HSBC CEO Noel Quinn has defended the bank's stance on fixed dividends at Friday's annual meeting, amid pressure from shareholder resolutions that require 75% of votes to pass. Quinn argued that maintaining fixed dividends represents "wise corporate governance and wise capital management for a bank." However, Michael Makdad, senior equity analyst at Morningstar, did not expect these resolutions to clear the required threshold.
Makdad explained that while the proposals may not succeed this time around, they reflect long-term issues unlikely to disappear for HSBC. He predicted continued pressure on management from leading shareholders due to recent challenges in banking. Shares of HSBC were trading 0.6% lower in Hong Kong ahead of the annual meeting scheduled for 6 p.m.
In related news, European Bank HSBC defeated a resolution backed by major investor Ping An Insurance Group and submitted by Hong Kong-based shareholders calling for a potential spin-off of its profitable Asia business. The bank's chairman Mark Tucker announced that shareholders had supported all board resolutions during the investor meeting.
Special resolutions put forth by individual investor Ken Lui recommending dividend boosts and strategy reviews were both rejected as well. Final voting results will be released later on Friday.
Approximately one-fifth of voting investors favored reporting regularly about possibly carving out HSBC's Asian unit; however, only 19.2% supported returning its dividend levels to pre-pandemic values. Besides Ping An Insurance Group—which owns roughly 8% of the bank—other independent shareholder advisory groups like Institutional Shareholder Services and Glass Lewis & Co also advised clients against backing these motions.
The call for radical restructuring originated from minority shareholders who urged consideration into spinning off HSBC’s Asia business—a move supported by its largest shareholder Ping An Insurance Group as an attempt to enhance value for stockholders.
Despite these pressures, at their annual shareholder meeting in Birmingham, England, HSBC shareholders overwhelmingly voted against restructuring proposals. Ping An Insurance of China, owning over 8% of HSBC stock, had been pushing for the plan as a means to boost share prices—including considering spinoffs and isolating its most profitable Asian operations.
HSBC Chairman Mark Tucker expressed relief at the rejection of these shareholder resolutions: "The board, my colleagues and shareholders can now move forward."