Paul Walsh has abruptly quit the board of HSBC amid concerns the former boss of spirits giant Diageo is distracted from the role because he holds too many directorships at other companies.
In a surprise move, Mr Walsh stepped down as a non-executive director of Europe’s biggest bank with immediate effect, having only been appointed to the board in January last year.
The City grandee is leaving to stave off the possibility of a revolt at HSBC’s annual general meeting on Friday, after influential investor advisory firms Institutional Shareholder Services (ISS) and Glass Lewis told fund managers to vote against his re-election as a director.
Mr Walsh, who led Diageo for 12 years until 2013, is also chairman of FTSE 100 catering giant Compass, Aim-listed satellite business Avanti and private firm Chime Communications, as well as sitting on the boards of New York-listed FedEx and British pallet maker RM2.
ISS said it was worried about his “multiple external appointments”, as did Glass Lewis, and both firms raised similar concerns about another HSBC non-exec, Irene Lee.
Mr Walsh’s decision to quit is likely to heap pressure on Ms Lee, who the advisory firms also recommended investors vote against at the AGM.
In a further blow to HSBC, ISS only gave lukewarm backing to HSBC’s remuneration report, suggesting the bank could be hit by a rebellion over executive pay.
Pre-tax profits at HSBC plunged by 62pc to $7.1bn last year, hit by by an unexpected $3.2bn goodwill impairment following an overhaul of its private banking division in Europe and a $1.7bn loss on the sale of its Brazilian business.
The US lawyer assigned to monitor an overhaul of HSBC’s financial crime controls after it settled money laundering allegations in 2012 also raised concerns about the lender’s progress.
ISS said it was concerned that despite those developments the annual bonus paid to HSBC chief Stuart Gulliver rose to almost £1.7m in 2016 from about £1.1m a year earlier. Mr Gulliver took home £5.7m in total, less than the £7.3m he received in 2015.
However, despite its reservations, ISS recommended that investors support HSBC’s pay report in Friday’s non-binding vote.
An HSBC spokesman declined to comment on Ms Lee’s behalf.