HSBC 2001 Annual Report Download - page 145

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achieved by focusing on predetermined targets. The
shares awarded are normally held under restrictions
for five years and are transferred to the individuals
only after attainment of a performance condition
which demonstrates the sustained and above average
financial performance of HSBC.
Executive Directors and Group General
Managers have been eligible to receive conditional
awards of Performance Shares under the HSBC
Holdings Restricted Share Plan and the HSBC
Holdings Restricted Share Plan 2000 since 1997. The
award of Performance Shares under these plans was
extended to other senior executives from 1999.
In appropriate circumstances, employees may
receive awards under the HSBC Holdings Restricted
Share Plan 2000 and the HSBC Holdings Group
Share Option Plan. Participants in these Plans are
also eligible to participate in the HSBC Holdings
savings-related share option plans on the same terms
as other eligible employees.
As part of HSBCs strategy, the use of the
existing share plans has been extended so that more
employees participate in the success they help to
create. In the UK, the HSBC Holdings UK Share
Ownership Plan, which enables employees to
purchase HSBC Holdings shares from pre-tax salary,
was established during the year. In addition,
employees in France may participate in a Plan d'
Epargne Entreprise through which they may
subscribe for HSBC Holdings shares.
Directors and Senior Management
HSBC Holdings Board is currently composed of 13
non-executive Directors and eight executive
Directors. With businesses in 81 countries and
territories, HSBC aims to attract Directors with a
variety of different experience, both in its key
markets and internationally. The Board currently
includes nationals of seven different countries. The
eight executive Directors and 26 Group General
Managers have in total more than 750 years of
service with HSBC.
Directors' fees
Directors fees are regularly reviewed and compared
with other large international companies. The current
basic fee of £35,000 per annum is at the median of
HSBC Holdings peer group. In addition, non-
executive Directors receive the following fees for
serving on certain Committees:
Chairman, Audit Committee £10,000 p.a.
Member, Audit Committee £7,500 p.a.
During 2001 five Audit Committee meetings were
held. A Director’s commitment to each meeting can
be as much as 15 hours.
Chairman, Remuneration Committee £10,000 p.a.
Member, Remuneration Committee £5,000 p.a.
During 2001, seven meetings of the Remuneration
Committee were held.
Chairman of the HSBC in the £5,000 p.a.
Community Advisory Panel
Executive Directors’ remuneration
HSBCs operations are large, diverse and
international; for example, less than 40 per cent of
net income is derived from the United Kingdom.
The executive Directors are experienced
executives with detailed knowledge of the financial
services business in various countries. In many cases
there has been a need to attract them from abroad to
work in the United Kingdom.
It became clear to the Board over two years ago
that executive Directors total remuneration had
fallen steadily behind the competition. This became
apparent from league tables in the press, surveys
from remuneration consultants, comparisons with top
executives in acquired companies such as Republic
Bank of New York and CCF and, perhaps above all,
from the fact that some of the next generation of top
management, due to the need to retain market
competitiveness in certain overseas locations, were
already being paid more than the current executive
Directors.
The Remuneration Committee has appointed
Towers Perrin, who have wide experience of
international companies, to conduct an annual top
executive remuneration survey. Other consultants are
used from time to time to validate their broad
findings.
The survey conducted in 2000 confirmed the
need to make major changes in order to bring total
remuneration to the chosen competitive position for
this group of executives, i.e. the 75th percentile of
market comparators. Recent information shows that
even with the action taken, total remuneration for
this group remains below the 75th percentile in 2001.