HSBC Holdings Plc, Europe’s largest bank, is drawing up plans to revamp its pay structure to counter tougher European Union bonus rules, according to a person with knowledge of the discussions.
The lender plans to give executives an additional payment in shares that will be paid in portions over five years on top of their base pay and variable bonuses, said the person, who asked not to be identified because the matter is private.
The EU agreed on rules last year to restrict bonuses that are more than twice fixed pay, a move lawmakers said would prevent excessive payouts and curb irresponsible risk-taking after the financial crisis. Barclays Plc, the U.K.’s second-largest lender, is considering an extra payment for some of its senior bankers, a person familiar with the matter has said.
The bonus caps are set to apply for the first time to awards given in 2015, based on 2014 performance. U.K. Chancellor of the Exchequer George Osborne opposed them, saying they would harm the competitiveness of the nation’s finance industry.
HSBC’s plan would require shareholder approval, said the person. Sky News reported the plan earlier today.