HSBC 2007 Annual Report Download - page 330

HSBC HOLDINGS PLC
Directors’ Remuneration Report (continued)
Executive Directors / Non-executive Directors / Directors’ emoluments
328
Number of shares
to be held
at 31
December
2007
Group Chairman ............................... 300,000 536,652
Group Chief Executive ..................... 300,000 385,189
Group Finance Director .................... 100,000 112,781
Group Managing Directors ............... 75,000 –1
1 A majority of the Group Managing Directors exceed the
expected holdings; where the holdings are below, the
executives are within five years of their appointment and
working towards the expected level.
Under the guidelines, the shareholding is
expected to be achieved within five years of the
executive’s appointment or three years from the date
of approval of the guidelines (May 2007), whichever
is the later. All executive Directors and the majority
of Group Managing Directors exceed the required
shareholding. The Remuneration Committee will
monitor compliance annually prior to approving any
awards or vesting of Performance Shares. The
Remuneration Committee will have full discretion in
determining any penalties in case of non-
compliance, which could include: a reduction of
future awards of long-term incentives and/or an
increase in the proportion of the annual bonus that is
deferred into shares. Increases in the expected level
of share ownership will be introduced as part of the
refinements to reward strategy and structure from
2008 discussed above.
Service contracts
HSBC’s policy is to employ executive Directors on
one-year rolling contracts although longer initial
terms may be approved by the Remuneration
Committee if considered appropriate. The
Remuneration Committee will, consistent with
the best interests of the Group, seek to minimise
termination payments.
S K Green, M F Geoghegan and D J Flint have
rolling service contracts with a notice period of
12 months for either party save that D J Flint’s
contract provides for nine months’ notice to be
given by Mr Flint.
In the event of early termination of employment
of S K Green, M F Geoghegan, or D J Flint, other
than for cause, HSBC is entitled to make a payment
in lieu of notice equal in the case of D J Flint, to base
salary and pension entitlement and in the case of
S K Green and M F Geoghegan to base salary,
pension entitlements and other benefits.
In addition, on termination of employment by
HSBC, other than for cause (or termination by either
party within 12 months following a change of
control), S K Green and M F Geoghegan will be
eligible for a bonus calculated as not less than the
average of the previous two years of bonus payments
received, pro-rated for any part year worked to
termination.
The dates of executive Directors’ service
contracts are as follows:
Contract date
D J Flint ............................................. 29 September 1995
M F Geoghegan ................................. 24 May 2007
S K Green ........................................... 24 May 2007
Other directorships
Executive Directors, if so authorised by either the
Nomination Committee or the Board, may accept
appointments as non-executive directors of suitable
companies which are not part of HSBC. Approval
will not be given for executive Directors to accept a
non-executive directorship of more than one FTSE
100 company. When considering a non-executive
appointment, the Nomination Committee or Board
will take into account the expected time commitment
of such appointment. The time commitment for
executive Directors’ external appointments will be
reviewed as part of the annual Board review. Any
remuneration receivable in respect of an external
appointment is normally paid to HSBC, unless
otherwise approved by the Remuneration
Committee. D J Flint does not retain his fees as a
non-executive Director of BP p.l.c.
Non-executive Directors
Non-executive Directors are appointed for fixed
terms not exceeding three years, subject to their
re-election by shareholders at Annual General
Meetings. Non-executive directors have no service
contract and are not eligible to participate in HSBC’s
share plans. Current non-executive Directors’ terms
of appointment will expire as follows: in 2008,
Lord Butler, Baroness Dunn and Sir Brian Moffat;
in 2009, W K L Fung, S W Newton, S M Robertson
and Sir Brian Williamson; in 2010, R A Fairhead,
Sir Mark Moody-Stuart and G Morgan; and in 2011,
J D Coombe, J L Dúran, J W J Hughes-Hallett and
W S H Laidlaw. S A Catz and N R N Murthy were
appointed non-executive Directors with effect from
1 May 2008. Subject to their re-election by
shareholders at the Annual General Meeting in 2008,
their terms of appointment will expire in 2011.
Fees
Non-executive Directors’ fees are regularly reviewed
and compared with other large international
companies. The current fee, which was approved by
shareholders in 2006, is £65,000 per annum.