How HSBC boss Stuart Gulliver earned his giant bonus

HSBC's performance was judged as 'satisfactory in aggregate' – so chief executive Stuart Gulliver received £7.2m rather than the £12.5m maximum he could have earned

HSBC has set out how chief executive Stuart Gulliver received £7.2m in 2011 – a year when the bank's performance was "satisfactory in aggregate" according to chairman Douglas Flint.

Gulliver has a salary of £1.25m. He can get three times that amount in his annual bonus and six times that in a long-term incentive plan which pays out on a three-year time horizon.

For 2011, he actually received £7.2m – compared with a maximum potential bonus and salary of £12.5m – because the bank awarded him 1.72 times his salary for his annual bonus and three times his salary for his long-term incentive plan.

Turning to the annual bonus of £2.1m, financial targets accounted for half of his potential bonus and he achieved 30% out of 50%. Here is the break down, the percentage figure being the maximum that could have been awarded:

• Capital strength: 10% – achieved.

• Dividend: 10% – achieved.

• Profit: 10% – half achieved.

• Cost reduction: 10% – half achieved.

• Return on equity: 5% – not achieved.

• Return on risk-weighted assets: 5% – not achieved.

Non-financial targets accounted for the other half and he achieved 27.5% out of 50%:

• Strategy and execution: 25% – awarded 20%

• People and values: 10% – awarded 7.5%

• Compliance and reputation: 15% – nothing.

In terms of the long-term bonus, the weighting between financial and non-financial measures is 60% and 40% and the result was that 50% of the total targets were achieved.

Long-term scorecard
From the annual report. Source: HSBC Photograph: HSBC

The table above shows how this was measured.


Jill Treanor

The GuardianTramp

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