HSBC Pays $40 Million for Poor Performance, Due To Pay More
For a banker - or a finance company predator - getting fired isn’t all that bad.
Do you feel sorry for Bobby Mehta and Sandy Derickson, summarily fired from HSBC for their connection to the bank’s catastrophic foray into high-risk US mortgages? Why should you? They had been paid $40 million (£20 million) in performance-related bonuses.
In a revelation likely to spark shareholder concern over rewards for failure, the two are also set to receive at least $2 million more in compensation for loss of office.
Siddarth (Bobby) Mehta ran the whole of HSBC in North America and was one of the eight most senior executives at HSBC, sitting on the group management board.
In 2005, the most recent year for which figures are available, he received $11 million in bonus shares, $3 million in a cash bonus and $1.3 million in other pay. In the two years before that he received $21.8 million.
Ms Derickson, who had just been promoted to run HSBC’s retail bank on the Eastern seaboard, was one of Mr Mehta’s most trusted lieutenants and previously ran the mortgage business at the heart of HSBC’s problems.
In 2005 she was paid $8.5 million in bonus shares, a $2.1 million cash bonus and $855,000 in other pay. She collected $11.5 million in pay and benefits in the previous two years.
Accounts of HSBC Finance Corp, formerly Household International, reveal that Mr Mehta was showered with perks, including personal travel, club membership fees, personal use of a limousine, financial counselling and relocation expenses. The largesse contrasts sharply with rewards for his bosses in London.
Consumer advocates at Household - HSBC Watch implied that income was partially derived from questionable payment processing and other shady tactics, and that performance is actually worse than what HSBC is telling shareholders.
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