HSBC 2015 Annual Report Download - page 292

Directors’ Remuneration Report (continued)
Directors’ remuneration policy
HSBC HOLDINGS PLC
290
Purpose and link to strategy Operation Maximum opportunity Performance metrics
Variable pay Adhering to the HSBC Values is a prerequisite to be considered for any variable pay. The HSBC Values are key
to running the bank on a sound, sustainable basis. Executive Directors have an HSBC Values rating that is
considered by the Committee following the financial year end.
Annual incentive
To drive and reward
performance against annual
financial, non-financial and
personal objectives which
are consistent with the
strategy and align to
shareholder interests.
Awards are discretionary and are
generally delivered in the form of
shares.
On vesting, the shares (net of
shares sold to cover any income
tax and social security) will be
subject to a minimum retention
period of at least six months.
Awards are subject to clawback
for a period of seven years from
the date of award. This may be
extended to ten years in the
event of an ongoing internal/
regulatory investigation at the
end of the seven-year period.
The Committee retains the
discretion to:
• apply a longer retention
period;
• grant the award partially in
cash, as long as at least 50% of
the award is in shares; and
• defer a portion of the awards,
which will be subject to malus
during the deferral period.
Dividend equivalents will be paid
on the vested deferred shares,
equal to the dividends paid or
payable between the grant and
vesting date. These will normally
be paid in the form of additional,
i.e. scrip, shares. If not permissible
under regulatory requirements,
the number of shares to be
awarded may be based on a
share price discounted based on
a historical dividend yield.
The maximum opportunity for
annual incentive award is up to
215% of base salary.
The Committee will assess and
judge performance against the
targets set to determine the level
of achievement.
The overall payout of the annual
incentive could be between 0%
and 100% of the maximum.
25% of the maximum award
opportunity will vest at threshold
performance and up to 50%
will vest for target performance.
100% of the award will pay out
for maximum performance.
The Committee can reduce (to
zero if appropriate) the annual
incentive payout based on the
outcome of the performance
measures, if it considers that
the payout determined does
not appropriately reflect the
overall position and performance
of the Company during the
performance period.
Performance is measured against
an annual scorecard, based on
targets set for financial outcomes
and non-financial outcomes
(including risk-related measures
and personal objectives). The
scorecards vary by individual.
Examples of the types of
measures are shown on
page 294.
The financial measures will have
a weighting of 60% for the Group
CEO, 50% for the Group Chief
Financial Officer and 25% for the
Group CRO.
The Committee has the
discretion to:
• change the overall weighting
of the financial and non-
financial measures;
• vary the measures and their
respective weightings within
each category. The specific
performance measures will be
disclosed in the ‘Annual report
on remuneration’ for the
relevant year; and
• make adjustments to
performance targets to reflect
significant one-off items which
occur during the
measurement period. Full and
clear disclosure of any such
adjustments will be made
within the ‘Annual report on
remuneration’ at the end of
the performance year, subject
to commercial confidentiality.