HSBC 2015 Annual Report Download - page 290

Directors’ Remuneration Report (continued)
Directors’ remuneration policy
HSBC HOLDINGS PLC
288
Directors’ remuneration
policy
Our new remuneration policy for executive and non-
executive Directors is subject to shareholder approval.
The policy has been amended to take into account the
new PRA Remuneration Rules, EBA guidelines and
shareholder feedback. We will seek approval at the Annual
General Meeting on 22 April 2016 and if approved, the
policy is intended to apply immediately, for three years
to the end of the AGM in 2019.
Material factors taken into account when setting remuneration policy
The Committee takes into account a variety of factors when determining the remuneration policy for Directors.
INTERNAL FACTORS
Group strategy
and objectives
• The Group strategic objectives are the key drivers for measuring performance and form the basis of the
annual scorecard and long term incentive scorecard for our executive Directors.
• The targets set for the scorecards are aligned to the strategic targets of the Group.
Pay and employment
conditions within
the Group
• In considering individual awards, a comparison of the pay and employment conditions of our employees
and senior executives is considered by the Committee.
• The Group Head of Performance and Reward presents proposals for remuneration for the wider employee
population and consults with the Committee on the extent to which the different elements of remuneration
are provided to other employees.
• Feedback from employee engagement surveys and HSBC Exchange meetings are taken into account in
determining the Group’s remuneration policy.
• Given the size of the Group’s employee base and its geographical presence, the Committee did not consider
it appropriate to consult all employees on the Directors’ remuneration policy.
Reinforcing the
Group’s values
• The remuneration policy is designed to reinforce the Group’s values and behaviours and to drive sustainable
performance.
• The Committee receives input from the Group Risk Committee, the Financial System Vulnerabilities
Committee and the Conduct and Values Committee to ensure such behaviours are taken into account.
EXTERNAL FACTORS
Regulation • There is still a wide divergence in local regulations governing remuneration structures globally. This
presents significant challenges to HSBC, which operates in over 70 countries worldwide.
• In order to deliver long-term sustainable performance, it is important to have market-competitive
remuneration which is broadly equivalent across geographical boundaries in order to attract, motivate and
retain talented and committed employees around the world.
• We aim to ensure that our remuneration policy is aligned with regulatory practices and the interests
of shareholders. HSBC is fully compliant with the FSB, FCA, PRA, EBA and HKMA principles and rules on
remuneration which apply at the date of this report.
Comparator group • The Committee considers market data for executive Directors’ remuneration packages from a defined
remuneration comparator group: Australia and New Zealand Banking Group Limited, Bank of America,
Barclays, BNP Paribas, Citigroup, Deutsche Bank, JPMorgan Chase & Co, Santander, Standard Chartered
and UBS.
• These ten global financial services companies were selected for 2015 on the basis of their business
coverage, size and international scope, and are subject to annual review for continuing relevance.
• The Committee can also review other companies where relevant in determining the remuneration policy.
Shareholder views • The Chairman of the Committee, the Group Head of Performance and Reward and the Group Company
Secretary meet with key institutional shareholders and other representative bodies to discuss our
remuneration policy design, impact of regulatory changes and any key changes introduced.
• We consider these meetings important to gather views on our current and developing remuneration
practices to ensure that our reward strategy continues to be aligned with the long-term interests of our
shareholders.
• We also took on board views expressed by our shareholders on our remuneration policy at previous annual
general meetings. We have changed our approach on the provision of cash in lieu of pension and long-term
incentive awards as a result.