HSBC 2011 Annual Report Download - page 330

HSBC HOLDINGS PLC
Notes on the Financial Statements (continued)
9 – Share-based payments
328
HSBC Share Awards
Award Policy Purpose
Restricted
share awards
(including
GPSP
awards)
• Vesting of awards generally subject to continued
employment with HSBC
• Vesting often staggered over three years. GPSP awards
vest after five years
• Certain shares subject to a retention requirement post-
vesting. In the case of GPSP awards retention applies
until cessation of employment
• Awards generally not subject to performance conditions
• Awards granted from 2010 onwards are subject to
clawback provision prior to vesting
• Rewards employee performance and potential and
retention of key employees
• To defer variable pay
Movement on HSBC share awards
Restricted share awards Performance share awards1
2011 2010 2011 2010
Number
(000s)
Number
(000s)
Number
(000s)
Number
(000s)
Outstanding at 1 January .............................................................. 229,092 184,318 4,425 7,360
Additions during the year ............................................................. 100,819 110,711 154 351
Released in the year ...................................................................... (56,301) (55,419) (883) (1,181)
Forfeited in the year ...................................................................... (11,369) (10,518) (3,696) (2,105)
Outstanding at 31 December ........................................................ 262,241 229,092 – 4,425
Weighted average fair value of awards granted (US$) ................ 10.11 10.50 – –
1 Additions during the year comprised reinvested dividend equivalents. The last award of performance shares was made in 2008, and
shares under the plan were released in March 2011.
HSBC Share Option Plans
Main plans Policy Purpose
Savings-
related share
option plans
• Exercisable within three months following the first
anniversary of the commencement of a one-year savings
contract or within six months following either the third or
fifth anniversaries of the commencement of three-year or
five-year contracts, respectively
• The exercise price is set at a 20% (2010: 20%) discount to
the market value immediately preceding the date of
invitation (except for the one-year options granted under
the US sub-plan where a 15% discount is applied)
• Eligible employees save up to £250 per month (or its
equivalent in US dollars, Hong Kong dollars or euros),
with the option to use the savings to acquire shares
• To align the interests of all employees with the creation of
shareholder value
HSBC
Holdings
Group share
option plan
• Plan ceased in May 2005
• Exercisable between third and tenth anniversaries of the
date of grant
• Long-term incentive plan between 2000 and 2005 during
which certain HSBC employees were awarded share
options
The table on page 329 shows the movement on HSBC share option plans during the year.
Calculation of fair values
Fair values of share options, measured at the date of grant of the option, are calculated using a Black-Scholes model.
The fair values of share awards are based on the share price at the date of the grant. The fair values of share options
calculated are inherently subjective and uncertain due to the assumptions made and the limitations of the model used.