HSBC 2010 Annual Report Download - page 227

225
Overview Operating & Financial Review Governance Financial Statements Shareholder Information
4 Allowances include an executive allowance paid to fund personal pension arrangements and a company car allowance.
5 Benefits in kind include provision of medical insurance, other insurance cover, accountancy advice and travel assistance.
V H C Cheng, A A Flockhart and M F Geoghegan received housing and other benefits in kind that are normal within the location in
which they are employed. I J Mackay relocated to London and he received temporary accommodation for him and his family
together with other normal relocation benefits.
6 Where applicable, bonus comprises: (i) the estimated monetary value of 33% of the award of HSBC Holdings Restricted Shares that
will vest on 1 March 2011 arising from the 2009 bonus awarded in March 2010 that was fully deferred into awards of HSBC
Holdings Restricted Shares, as follows: D J Flint, £685,000, A A Flockhart, £662,000, M F Geoghegan £1,304,000 and S T Gulliver,
£2,934,000; and (ii) 40% of the annual bonus in respect of the 2010 performance year that is non-deferred. The non-deferred bonus
is payable half in cash and half in HSBC Holdings Restricted Shares which are subject to a six month retention period. Full details
are set out below and on page 223.
7 The Bonus for 2010 comprises the deferred and non-deferred bonus, details of which are set out below and on page 223.
Retirement of M F Geoghegan in 2011
M F Geoghegan will continue to work under his
existing compensation arrangements until his
retirement on 31 March 2011; however he will not
be eligible to receive any bonus in respect of 2011.
M F Geoghegan will receive the sum of £1,027,500,
and the Group will also make a pension contribution
on his behalf equal to £401,250, in lieu of the remaining
nine months notice period required to terminate the
Service Agreement. Following his retirement,
M F Geoghegan will provide consultancy to HSBC
for a period of three months from 1 April 2011, at a
consultancy fee of £200,000, which he intends to
donate to charity. In accordance with our disclosure
practices these sums will also be fully disclosed in
the 2011 Directors’ Remuneration Report.
Salary
To reflect the significantly increased responsibilities
and maintain and reinforce a collegiate executive
team, the salaries for two executive Directors were
adjusted from 1 February 2010, equalising the
salaries of D J Flint, S T Gulliver and A A Flockhart.
In addition, with effect from 2010 the employer
pension contribution or executive allowance, in
lieu of pension, for D J Flint, A A Flockhart and
S T Gulliver were equalised at 50% of basic salary.
On appointment as Group Chairman, the salary
for D J Flint was increased to £1,500,000 with effect
from 3 December 2010.
On appointment as Group Chief Executive, the
salary for S T Gulliver was increased to £1,250,000,
with effect from 1 January 2011.
On appointment as Chairman, Europe, Middle
East, Africa, Latin America, Commercial Banking
and Chairman of HSBC Bank plc, the salary for
A A Flockhart was increased to £975,000, with
effect from 1 January 2011.
I J Mackay was appointed an executive Director
on 3 December 2010 with a base salary of £700,000,
and will receive an executive allowance of 50% in
lieu of pension.
No other salary increases are proposed for
executive Directors.
Annual bonus
The awards made to executive Directors in respect
of 2010 performance will be 60% deferred and 40%
non-deferred (with the exception of S T Gulliver,
whose arrangements are noted below). 50% of both
the deferred and non-deferred components will be in
the form of Restricted Shares issued under the HSBC
Share Plan. The remaining 50% will be delivered as
cash. The vesting policy as noted on page 223 under
‘Executive Directors remuneration’ will apply to the
deferred awards.
S T Gulliver, at his request, will receive his
2010 annual bonus 100% fully deferred in the form
of Restricted Shares. This award will be subject to
the same vesting policy for other executive
Directors’ deferred awards.
The award made to the former Group Chief
Executive, M F Geoghegan, and the Group
Chairman, D J Flint, in respect of his previous role
as Chief Financial Officer, Executive Director, Risk
and Regulation, reflects the overall achievements of
the Group under the balanced scorecard and risk
appetite framework. The 2010 results show an
improved profit after tax and return on equity,
although below our target range, and a strong core
tier 1 capital position. Loan impairment charges
as a percentage of total operating income reduced
and the firm’s economic profit position improved,
although it remained in an overall negative position.
Operational losses for the Group were reduced from
last year and notwithstanding the Group’s employee
engagement score reduced year on year, it still
maintained its position ahead of the industry norm.
From 2011 and onwards D J Flint will no longer
receive an annual bonus payment.
The award made to the Group Chief Executive,
S T Gulliver, reflects his overall strong achievements
in his previous role as Chairman, Europe, Middle
East and Global Businesses. Profit before tax for
the businesses within his remit decreased slightly,
however this was against challenging market