HSBC 2005 Annual Report Download - page 220

HSBC HOLDINGS PLC
Directors’ Remuneration Report (continued)
218
Directors’ fees
Directors’ fees are regularly reviewed and compared
with other large international companies. The current
fee, which was approved by shareholders in 2004, is
£55,000 per annum. With effect from 1 January
2005, all executive Directors waived their rights to
receive a Director’s fee from HSBC Holdings.
Having considered comprehensive data it is clear
that the current Director’s fee is below the level paid
in other major UK companies. The approval of
shareholders will therefore be sought at the 2006
Annual General Meeting for the fee for non-
executive Directors to be increased to £65,000 per
annum with effect from 1 January 2006.
In addition, non-executive Directors receive,
from 1 January 2006, the following fees:
Chairman, Audit Committee £50,000 p.a.
Member, Audit Committee £20,000 p.a.
During 2005, seven Audit Committee meetings were held. A
Director’s commitment to each meeting, including preparatory
reading and review, can be 15 hours or more.
Chairman, Remuneration Committee £40,000 p.a.
Member, Remuneration Committee £20,000 p.a.
During 2005, seven meetings of the Remuneration Committee
were held.
Chairman, Nomination Committee £30,000 p.a.
Member, Nomination Committee £20,000 p.a.
During 2005, three meetings of the Nomination Committee
were held.
Chairman, Corporate Social
Responsibility Committee £30,000 p.a.
Member, Corporate Social
Responsibility Committee £20,000 p.a.
During 2005, four meetings of the Corporate Social
Responsibility Committee were held.
Executive Directors
The executive Directors are experienced executives
with detailed knowledge of the financial services
business in various countries. In most cases there has
been a need to attract them from abroad to work in
the United Kingdom.
Consistent with the principles applied by the
Committee to employees generally, there are four
key components to the executive Directors’
remuneration:
• salary;
• annual cash bonus;
• long-term incentives; and
• pension.
To ensure that the executive Directors’
remuneration packages are competitive having
regard to the broad international nature of the Group,
each year the Remuneration Committee considers
market data on senior executive remuneration
arrangements within organisations that are
considered key competitors.
In 2005, a review of the competitive peer groups
was undertaken to ascertain their continued
relevance to roles at HSBC Holdings. The review
resulted in a slight change in the composition and
emphasis of the peer groups so that for the 2006
review they consisted primarily of:
• FTSE30 companies with significant
international operations in the US and/or in
Asia-Pacific. This peer group comprised 22
companies and representative companies
include: Anglo American plc, AstraZeneca plc,
Barclays PLC, BP p.l.c., Diageo plc,
GlaxoSmithKline plc, Prudential plc, Reckitt
Benckiser plc, Rio Tinto plc, The Royal Bank of
Scotland Group plc, Royal Dutch Shell plc,
Standard Chartered PLC, Unilever PLC and
Vodafone Group plc.
• European banks with significant domestic and/or
global operations/influences. These banks
include ABN AMRO Holding N.V., Banco
Bilbao Vizcaya Argentaria S.A., Banco
Santander Central Hispano S.A., Credit Suisse
Group and Deutsche Bank AG.
Although not used for setting remuneration
benchmarks, the Remuneration Committee also
considers it important to be mindful of trends in the
level and structure of executive reward in the United
States banking sector. Market information is
monitored for major US institutions of a comparable
size and complexity to HSBC Holdings, including:
Bank of America Corporation, Citigroup Inc. and
JPMorgan Chase & Co.
The level of awards available to the executive
Directors under the annual cash bonus scheme and as
Performance Shares is entirely dependent on
performance. Remuneration policy for executive
Directors is intended to provide competitive rates of
base salary but with the potential for the majority of
the value of the remuneration package to be
delivered in the form of both short and long-term
incentives. This typically results in base salary
comprising around 30 per cent of total direct pay and
the remaining 70 per cent split between annual bonus
and the expected value of Performance Share
awards.
Each component of executive Directors’
remuneration is explained in detail below as it