HSBC 2006 Annual Report Download - page 258

HSBC HOLDINGS PLC
Report of the Directors: Governance (continued)
Board of Directors > The Board / Corporate governance codes
256
W K L Fung and Sir Brian Moffat will each have
served on the Board for more than nine years and, in
that respect only, will not meet the usual criteria for
independence set out in the UK Combined Code on
corporate governance.
When determining independence the Board
considers that calculation of the length of service of
a non-executive Director begins on the date of his or
her first election by shareholders as a Director of
HSBC Holdings. Given the complexity and
geographical spread of HSBC’s business, the
experience of previous service on a subsidiary
company board can be a considerable benefit to
HSBC and does not detract from a Director’s
independence.
In accordance with the Rules Governing the
Listing of Securities on The Stock Exchange of
Hong Kong Limited, each non-executive Director
determined by the Board to be independent has
provided an annual confirmation of his or her
independence to HSBC Holdings.
Information, induction and ongoing
development
The Board regularly reviews reports on progress
against financial objectives, on business
developments and on investor and external relations
and receives reports from the Chairmen of Board
Committees and from the Group Chief Executive.
The Board receives regular reports and presentations
on strategy and developments in the customer groups
and principal geographical areas. Regular reports are
also provided to the Board, the Group Audit
Committee and the Group Management Board on
credit exposures and the loan portfolio, asset and
liability management, liquidity, litigation and
compliance and reputational issues. The agenda and
supporting papers are distributed in advance of all
Board and Committee meetings to allow time for
appropriate review and to facilitate full discussion at
the meetings. All Directors have full and timely
access to all relevant information and may take
independent professional advice if necessary.
The Directors have free and open contact with
management at all levels. Group Managing Directors
and Group General Managers meet informally with
Directors after Board meetings. Board offsite visits
are made each year to enable Directors to see at first
hand the operations of subsidiary companies in local
environments and to meet management, employees
and customers. In 2006 the Board visited Istanbul,
Hong Kong and Shenzhen.
Full, formal and tailored induction programmes,
with particular emphasis on internal controls, are
arranged for newly appointed Directors. The
programmes consist of a series of meetings with
other Directors and senior executives to enable new
Directors to receive information and familiarise
themselves with HSBC’s strategy, operations and
internal controls. Prior to their appointment, each
Director receives comprehensive guidance on the
duties and liabilities of a Director of HSBC
Holdings. Opportunities to update and develop skills
and knowledge, through externally run seminars and
through briefings by senior executives, are provided
to all Directors.
Performance evaluation
MWM Consulting was commissioned to undertake
an independent performance evaluation of the Board,
its committees and individual Directors. The
evaluation examined those key areas where the
Board requires clarity in order to provide high level
oversight, including: the strategic process; key
business drivers and performance milestones; the
global economic environment and competitive
context in which HSBC operates; the risks faced by
the business; board dynamics, capability and
alignment; reputation; and information flows. The
report on the evaluation has been reviewed by the
Board and has been used by the non-executive
Directors, led by Sir Brian Moffat, in their
evaluation of the performance of the Group
Chairman. The review concluded that the Board and
its committees were functioning effectively. It is the
intention of the Board of HSBC Holdings to
continue to review its performance and that of its
Directors annually.
Retirement and re-election of Directors
Lord Butler, R K F Ch’ien, Baroness Dunn,
R A Fairhead, W K L Fung, S Hintze, Sir
Brian Moffat, G Morgan and H Sohmen will retire at
the forthcoming Annual General Meeting. With the
exception of R K F Ch’ien, S Hintze and H Sohmen,
who are to retire, they offer themselves for
re-election.
Following the performance evaluation of the
Board, the Group Chairman has confirmed that the
Directors standing for re-election at the Annual
General Meeting continue to perform effectively and
to demonstrate commitment to their roles.
Brief biographical particulars of all Directors
including those seeking re-election at the Annual
General Meeting, are given on pages 248 to 250.