the job was supposed to be establishing relations with government and regulators, sparking a potential bust-up with some shareholders.

Voting advisers, such as the Pirc group, had urged shareholders to vote against the remuneration policy.

The debate over banking executives' pay has heated up again this year, after a relatively quiet 2013. More than a quarter of Barclays shareholders failed to back its remuneration report, while the emerging markets specialist Standard Chartered saw 41 per cent of its shareholders voting against its pay policy.