HSBC total compensation fail

When HSBC increased its salaries last year, it made it very clear that it intended to reduce bonuses to compensate for its generosity.

Predictably, it appears that the reduction in bonuses outweighs the increase in salaries.

Last year, HSBC's bonus pool was rumoured to be 1.5bn. This year, it's 1.24bn according to Douglas Flint, HSBC's new chairman.

To accommodate this reduction in bonuses, salaries have been increased by 92.5m. Clearly, there is a shortfall of 168m.

This might be ok, except that HSBC Global Banking and Markets isn't actually doing that badly and (compared to US banks) it didn't really pay particularly well in the first place.

Last year, the bonus pool was approximately 50% of total compensation.

If it amounts to 45% this year, that implies a total compensation pool of 3.3bn. Assuming HSBC still employs 21,000 people in Banking and Markets, average pay per head will be 156k. And this will be disproportionately skewed towards the nine people earning more than 9m.