HSBC 2015 Annual Report Download - page 309

HSBC HOLDINGS PLC
307
Strategic Report Financial Review Corporate Governance Financial Statements Shareholder Information
Notional return on deferred cash
• The deferred cash award portion of the annual incentive also includes a right to receive notional returns for the period between grant date
and vesting date and is determined by reference to the dividend yield on HSBC shares, determined annually.
• A payment of notional return is made annually in the same proportion as the vesting of the deferred awards on each vesting date.
The amount is disclosed on a paid basis in the year in which the payment is made.
Determining executive Directors’ annual
performance
(Audited)
Awards made to executive Directors reflected the
Committee’s assessment of the extent to which they had
achieved personal and corporate objectives set within
their performance scorecard as agreed by the Board at
the beginning of the year, which had been set to reflect
the risk appetite and strategic priorities. In addition, in
accordance with the downward override policy, the
Committee also consulted the Financial System
Vulnerabilities Committee and took into consideration
their feedback in relation to progress on enhancing AML
and sanctions compliance along with progress in meeting
the Group’s obligations under the US DPA and other
relevant orders. The Committee also took into consideration
the report of the independent Monitor in determining the
scorecard outcomes.
In order for any award of annual incentive to be made
under the above performance scorecard, each executive
Director must meet a required behavioural rating which is
assessed around HSBC Values of being ‘open, connected
and dependable’ and acting with ‘courageous integrity’. For
2015, all executive Directors met the required behavioural
rating.
Value of annual incentives awarded to each executive Director
Stuart Gulliver Iain Mackay
Marc Moses
Fixed pay
Value (£000) 3,575 2,000 2,000
Annual incentive
Maximum multiple of fixed pay 0.67 0.67 0.67
Performance outcome 45.0% 80.1% 62.0%
Multiple awarded 0.30 0.53 0.41
Value (£000) 1,072 1,068 827
Stuart Gulliver
Stuart Gulliver achieved a performance outcome for the
year of 45% against his annual scorecard.
The chart shows the value and composition of Stuart
Gulliver’s remuneration based on the current policy in
comparison with the actual 2015 variable pay outcomes.
Annual assessment
Weighting
%
Target Performance Assessment
%
Outcome
%
Measure
Profit before tax1 15 $21.2bn $21.1bn 50 7.5
Return on equity 15 7.3 7.2%
–
–
Jaws2 15
–
(3.7%)
–
–
Grow dividends3 15 0.50 0.51 75 11.2
Financial 60 18.7
Strategy execution 15 Judgement – see commentary 75 11.3
Global Standards including risk and compliance 25 Judgement – see commentary 60 15.0
%
Non-financial 40 26.3
Promoting HSBC Values Over-riding test Met
Total 100 45.0
1 Profit before tax, as defined for the Group variable pay pool.
2 Revenue growth less operating expense, on an adjusted basis.
3 Dividend per ordinary share (US dollar) in respect of the year, measured year on year; consistent with the growth of the overall profitability of the
Group, predicated on the continued ability to meet with regulatory capital requirements.
FINANCIAL
Profit before tax • Although the target was not fully met, profit before tax fell marginally short of the baseline. In acknowledgement
of a resilient performance in difficult market conditions, an assessment of 50% was awarded.
Return on equity • Return on equity for 2015 was 7.2%, 190 basis points lower than 2014, impacted by low revenue growth as well
as significant items. While the Committee acknowledged efforts to improve medium-term returns, it decided to
not make an award under this opportunity.
50%
33%
54%
17%
22%
16%
33%
45%
30%
7,150
10,725
6,616
Target policy
Maximum policy
2015 actual
Fixed pay Annual incentive GPSP