HSBC 2006 Annual Report Download - page 257

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Group Chairman and Group Chief Executive
The roles of Group Chairman and Group Chief
Executive are separated and held by experienced
full-time Directors. S K Green succeeded Sir John
Bond as Group Chairman at the conclusion of the
Annual General Meeting on 26 May 2006 and
M F Geoghegan succeeded S K Green as Group
Chief Executive. Sir Brian Moffat, the senior
independent non-executive Director and the
Chairman of the Nomination Committee, wrote to
shareholders regarding these appointments.
He explained that the decision by the Board to
appoint S K Green as Group Chairman was made
after a thorough selection process. This was
conducted by the Nomination Committee, assisted
by external advisers, and included extensive
benchmarking against external candidates. The
Committee considered carefully the requirements of
the position in terms of HSBC’s size, geographical
spread and complexity; the need for full time
executive commitment and experience of
international banking at the highest level; and took
account of the need for the Group Chairman to have
a wide range of skills, the capacity for strategic
thinking and the ability to sustain and enhance the
Group’s corporate character. The Committee also
took into consideration the need for the Group
Chairman to be able to work closely and effectively
with the Group Chief Executive, to have the
authority to run the Board and to have the personal
standing to represent HSBC externally at the highest
level. Job specifications for the Group Chairman and
the Group Chief Executive, setting out their
respective authorities and responsibilities, have been
agreed by the Board. The Nomination Committee
came to the unanimous conclusion that S K Green
was the outstanding candidate.
S K Green joined HSBC in 1982. He was Group
Treasurer from 1992 to 1998, and Executive
Director, Corporate, Investment Banking and
Markets from 1998 to 2003, when he was appointed
Group Chief Executive. He has worked in Hong
Kong, New York, the Middle East and London, and
has immense international experience and
knowledge of HSBC. The Committee concluded that
S K Green is superbly well qualified to serve as
Group Chairman. His principal commitment outside
HSBC is as Chairman of The British Bankers’
Association.
S K Green’s successor as Group Chief
Executive was M F Geoghegan, who led HSBC
Bank, HSBC’s principal subsidiary in the UK, from
2004 to March 2006. He too is highly qualified for
his position as Group Chief Executive and his
appointment also had the unanimous support of the
Board. Mr Geoghegan has over 33 years’ experience
with HSBC and has worked in 10 countries in North
and South America, Asia, the Middle East and
Europe.
The Directors believed strongly that these
appointments were in the best interests of the
shareholders. The appointments had the unanimous
support of the Directors and were made after
consulting with representatives of major institutional
investors and explaining the succession planning and
independent external search process. S K Green and
M F Geoghegan stood for re-election at the 2006
Annual General Meeting and were both re-elected
ahead of taking up their new roles from the
conclusion of that meeting.
Nowadays, success in financial services depends
in a large measure on the relative strengths of
competing management teams. Planning
management succession is key to this, has long been
established in the Group and the plan is regularly
reviewed by the non-executive Directors.
Furthermore, HSBC is a remarkable organisation
with a distinctive character and culture. The business
is managed through international teamwork and
HSBC believes this is best achieved by management
continuity and amongst colleagues who have similar
values. By way of example, the top 45 executives
have a combined service of over 1,000 years with
HSBC, although four of these executives have joined
the Group in the last six years, thus ensuring there is
a balance of new talent to help run the business.
Board balance and independence of
Directors
The Board considers all of the non-executive
Directors to be independent in character and
judgement. Baroness Dunn and H Sohmen have
served on the Board for more than nine years,
however, and in that respect only, do not meet the
usual criteria for independence set out in the UK
Combined Code on corporate governance. The
Board has therefore determined Lord Butler,
R K F Ch’ien, J D Coombe, R A Fairhead,
W K L Fung, S Hintze, J W J Hughes-Hallett, Sir
Brian Moffat, Sir Mark Moody-Stuart, G Morgan,
S W Newton, S M Robertson, and Sir Brian
Williamson to be independent. In reaching its
determination of each non-executive Director’s
independence the Board has concluded that there are
no relationships or circumstances which are likely to
affect a Director’s judgement and any relationships
or circumstances which could appear to do so were
considered not to be material. From the conclusion
of the Annual General Meeting in 2007, Lord Butler,