George S. May Business Blog

Banks Do The Right Thing to the Surprise of Millions

This has been the era in which America has ended its love affair of the Gordon Gecko-inspired financial executives and the “greed is good” mentality that they acted out in the form of the derivatives crisis. People are no longer envious of these opulently wealthy executives, nor do they have much latitude for the continuing avarice on Wall Street.

However, every now and then a company’s leader can make an announcement that really makes the world stand up and take notice. It’s just that usually these notices involve a deluge of words like “regrettable”, “mistake”, and “multi-million dollar bonus package”.

This story reminds us that these titans of the financial services sector are capable of more than just pointing fingers and collecting obscene checks, sometimes they give those giant checks to people who need it more.

HSBC Holdings Chief Executive Michael Geoghegan attends a news conference in Hong Kong September 25, 2009. HSBC Holdings is moving its chief executive to Hong Kong as Europe’s biggest bank increasingly focuses on Asia.

The chief executives of HSBC Holdings, Europe’s biggest bank, and Asia-focused rival Standard Chartered are set to give their bonuses to charity, newspapers reported on Sunday, following a high-profile outrage people are beginning to feel for these executives and their disparate compensation.

Three British newspapers reported that HSBC chief Michael Geoghegan would accept his bonus but give it to several charities. HSBC declined to comment.

The Daily Telegraph in London also reported that Peter Sands, the head of Standard Chartered, also planned to donate his bonus to charity. A spokesman for the London-listed bank declined to comment.

The news follows moves by both the heads of English firms Barclays and the bailed-out Lloyds Banking Group and Royal Bank of Scotland to waive their rights to a 2009 annual bonus.

The undeniable public rancor has to be a sizable factor in the decision to defer this money and send it towards others who have bigger problems than too much money to deal with. The only thing about this story that is disheartening is that these companies and executives don’t seem to be spreading the lessons they’ve learned to this side of the pond.

In the same statement HBSC was quick to point out it had received no direct taxpayer money, had paid dividends throughout the financial crisis and should be allowed to make its own decision on how it pays its executives.

Geoghegan stands to get a bonus of four times his basic salary of 1.1 million pounds ($1.68 million).

HSBC had also been discussing with investors a plan to increase base pay for its top executives, shareholders have told Reuters, but it has shelved plans to award Geoghegan a pay rise of more than a third.

HSBC will report full-year results on Monday while London-listed Standard Chartered is expected to post record profits of $5.1 billion next week.

This story is one that needs to be heard in the American corporate world as well. The American public is increasingly upset not only at the huge errors of these banks, but also their seeming lack of repentance or shame for perpetuating this crisis and leaving the mess for taxpayers to clean up.

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