HSBC 2003 Annual Report Download - page 301

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The HSBC Qualifying Employee Share Ownership Trust was established in 1999 to satisfy options exercised by UK
participants of the HSBC Holdings Savings-Related Share Option Plan. During 2003, HSBC QUEST Trustee (UK)
Limited, the corporate trustee of the QUEST, subscribed at market value for 2,200,630 ordinary shares at a total cost
of US$27 million (2002: US$68 million; 2001: US$39 million). HSBC provided US$nil (2002: US$nil; 2001:
US$nil) for this purpose.
During 2003, 3,175,232 ordinary shares (2002: 9,564,355 shares; 2001: 8,774,315 shares) were transferred from the
QUEST to employees who exercised under the HSBC Holdings Savings-Related Share Option Plan. US$27 million
(2002: US$68 million; 2001: US$39 million) was received from the share option plan participants. The price paid by
option holders ranged from £4.5206 to £6.7536 (2002: £3.059 to £6.7536; 2001: £1.806 to £6.7536) per ordinary
share of US$0.50.
At 31 December 2003, the trust held 514,293 ordinary shares (2002: 1,488,895 shares; 2001: 4,905,939 shares) of
US$0.50 with a market value of US$8,062,509 (2002: US$16,474,634; 2001: US$57,308,030) in respect of these
options. Dividends on these shares are waived by the QUEST.
HSBC has taken advantage of the exemptions applicable to Inland Revenue approved SAYE share option schemes
and equivalent overseas schemes under UITF Abstract 17 (revised 2000) ‘Employee share schemes’ .
HSBC Own shares held reserve
Included within the Own shares held reserve are:
(a) US$33 million (2002: US$29 million; 2001: US$29 million) of shares held by HSBC Life International.
(b) US$134 million (2002: US$nil; 2001: US$nil) of shares held by CCF S.A. for market making activities.
(c) US$653 million (2002: US$540 million; 2001: US$571 million) of shares held by HSBC Holdings as explained
below.
(d) US$58 million (2002: US$56 million; 2001 US$76 million) of ordinary shares held in trusts established by
subsidiary companies for the purposes of conditional awards under the Restricted Share Plan, details of which
are provided in the Directors’ Remuneration Report on pages 216 to 219. At 31 December 2003, such trusts held
7,562,628 ordinary shares (2002: 5,029,157 ordinary shares; 2001: 3,455,821 ordinary shares).
(e) US$2 million (2002: US$nil; 2001 US$nil) of ordinary shares held in trusts established by subsidiary
companies which may be used in respect of the exercise of share options or for the purposes of share awards as
detailed in Note 35. At 31 December 2003, such trusts held 100,556 (2002: nil; 2001: nil) ordinary shares.
(f) US$43 million (2002: US$21 million; 2001: US$10 million) of ordinary shares held in trusts established by
subsidiary companies which may be used in respect of the exercise of share options or for the purposes of share
awards as detailed in Note 35. At 31 December 2003, such trusts held 3,151,224 ordinary shares (2002:
1,482,249 ordinary shares; 2001: 796,700 ordinary shares).
HSBC Holdings Own shares held reserve
Included within the HSBC Holdings Own shares held reserve are:
(a) US$64 million, of HSBC Holdings’ own shares (2002: US$43 million; 2001: US$32 million) held in trust for
the purposes of conditional awards under the Restricted Share Plan, details of which are provided in the
Directors’ Remuneration Report on pages 216 to 219. At 31 December 2003, the trust held 6,391,497 ordinary
shares (2002: 4,664,315 ordinary shares; 2001: 3,230,422 ordinary shares) with a market value at that date of
US$100,191,651 (2002: US$51,610,678; 2001: US$37,735,716) in respect of these conditional awards.
(b) US$455 million of HSBC Holdings’ own shares (2002: US$497 million; 2001: US$539 million) held in trust
which may be used in respect of the exercise of share options as detailed in Note 35. At 31 December 2003, the
trust held 32,775,055 ordinary shares (2002: 35,745,555 ordinary shares; 2001:38,788,413 ordinary shares) with
a market value of US$513,774,295 (2002: US$395,524,816; 2001: US$453,101,339) in respect of these option
holders.