As HSBC prepares to name its third CEO in nine years, the bank is considering financial incentives and reallocating key projects to retain those who miss out on the top job, according to sources.
Europe’s largest bank might reassign its technology transformation and innovation strategy, currently overseen by CEO Noel Quinn, away from his successor.
The new chief executive will likely be an internal candidate, with an announcement expected this month.
HSBC is keen to retain top talent amid internal changes and challenges, including tensions between Britain and China and a lackluster share price performance.
Three shareholders, including two of HSBC’s 20 largest, expressed concerns about potential management upheaval due to the CEO appointment.
If Chief Financial Officer Georges Elhedery is promoted, the CFO role will see its third occupant in less than three years.
“Promotions do leave gaps elsewhere, and that merry-go-round can be problematic if not handled well,” one investor noted.
Reassigned projects could come with significant pay incentives as they represent a major portion of Quinn’s key performance indicators.
Quinn’s total pay package doubled in 2023 to £10 million ($12.8 million).
“HSBC is conducting a robust and rigorous process to find its next Group Chief Executive.
This process will consider internal and external candidates. We will update the market as appropriate,” a spokesperson said.
The nominations committee is expected to choose from executives like CFO Elhedery, wealth business head Nuno Matos, Europe boss Colin Bell, and investment bank chief Greg Guyett.
Chairman Mark Tucker is also set to step down by 2026.
“It certainly is unusual for a large bank such as HSBC to go through three major changes in such rapid succession,” said Octavio Marenzi, CEO of consulting firm Opimas.
The changes follow Quinn’s reshaping of the bank, which included dropping underperforming businesses in the US, Canada, and France, and trimming upper management ranks.
A key task for his successor will be to revive HSBC’s shares, which have gained just 4% since Quinn took over in August 2019, compared to a 54% surge in the European banking sector index.
Despite a record annual profit of $30 billion in 2023, challenges remain for HSBC.
These include geopolitical tensions between Britain and China and a forecasted fall in global central bank interest rates.
“There are not many candidates to lead the company who will have the two essential skills of managing both politics and people,” said an investor.
Former wealth business head Charlie Nunn, a previous CEO contender, left in 2020 to become CEO at Lloyds.
Highlighting the bank’s top talent also makes those not selected potential targets for headhunters.
“Pay increases for better retention under the C-suite would be a good thing,” said a third HSBC shareholder.
“It is really important to ensure some stability and continuity for the bank given the CEO transition.”
Kyle Samuels, CEO of Creative Talent Endeavors, emphasized the complexity of internal promotions.
“The Chairman needs to communicate the decision transparently and offer significant new roles or projects to keep those not selected. Immediate recognition and rewards can also help,” he said.
The appointment of an insider could provide continuity for HSBC, analysts suggested.
“For HSBC, if the CFO becomes the CEO, it will provide some degree of continuity,” noted RBC Capital Markets’ Benjamin Toms.