HSBC 2009 Annual Report Download - page 341

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2009 performance1 2008 performance 2007 performance
Cash Restricted
Shares
Cash Restricted
Shares
Cash Restricted
Shares
£000 £000 £000 £000 £000 £000
D J Flint2 ............................ – 2,100 – – 800 –
M F Geoghegan2................. – 4,000 – – 2,140 –
S K Green3 ......................... – – – – 1,750 –
S T Gulliver2 ...................... – 9,000 – – 5,592 3,600
HK$000 HK$000 HK$000 HK$000 HK$000 HK$000
V H C Cheng ..................... – 15,600 – 18,533 23,864 9,832
A A Flockhart4 ................... – 24,000 – 18,705 – –
US$000 US$000 US$000 US$000 US$000 US$000
A A Flockhart4 ................... – – – – 2,598 1,184
1 The awards made in respect of 2009 performance will be fully deferred into awards of Restricted Shares, issued under the HSBC Share
Plan. With the exception of the award for V H C Cheng, 33 per cent of the executive Directors’ awards will vest on each of the first and
second anniversaries of the date of the award, with the balance vesting on the third anniversary of the date of the award. The award for
V H C Cheng has a vesting date three years from the date of the award.
2 M F Geoghegan, D J Flint and S T Gulliver requested that they not be considered for a bonus in respect of 2008.
3 At the Chairman’s request, he is not considered for an annual bonus award.
4 The change in currency for A A Flockhart reflects a change of expatriate terms. The 2008 figure is on a gross equivalent basis.
Performance Shares
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 Group Chairman, S K Green, at his
request is no longer considered for awards of
Performance Shares. The performance conditions
associated with these awards are detailed in
‘Description of performance conditions’ below.
No awards of Performance Shares were made
in 2009, and no awards have been made to date in
2010. Awards may be considered later in 2010,
taking into account performance and the market
context at the time.
The average actual vesting of Performance
Share awards made in 2004, 2005 and 2006 (which
were tested in 2007, 2008 and 2009) has been 23 per
cent of their face value. The awards made in 2006
did not satisfy the earnings per share (‘EPS’)
condition but did satisfy the total shareholder return
(‘TSR’) condition and accordingly, 39.5 per cent of
the TSR element of the award (19.75 per cent of the
overall award) vested. The awards made in 2007
have not satisfied the earnings per share measure.
The extent to which the TSR part of the award will
vest will be determined following the completion of
the three year comparison period on 26 March 2010.
Description of performance conditions
The performance measures for the long-term
incentive awards of Performance Shares under the
HSBC Share Plan remain as follows.
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 TSR (40 per cent of the award); economic
profit (40 per cent); and growth in EPS (20 per cent).
These measures provide a basis on which to
measure HSBC’s relative and absolute 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.
Awards will not vest unless the Remuneration
Committee is satisfied that HSBC Holdings’
financial performance has shown a sustained
improvement in the period since the award date. In
determining whether HSBC Holdings has achieved
such sustained improvement the Remuneration
Committee will take account of all relevant factors,
in particular, comparisons against the TSR
comparator group in areas such as revenue growth
and mix, cost efficiency, credit performance, cash
return on cash invested, dividends and TSR.
The performance conditions are measured over
a three year performance period and awards forfeited
to the extent that they have not been met.
The performance measures and the targets
described below apply to awards made in 2008
and any awards to be made in the future. The
Remuneration Committee will review annually
whether the performance targets remain appropriate
and challenging, or whether they should be
recalibrated for any future awards, taking into
account factors such as economic expectations,
the industry’s outlook and shareholders’ interests.
The Committee will consult in accordance with
institutional shareholder guidelines on any further
changes proposed to the nature of the performance