HSBC 2002 Annual Report Download - page 172

HSBC HOLDINGS PLC
Directors' Remuneration Report
170
Remuneration Committee
The Remuneration Committee meets regularly to
consider human resource issues, particularly terms
and conditions of employment, remuneration,
retirement benefits, development of high potential
employees and key succession planning. During
2002, the members of the Remuneration
Committee were W K L Fung, Sir John Kemp-
Welch, Lord Marshall and Sir Mark Moody-Stuart,
all of whom were independent non-executive
Directors. Sir Mark Moody-Stuart succeeded Lord
Marshall, who retired as a member of the
Committee, as Chairman of the Committee on 1
January 2003.
The Remuneration Committee retains the
services of Towers Perrin, a specialist
remuneration consulting firm, who provide advice
on executive pay issues. The Remuneration
Committee also receives advice from the Group
General Manager, Group Human Resources and
the Senior Executive, Group Reward Management.
Towers Perrin also provide other remuneration,
actuarial and retirement consulting services to
various parts of the HSBC Group. Other
consultants are used from time to time to validate
their findings.
Policy
In common with most businesses, HSBC’ s
performance depends on the quality and
commitment of its people. Accordingly, the
Board’ s stated strategy is to attract, retain and
motivate the very best people.
In a business that is based on trust and
relationships, HSBC’ s broad policy is to look for
people who want to make a long-term career with
the organisation because trust and relationships are
built over time.
Remuneration is an important component in
people’ s decisions on which company to join, but it
is not the only one; it is HSBC’ s experience that
people are attracted to an organisation with good
values, fairness, the potential for success and the
scope to develop a broad, interesting career.
Within the authority delegated by the Board
of Directors, the Remuneration Committee is
responsible for determining the remuneration
policy of HSBC including the terms of bonus
plans, share option plans and other long-term
incentive plans, and for agreeing the individual
remuneration packages of executive Directors and
other senior Group employees. No Directors are
involved in deciding their own remuneration.
The Remuneration Committee applies the
following key principles:
• to pay against a market of comparative
organisations
• to offer fair and realistic salaries with an
important element of variable pay based on
relative performance
• to have as many top-performers as possible at
all levels within HSBC participating in some
form of long-term share plan
• since 1996, to follow a policy of moving
progressively from defined benefit to defined
contribution Group pension schemes for new
employees only.
Basic salary and benefits
Salaries are reviewed annually in the context of
individual and business performance, market
practice, internal relativities and competitive
market pressures. Allowances and benefits are
largely determined by local market practice.
Annual performance-related payments
The level of performance-related variable pay
depends upon the performance of HSBC Holdings,
constituent businesses and the individual
concerned. Key measures of success include
achievement of financial goals, concerning both
revenue generation and expense control; customer
relationships; full utilisation of professional skills;
and adherence to HSBC’ s ethical standards. HSBC
has a long history of paying close attention to its
customers in order to provide value for
shareholders. This has been achieved by ensuring
that the interests of HSBC and its staff are aligned
with those of its shareholders and that HSBC’ s
approach to risk management serves the interests
of all. Closer alignment with the interests of
shareholders continues to be achieved through the
promotion and extension of employee participation
in the existing share plans.