LONDON BRIEFING:Annual shareholder meetings have become a lightning rod for anger over executive salaries

ON FRIDAY, at 11am, shareholders in HSBC will gather at the Barbican arts and conference centre in the City of London for their latest showdown with the board of Britain's biggest bank.

Top of the agenda will be the controversial pay and performance packages that could see top executives at the bank share an eye-watering £120 million over the next three years.

Should the targets be met, chief executive Mike Geoghegan, for example, stands to collect £36 million, and other directors will also be handsomely rewarded.

Questions will also be asked about the group's exposure to the crisis-hit US subprime housing market and some of the toughest grilling is likely to come from Knight Vincke, the Monaco-based activist investment firm headed by Eric Vincke.

The firm has been waging a campaign against HSBC for the past year or so and is expected to turn up at the meeting to interrogate the board in public.

Vincke is fiercely critical not just of the bank's performance targets, which he believes are far too undemanding, but also of its overall strategy and its share price performance.

Institutional shareholders, too, have made it clear they are unhappy with the rewards that could potentially come the way of the HSBC board.

The Association of British Insurers has issued what it calls an "amber-top" warning to clients, highlighting its concerns about the pay scheme.

Pay protests have become something of a tradition at HSBC's annual shareholder gatherings.

In 2003, the focus of shareholder anger was William Aldinger, who headed Household International, the US subprime lender controversially bought by HSBC earlier in the year - and now the source of much of its subprime woes.

Aldinger's pay deal amounted to $57 million over three years - along with paid dental care for life. It sparked a huge row over US-style salaries, although HSBC rejected calls for the contract to be renewed.

HSBC's then chairman, Sir John Bond, took the precaution of writing to 50 of the bank's largest shareholders ahead of the annual meeting, in what proved an astute move. Although there was a significant No vote, the rebellion was defused. If only the institutions had known then just what a mess the Household business would turn out to be . . .

The following year, HSBC's truculent shareholders used the annual meeting to confront the bank both on pay and on its move to transfer 4,000 call-centre and processing jobs to Asia. Then, in 2005, investors arriving at the meeting expecting the new traditional fireworks were greeted by hundreds of striking HSBC staff. Carrying red flags, the bank workers handed out packs of peanuts to shareholders, which they said reflected the wages they were paid.

Bond's £3.5 million salary was branded "obscene" although, in his defence, the HSBC veteran said he had started his career at the bank as a counter clerk on £26 a month. As that was in the early 1960s, however, it did little to appease the unions.

Although Bond has since moved on to chair Vodafone, the HSBC board has had plenty of practice at heading off shareholder revolts. Friday's meeting looks finely balanced, however, particularly if Knight Vincke succeeds in stirring up the assembled masses.

The latest row over pay at HSBC comes amid growing criticism of rewards earned in the banking sector. As ordinary households tighten their belts, bonuses earned by City workers so far this year are put at more than £13 billion, down a mere 1 per cent on a year ago, despite the impact of the credit crunch.

Unions have accused the City of London's "multi-millionaire elite" of being "out of control and divorced from economic realities". The GMB union is calling for an inquiry into whether the £50 billion bailout to banks by the Bank of England (ie, the taxpayer) is being used to fund bankers' bonuses.

Fiona Walsh writes for theGuardian newspaper in London