HSBC executives will have their pension cash allowance cut following criticism of their remuneration policy, the bank has stated.
Until now HSBC chief executive John Flint received £372,000 a year in contributions to his pension, which amounted to 30 per cent of his base salary.
However, the bank’s regular employees received a maximum of 16 per cent in pension contributions.
In a market update on Friday (March 15), HSBC’s remuneration committee stated that after speaking to a number of its key shareholders regarding the remuneration policy for the executive directors, it decided to reduce the cash in lieu of pension allowance to 10 per cent for any new executive directors.
Although the current executive directors are compensated under the provisions of the directors’ remuneration policy approved by shareholders in 2016, they have asked that their own arrangements are also brought into line with the new level, the committee added.
Pauline van der Meer Mohr, chairwoman of HSBC’s remuneration committee, said: "We have consulted closely with shareholders and listened to their views. Our guiding principle has been to create a policy that is simple, transparent and in the interests of all stakeholders.
"We believe this is the right thing to do for the business, for our employees and for our shareholders.
"I would like to express the committee’s appreciation for the engagement by our shareholders on this issue and, in particular, the request made by the current executive directors to conform their pension allowance with the new remuneration policy."
Andrew Ninian, director of stewardship and corporate governance at the Investment Association, welcomed the move, saying the bank had recognised and acted upon the concerns from investors.
He said: "By bringing their executive director’s pensions down to the level of the majority of the workforce, they have not only put themselves in line with Investment Association guidelines and shareholder expectations, but have shown their willingness to engage with, listen to and act upon the views of their shareholders.
"We particularly welcome the leadership shown by the existing executive directors, who have reduced their own pensions contributions to align with the workforce."
Mike Lacey, partner at Berkshire-based financial adviser firm Bowman Pension Consulting, also welcomed the move.
He said: "The gulf between average employee and executive earnings has been widening for some years now. I also note that the existing executive directors have asked to be included in this policy as well, which is admirable.
"Who knows, this could end with closed defined benefit schemes being re-opened to new joiners, now that the deficits have now greatly reduced."