HSBC 2009 Annual Report Download - page 336

HSBC HOLDINGS PLC
Directors’ Remuneration Report
Remuneration committee / Principles / Application to executive Directors / HSBC performance and context
334
Page
Remuneration policy (unaudited)
Remuneration Committee ............................. 334
Overall principles .......................................... 335
Application to executive Directors ................ 335
HSBC performance and market context ........ 335
Key achievements ...................................... 336
Management of risk ................................... 336
Executive Director remuneration .................. 337
Salary ......................................................... 337
Annual bonus ............................................. 338
Performance Shares ................................... 339
Funding ...................................................... 342
Total shareholder return ............................ 342
Pensions ..................................................... 342
Share ownership guidelines ....................... 342
Service contracts ........................................ 343
Other directorships .................................... 343
Non-executive Directors ............................... 343
Fees ........................................................... 344
Remuneration review (audited)
Directors’ 2009 remuneration ....................... 345
Pensions ........................................................ 346
Share plans .................................................... 347
Remuneration Committee
The Remuneration Committee meets regularly to
consider human resource issues relating to terms
and conditions of employment, remuneration and
retirement benefits. Within the authority delegated
by the Board, the Committee is responsible for
approving the remuneration policy of HSBC and in
doing so takes into account the pay and conditions
across the Group. This includes the terms of bonus
plans, share plans, other long-term incentive plans
and the individual remuneration packages
of executive Directors and other senior Group
employees, including all in positions of significant
influence and those having an impact on HSBC’s
risk profile. No Directors are involved in deciding
their own remuneration.
Following each meeting the Committee reports
to the Board on its activities. The terms of reference
of the Committee are available at
www.hsbc.com/boardcommittees.
The members of the Remuneration Committee
throughout 2009 were Sir Mark Moody-Stuart
(Chairman), J D Coombe, W S H Laidlaw and
G Morgan. J L Thornton became a member of the
Committee on 24 April 2009.
There were seven meetings of the Remuneration
Committee during 2009. The table on page 304 gives
details of Directors’ attendance at these meetings.
The Committee has appointed Deloitte LLP
to provide independent advice on executive
remuneration issues and Towers Watson (formerly
Towers Perrin) to provide remuneration data. As
global firms, each of these firms also provided other
consulting services to various parts of HSBC. Other
consultants are used from time to time to advise on
specific issues. During the year the Group Chief
Executive provided regular briefings to the
Committee and the Committee received advice from
the Group Managing Director, Human Resources,
A Almeida, the Head of Group Performance and
Reward, S J Walker and subsequently T Roberts,
and the Group Chief Risk Officer, B Robertson.
Overall principles
A global reward strategy for the Group was approved
by the Remuneration Committee in 2007. This
strategy provided a framework for the Remuneration
Committee in carrying out its responsibilities during
the year and includes the following key elements:
• an assessment of reward with reference to clear
and relevant objectives set within a balanced
scorecard framework. This framework facilitates
a rounded approach to objective setting. Under
this framework, objectives are set under four
categories – financial, process (including risk
mitigation), customer and people. Significant
importance is given to the achievement of
efficiency and risk objectives as well as
financial objectives. Objectives relating to
customer development and the productivity of
the Group’s human capital are also key to
financial performance and the development and
sustainability of the Group over the short and
medium term;
• a focus on total compensation (salary, bonus and
the value of long-term incentives) with variable
pay (namely bonus and the value of long-term
incentives) differentiated by performance;
• the use of considered discretion to assess the
extent to which performance has been achieved
rather than applying a formulaic approach
which, by its nature, may encourage
inappropriate risk taking and cannot cover all
scenarios;
• a significant proportion of variable pay being
deferred into, predominantly, awards of HSBC
Holdings Restricted Shares to tie recipients to