HSBC CEO gets extra $450,000 for Hong Kong living

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HSBC (HSBA.L) is paying its chief executive an extra 300,000 pounds ($451,800) a year for living costs following his relocation to Hong Kong, as the bank's plan to increase his salary remains under scrutiny.

HSBC (0005.HK) sought to increase CEO Michael Geoghegan's base salary by about a third ahead of this week's results but investors resisted amid fears of a public backlash about higher pay for bankers, people familiar with the matter said.

Europe's biggest bank plans to discuss increasing Geoghegan's base salary with investors, as he is underpaid relative to peers, HSBC Chairman Stephen Green said at a results press conference on Monday. [ID:nLDE6200IU]

A footnote in HSBC's annual report, released alongside the results, said Geoghegan would be paid an extra 300,000 pounds a year "in recognition of the relocation to Hong Kong and the associated additional costs of living that will be incurred".

It will be in addition to housing and other benefits that are normal for such a move.

"The 300,000 pounds seems a bit generous especially if it is on top of housing," said a top 20 investor, who asked not to be named. "Hong Kong has a lower tax rate and it's not as expensive to live there except for housing. We will certainly go through all these disclosures very carefully."

HSBC has made clear it will be raising Geoghegan's pay this year. Its non-executive directors "unanimously agreed" that his pay "will be brought up to internationally competitive levels" in the next year, the annual report said.

Green said on Monday that Geoghegan was not one of the top 10 paid CEOs of FTSE 100 firms and his salary ranked fourth out of the bosses of Britain's six banks. "So there is some work to do with our shareholders and we intend to do it," he said.

A second top 20 investor in the bank said: "Companies do need to think about genuinely showing restraint in these particular times...we will certainly be looking for some clarification from the company on the 300,000 figure."

An HSBC spokesman said Geoghegan was asked to move by the bank and the payment compensates for that disruption, having family in two continents and recognises his additional role as chairman of HSBC's Asia business.

It was not "a pay rise in disguise" and had been earmarked since the plan to move was announced in September.

Geoghegan is giving his 2009 bonus of up to 4 million pounds to charity. His basic salary is 1.1 million pounds.

Geoghegan, who has been CEO for almost four years and steered the bank through the crisis without needing any direct taxpayer support, last month moved his base to Hong Kong to be closer to where the bank's growth is being driven.

Banks scaled back on generous packages for executives and staff in Asian cities when the financial crisis put more focus on costs, with housing, schooling and club benefits often rolled into salaries. [ID:nHKG336328] (Editing by Elaine Hardcastle)