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Walsh quits HSBC after 'over-boarding' alert

Business News

BUSINESS / Business News 8 Views comments

One of Britain's most respected businessmen has stepped down from the board of HSBC Holdings after voting advisers raised concerns over his portfolio of directorships.

The bank confirmed a story first reported by Sky News that Paul Walsh, the former chief executive of Diageo, would not seek re-election at its annual general meeting next week despite encouragement from boardroom colleagues to remain in place.

HSBC said Mr Walsh had "resigned from the board with immediate effect to focus on other commitments".

City sources said that proxy voting agencies including ISS and Glass Lewis had circulated reports recommending that shareholders oppose Mr Walsh's re-election because of the scale of his business commitments.

He is chairman of Compass Group, the FTSE 100 contract caterer, and the AIM-listed satellite group Avanti Communications, as well as serving on the boards of London-listed RM2 and New York-listed FedEx.

The agencies' reports are understood not to make any judgements about Mr Walsh's competence, and may spark a renewed debate about the quality of voting advisers' judgements.

A person close to HSBC said there was no doubt that Mr Walsh would have easily secured sufficient backing to retain his seat on the board, but that he had decided to step down to save the bank from any embarrassment resulting from a substantial vote against him.

The issue of 'over-boarding', where an individual is deemed to have too many directorships to fulfil their duties properly, is understood to be becoming a greater concern for proxy advisers.

ISS is also recommending that investors oppose the re-election of Irene Lee, another HSBC non-executive whose other roles include directorships of companies such as Cathay Pacific Airways.

One independent shareholder described the recommendation regarding Mr Walsh as "a scandal".

"Are they really suggesting that someone of the calibre of Paul Walsh doesn't have the capacity to make a judgement about whether he has sufficient time to devote to his duties?" said the investor, who did not want to be named.

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