HSBC Holdings PLC is likely to back down after investors opposed a plan to give Chief Executive Officer Michael Geoghegan a pay increase of as much as 40% this year, said a person briefed on the discussions.

The proposal would have increased Geoghegan's base salary to as much as $2.3 million this year, from $1.7 million in 2009, said the person, who declined to be identified because the talks are private.

Executives at Barclays PLC, Royal Bank of Scotland Group PLC and Lloyds Banking Group PLC all waived bonuses for 2009 amid public anger over such payments after taxpayers bailed out the banking system.

In a sign of increasing shareholder involvement in pay issues, Royal Dutch Shell PLC said this month it would freeze the pay of its CEO and other executives until 2011, after an investor revolt.

"This is such a big issue that the shareholders are likely to put their votes where their mouths are," said Paul Mumford, a fund manager at Cavendish Asset Management, which oversees about $1 billion. "It shows there is shareholder power and management can't bluster their way through."

HSBC, which is based in London, sought to justify the pay increase for Geoghegan after the CEO took charge of strategy last year. The Financial Times first reported the bank's plan Wednesday.

A final decision on directors' pay is to be taken by the banking company's remuneration committee on Friday.

The company said in a statement: "HSBC has not taken taxpayer money, and we have been profitable, generated capital, paid dividends and very much remained open for business throughout the crisis."

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