HSBC 2007 Annual Report Download - page 326

HSBC HOLDINGS PLC
Directors’ Remuneration Report (continued)
Executive Directors > Current arrangements / Performance conditions
324
awards. Example measures for the Group Chief
Executive are set out below:
Financial Customer
• EPS • Customer recommendation
• ROE • Brand health
• Cost efficiency ratio
Process People
• Operational losses • Employee engagement
• Regulatory relationship • Leadership
The Committee intends to provide significantly
greater transparency in subsequent Reports regarding
both the performance measures and the achievement
against performance targets, together with a
commentary on the resulting levels of bonus awards.
Long-term incentive plan
The long-term incentive plan (‘LTIP’) was last
reviewed in 2005 when, with the adoption of The
HSBC Share Plan, a growth in earnings per share
measure (‘EPS’) was introduced alongside Total
Shareholder Return (‘TSR’) relative to a peer group
of 28 banks.
The Committee is proposing changes to the
performance measures and vesting conditions of the
long-term incentive awards of Performance Shares
under The HSBC Share Plan, the details of which
will be described in the circular containing the
Notice of the 2008 Annual General Meeting, which
is expected to be sent to shareholders in April 2008,
and submitted to shareholder vote at that Meeting.
Awards will be granted to executive Directors
and other senior executives shortly after the Meeting.
These will be made under the amended Plan subject
to the proposed changes to the Plan receiving
shareholder approval.
Current arrangements
Salary
The
Committee reviews salary levels for executive
Directors each year
.
As described above, the Remuneration
Committee will not increase base salaries for current
executive Directors in 2008.
2008 2007
£000 £000
D J Flint ................................... 700 700
M F Geoghegan ....................... 1,070 1,070
S K Green ................................ 1,250 1,250
Annual cash bonus
The annual cash bonus for executive Directors is
based upon individual performance as well as
performance measured against a number of key
financial targets for the Group, including financial
(e.g. revenue growth, economic profit and cost
efficiency). Annual bonus payments are not
pensionable.
The Committee took into account the Group’s
absolute performance and relative performance
compared to its peers in a challenging operating
environment, in setting the overall bonus payment
levels.
There were significant increases in profit
before tax, earnings per share and improvements
in cost efficiencies during 2007. During that year
management moved effectively to resolve the issues
identified in late 2006 in the United States in relation
to consumer lending, and to anticipate and respond
to the sector-wide liquidity crisis.
On this basis, the Remuneration Committee
approved annual bonus payments for the following
executive Directors in 2008 in respect of 2007
performance (payments made in 2007 in respect of
2006 performance are shown for reference):
2008 2007
£000 £000
D J Flint ................................... 800 500
M F Geoghegan ....................... 2,140 1,750
Chairman’s variable compensation
The Committee has determined, at the request of
the Chairman, that future variable compensation
payments to the Chairman will be delivered
exclusively through Performance Share awards
given the key focus of the role of the Chairman in
the formation and management of Group strategy.
The Remuneration Committee approved an
annual bonus payment for the Chairman for 2008, in
respect of 2007 performance, that was unchanged
from the prior performance year as indicated in the
table below (the payment made in 2007 in respect of
2006 performance is shown for reference):
2008 2007
£000 £000
S K Green ................................. 1,750 1,750
Long-term incentive plan
Under The HSBC Share Plan, executive Directors,
as with other participants in the Plan, are eligible to
receive awards of Performance Shares with a face
value at grant of up to a maximum of seven times