Europe's largest bank HSBC is finalising plans to boost chief executive officer Georges Elhedery's maximum pay package to over £15 million, marking a significant overhaul of executive compensation following the UK's removal of EU bonus caps.

The proposed changes, first reported by Sky News, would roughly halve Elhedery's fixed pay while substantially increasing his potential variable compensation through bonuses and long-term share awards. The package represents a 43 per cent increase from his current maximum potential pay of £10.5 million.

"The Remuneration Committee's objective is for the pay outcomes for our executive directors to be strongly aligned with performance and shareholders' interests," an HSBC spokesman told Sky News.

The bank has been consulting with major shareholders on the proposals in recent weeks. The changes would eliminate Elhedery's £1.7 million fixed pay allowance while incorporating higher multiples for bonus and long-term share awards. The plans are expected to be put to a shareholder vote this spring.

The move follows similar action by Barclays, which recently proposed increasing chief executive officer CS Venkatakrishnan's maximum package to just over £14 million. These changes have been enabled by the UK government's decision to scrap the EU bonus cap that previously limited banker bonuses.

Since taking the helm in September, Elhedery has launched a sweeping reorganisation of HSBC's operations along geographical lines. This has included merging commercial and investment banking units and scaling back investment banking operations in the UK, Europe and Americas.

While the proposed £15 million package marks a substantial increase, industry observers note it remains lower than compensation for chief executive officers at major US banks. Bank of America's chief executive officer Brian Moynihan earned $29 million in 2023, with leaders at Goldman Sachs, JP Morgan and Morgan Stanley receiving even higher amounts.

The final details of the new compensation structure are expected to be published with HSBC's annual results on February 19.

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