HSBC 2008 Annual Report Download - page 320

HSBC HOLDINGS PLC
Directors’ Remuneration Report (continued)
Executive Directors’ remuneration > Annual bonus / Long-term incentive plan
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overall performance of the Group, as set out above,
as well as their own part of the business.
For executive Directors with responsibility for
Asia, performance against financial objectives was
mixed. Whilst the target for return on equity was
met, overall 2008 profitability did not meet its target.
Performance against Process, Customer and People
objectives was stronger and this included high
customer recommendation and employee
engagement scores.
For Global Banking and Markets, although the
financial targets for 2008 were not met, the business
remained profitable and relative performance against
its peers was strong. Performance against Process,
Customer and People objectives was strong and
included high employee engagement scores and
improved positions within global markets league
tables.
The bonus awards, which are shown in the table
below, have been fully deferred into HSBC Holdings
Restricted Shares, issued under the HSBC Share
Plan, with a vesting date three years from the date of
the award. Bonus awards made in 2008, in respect of
performance in 2007 are shown for reference.
Cash bonus
2009 2008
£000 £000
D J Flint1 ....................... – 800
M F Geoghegan1 ........... – 2,140
S K Green2 .................... – 1,750
S T Gulliver1 ................. – 5,592
HK$000 HK$000
V H C Cheng ................ – 23,864
US$000 US$000
A A Flockhart ............... – 2,598
Restricted Share Awards
2009 2008
£000 £000
D J Flint1 ....................... – –
M F Geoghegan1 ........... – –
S K Green2 .................... – –
S T Gulliver1.................. – 3,600
HK$000 HK$000
V H C Cheng ................ 18,533 9,832
A A Flockhart3 .............. 18,705 –
US$000 US$000
A A Flockhart3 .............. – 1,184
1 M F Geoghegan, D J Flint and S T Gulliver requested that
they not be considered for a bonus in respect of 2008.
2 At the Chairman’s request, he is no longer eligible to
receive an annual bonus payment.
3 The change in currency for A A Flockhart reflects a change
of expatriate terms. The 2008 figure is on a gross equivalent
basis.
Long-term incentive plan
Under the HSBC Share Plan, executive Directors, as
with other participants in the Plan, are eligible to
receive awards of Performance Shares with a face
value at grant of up to a maximum of seven times
salary. The performance conditions associated with
these awards are detailed in the next section,
‘Arrangements from 2008’.
No awards of Performance Shares have been
made to date in 2009. Awards may be granted later
in 2009, taking into account performance and the
market context at the time.
The face and expected values of individual
awards made in 2008, in respect of the prior 2007
performance year, are shown for reference.
2008
Face value Expected value1
£000 £000
D J Flint ........................ 3,182 1,305
M F Geoghegan ............ 7,477 3,066
S K Green ...................... 8,750 3,587
S T Gulliver ................... 473 194
HK$000 HK$000
V H C Cheng ................. 17,231 7,065
US$000 US$000
A A Flockhart ................ 2,172 890
1 41 per cent of the face value for the 2008 award.
Arrangements from 2008
The performance measures for the long-term
incentive awards of Performance Shares under the
HSBC Share Plan were amended last year following
approval by shareholders at the 2008 Annual
General Meeting.
From 2008, the vesting of awards is based on
three independent performance measures and an
overriding ‘sustained improvement’ judgement by
the Committee. The three Group measures are
relative total shareholder return (40 per cent of the
award); economic profit (40 per cent of the award);
and growth in earnings per share (‘EPS’) (20 per
cent of the award).
These measures provide a basis on which to
measure HSBC’s absolute and relative performance
over the long-term taking into account an external
measure of value creation, a measure of the extent to
which the return on capital invested in HSBC is in
excess of a benchmark return and a direct measure of
the profits generated for shareholders.