HSBC 2010 Annual Report Download - page 228

HSBC HOLDINGS PLC
Directors’ Remuneration Report (continued)
Executive Directors’ remuneration > Performance shares
226
conditions. Operational losses for the year, however,
also reduced substantially as well as there being a
substantial decrease in loan impairment charges as a
percentage of total operating income.
The award made to V H C Cheng, Chairman of
HSBC Bank (China) Company Limited, reflects his
performance in ensuring the continued strategic
development in mainland China.
The award made to A A Flockhart reflects
his overall achievements in his previous role
as Chairman, Personal and Commercial Banking and
Insurance. Profit before tax increased and the return
on equity increased in all areas from last year.
Operational losses increased from last year,
however, resulting in the cost efficiency across his
remit to decrease.
The award for I J Mackay, reflects his overall
achievements in his previous role as Chief Financial
Officer, Asia-Pacific.
Bonus awards
2010 performance1 2009 performance 2008 performance
Non-deferred Deferred
Cash
Restricted
Shares Cash
Restricted
Shares Cash
Restricted
Shares Cash
Restricted
Shares
£000 £000 £000 £000 £000 £000 £000 £000
V H C Cheng ................. 142 142 213 213 – 1,240 – 1,639
D J Flint2 ........................ 560 560 840 840 – 2,100 – –
A A Flockhart ................ 362 362 542 542 – 1,908 – 1,655
M F Geoghegan2,3 .......... 760 760 1,140 1,140 – 4,000 – –
Lord Green4 ................... – – – – – – – –
S T Gulliver2,5 ................ – – – 5,200 – 9,000 – –
I J Mackay6 .................... 12 12 18 18 – – – –
1 The awards made in respect of 2010 performance will be delivered as described on page 223.
2 D J Flint, M F Geoghegan and S T Gulliver requested that they not be considered for a bonus in respect of 2008.
3 M F Geoghegan has stated that subject to the shares being released, he will make total donations up to the size of his bonus awarded for
2009 performance to charities by 2013.
4 At the former Group Chairman’s request, he was not considered for an annual bonus award in 2010, 2009 and 2008.
5 S T Gulliver has requested that 100% of the award made to him in respect of 2010 performance be fully deferred in Restricted Shares
subject to the standard vesting and retention period.
6 Appointed a Director of HSBC Holdings on 3 December 2010.
Performance Shares
No awards of Performance Shares have been made
since 2008. No awards are proposed to date. Awards
may be considered later in 2011, subject to the
conclusion of the current consultation with
shareholders concerning a revised approach as
referenced on page 221.
The average actual vesting of Performance
Share awards made in 2004, 2005, 2006 and 2007
(which were tested in 2007, 2008, 2009 and 2010)
has been 26.88% of their face value. The awards
granted in 2007 did not satisfy the EPS condition but
did satisfy the TSR condition and accordingly,
75.6% of the TSR element of the award (37.8% of
the overall award) vested. The awards made in 2008
have not satisfied the EPS or economic profit
measures. The extent to which the TSR part of the
award will vest will be determined following the
completion of the three year period on 25 March
2011.
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% of the award); economic profit
(40%); and growth in EPS (20%).
These measures provide a basis on which to
measure our 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 Committee is
satisfied that our financial performance has shown a
sustained improvement in the period since the award
date. In determining whether we have achieved
such sustained improvement the 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