If you donate some of your bonus to charity, is it still bad? This may be a question some will ask as HSBC Holdings PLC (HBC) Chief Executive Michael Geoghegan has suggested he will give all or part of his bonus to charity.
The Wall St. Journal reported that, according to people close to the matter, Mr. Geoghegan will be awarded a bonus of as much as £4 million ($6.1 million) for 2009.
HSBC, which received no state bailouts unlike other rivals, has said Geoghegan would donate up to four million pounds of his bonus to charity until 2013.
And it will raise an interesting question among those who have criticized the practice of giving out bonuses as part of compensation. Could it be that some of these multi-million dollar bonuses may be going to charitable organizations which have been especially hard hit during this recession?
Elsewhere, some other top bankers have received noteworthy bonus awards. J.P. Morgan Chase & Co. disclosed in February that CEO James Dimon received a $17 million bonus for 2009. Goldman Sachs Group Inc. said Chairman and CEO Lloyd Blankfein received a $9 million bonus for 2009. The compensation for both was in the form of stock that can’t be redeemed immediately. In the fourth quarter, Goldman Sachs Group moved $500 million from its compensation and benefits pool to a charitable fund.
In New York City, the Robin Hood Foundation Executive Director David Saltzman has stated they get more than half of the $150 million in donations it raises each year from investment banks, brokerage firms and hedge funds. The return of record Wall Street compensation will help the charity continue to fund the more than 200 poverty-fighting programs it supports.
Further complicating the issuing of bonuses for HSBC, the bank didn’t accept direct government aid during the financial crisis. HSBC, while based in London, has significant operations in Asia, and weathered the financial crisis more successfully than its U.K.peers.
“Throughout the crisis, HSBC has remained profitable, financially strong and independently owned by our shareholders,” said HSBC Chairman Stephen Green in the earnings release.
“While emerging markets are leading global recovery and seem certain to drive the majority of the world’s growth in the generation ahead, recovery in developed markets has been slow to start.”
But at the same time, the bank’s chairman, Green, has publicly criticized excesses in banker pay, and three years ago asked the board to stop awarding him a bonus.
People close to HSBC hope its approach—the awarding of bonuses while at the same time stressing its good performance—will help distinguish it from U.K. peers like RBS and Lloyds as a stronger global bank. Despite the billions it has lost through its subprime-lending business in the U.S., the bank booked a profit of $3.3 billion in the first half of 2009.
