HSBC chief executive Stuart Gulliver in line for £9m bonus

By James Quinn and Kamal Ahmed

Mr Gulliver, who took over from Mike Geoghegan at the turn of the year, is set to be awarded the windfall as part of an overall compensation package which could take the total amount he receives for 2010 to in excess of £10m.

Although the bank's remuneration committee, chaired by HSBC's deputy chairman, John Thornton, has not yet finalised any executive bonuses, City sources with knowledge of the situation believe that a bonus of £9m is highly possible.

If so, it would mirror the amount Mr Gulliver received for 2009, and would be in line with the amount his counterpart at Barclays, Bob Diamond, is set to be paid.

Stephen Hester, the chief executive of Royal Bank of Scotland, and Eric Daniels, the chief executive of Lloyds Banking Group, are likely to be in line for awards of £2.5m and £2m respectively.

Should a bonus be allotted, it would be paid entirely in deferred shares, which Mr Gulliver could not gain access to for three years. Under the terms of his compensation arrangements, he could also be eligible for performance shares equivalent to seven times his basic salary – £800,0000 – but these shares have not been paid in recent years.
 
Mr Geoghegan, who remains with the bank as a senior adviser until the end of March, is expected to be awarded a bonus of £4m for 2010, equivalent to four times his salary.

The exact figures for the two men are subject to internal bank verification and discussion with major investors and could yet change. It is expected the detailed figures will be released shortly after the bank's full-year results on February 28.

Mr Gulliver has a history of big-money bonuses, receiving £9m in shares for 2009, and £5.59m in cash and £3.6m in restricted shares for 2007. He declined a bonus for 2008.

From January 1, Mr Gulliver's new base salary is £1.25m and he will be eligible for a bonus of £5m, a maximum of four times salary.

A spokesman for HSBC said that the remuneration committee has not yet met, and that neither its members nor Mr Gulliver or Mr Geoghegan know what any bonus amounts will be. However the spokesman added that HSBC "believes in proper pay for proper performance" and stressed the bank has paid $24bn (£14.9bn) in dividends since the financial crisis began, and that it has paid £5bn in UK taxes over the past five years.

The news comes as the Government attempts to finalise the Project Merlin deal with five of the six leading UK banks – RBS, Lloyds, Barclays, HSBC and Santander. Standard Chartered pulled out of the talks as its business primarily operates overseas.

Banking sources have revealed that concerns over the verification of lending targets is at the heart of delays to the deal, with RBS and Lloyds being questioned on the figures for 2010.

The lending target is now set to be in the region of £185bn, a rise of approximately 10pc on last year's figure. The Treasury will demand that up to half the amount is made available to small and medium sized businesses, meaning a potential lending boost of some £90bn.

Although Government sources were still refusing to say whether a deal would be announced in the next few days, George Osborne, the Chancellor, wanted to get an agreement signed before Barclays begins the banking end of year reporting season on February 15. Telegraph