Chief among a list of transgressors is HSBC, which is paying out over 38 million pounds in bonuses to the top five employees despite a 24% drop in pre-tax profits. This information was discerned from paperwork released by HSBC in order to comply with Hong Kong’s employment laws. It states that the top employee will receive ten million pounds, the second and third most will receive nine million, and the fourth and fifth will receive 5.7 million and 4.3 million, respectively.
It has been suggested that the lucky recipient of the nine million-pound bonus was none other than the executive director of HSBC, Stuart Gulliver, but this has not been confirmed. Three of the other names have been the subject of discussion and debate, however there is no doubt that the recipient of the 4.3 million pound bonus is Michael Geoghegan, due to his decision to donate his entire charity to various worldwide charities. Considering this is many times his yearly salary of eight hundred thousand pounds, many of Mr. Geoghegan’s defenders have asserted that this is an attempt to “make right” the sort of economic and personal hardship faced by many people due to the current economic depression. The money will be split widely over a number of charities in both the United Kingdom and Hong Kong, the latter of which has been Mr. Geoghegan’s residency of the past six years. Considering his take-home pay for the year would be five million pounds, the donation of his bonus would be the vast majority of his pay. He claims further that he initially asked his employer not to give him a bonus, due to the steps necessary to keep the bank’s cash cushion inflated.
It is not known if other bonus recipients will follow Mr. Geoghegan’s lead, however, as the investment banker’s yearly bonuses generally greatly outstrip their salary, they would be giving up a large amount of their yearly income were they to do so. HSBC paid out 18.5 billion pounds in salary and bonuses in 2009, which is down 11% from 2008. They are expected to pay three hundred and thirty five million pounds in a one-time tax on executives receiving bonuses of twenty five thousand pounds or more. Shares in HSBC fell 2.5% at the announcement of bonuses and salaries, with stockholders concerned both that HSBC is paying out too much in bonuses and that decreased overall salaries are indicative of potential financial problems.