HSBC 2008 Annual Report Download - page 294

HSBC HOLDINGS PLC
Report of the Directors: Governance (continued)
Board of Directors > Balance and independence / Development / Performance / Appointment / Shareholder relations
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re-elected ahead of taking up their new roles from
the conclusion of that Meeting.
Board balance and independence of
Directors
The Board includes a strong presence of both
executive and non-executive Directors such that no
individual or small group can dominate the Board’s
decision making. Following the 2009 Annual
General Meeting, the Board will comprise
21 Directors, 14 of whom are independent non-
executive Directors. The size of the Board is
appropriate given the complexity and geographical
spread of HSBC’s business and the significant time
demands placed on the non-executive Directors,
particularly those who serve as members of Board
committees.
The Board has appointed S M Robertson as the
senior independent non-executive Director. The
principal role of the senior independent non-
executive Director is to support the Group Chairman
in his role, to lead the non-executive Directors in the
oversight of the Group Chairman and to ensure there
is a clear division of responsibility between the
Group Chairman and Group Chief Executive. The
senior independent non-executive Director is also
available to shareholders to express concerns which
the normal channels have failed to resolve or would
be inappropriate.
The Board considers all of the non-executive
Directors to be independent in character and
judgement. W K L Fung has served on the Board for
more than nine years, however, and in that respect
only, does not meet the usual criteria for
independence set out in the UK Combined Code on
corporate governance. The Board has therefore
determined S A Catz, M K T Cheung (appointed a
Director with effect from 1 February 2009),
J D Coombe, J L Durán, R A Fairhead,
J W J Hughes-Hallett, W S H Laidlaw, J R Lomax,
Sir Mark Moody-Stuart, G Morgan, N R N Murthy,
S M Robertson, J L Thornton and Sir Brian
Williamson to be independent. In reaching its
determination of each non-executive Director’s
independence the Board has concluded that there are
no relationships or circumstances which are likely to
affect a Director’s judgement and any relationships
or circumstances which could appear to do so were
considered not to be material.
When determining independence the Board
considers that calculation of the length of service of
a non-executive Director begins on the date of his or
her first election by shareholders as a Director of
HSBC Holdings. Given the complexity and
geographical spread of HSBC’s business, the
experience of previous service on a subsidiary
company Board can be a considerable benefit to
HSBC and does not detract from a Director’s
independence.
In accordance with the Rules Governing the
Listing of Securities on The Stock Exchange of
Hong Kong Limited, each non-executive Director
determined by the Board to be independent has
provided an annual confirmation of his or her
independence to HSBC Holdings.
Information, induction and ongoing
development
The Board regularly reviews reports on progress
against financial objectives, on business
developments and on investor and external relations
and receives reports from the Chairmen of Board
Committees and from the Group Chief Executive.
The Board receives regular reports and presentations
on strategy and developments in the customer groups
and principal geographical areas. Regular reports are
also provided to the Board, the Group Audit
Committee and the Group Management Board on
credit exposures and the loan portfolio, asset,
liability and risk management, liquidity, litigation
and compliance and reputational issues. The agenda
and supporting papers are distributed in advance of
all Board and Committee meetings to allow time for
appropriate review and to facilitate full discussion at
the meetings. All Directors have full and timely
access to all relevant information and may take
independent professional advice if necessary.
The Directors have free and open contact with
management at all levels. Group Managing Directors
and Group General Managers meet informally with
Directors after Board meetings. Board offsite visits
are made each year to enable Directors to see at first
hand the operations of subsidiary companies in local
environments and to meet management, employees
and customers. In 2008 the Board visited Dubai.
Full, formal and tailored induction programmes,
with particular emphasis on internal controls, are
arranged for newly appointed Directors. The
programmes consist of a series of meetings with
other Directors and senior executives to enable new
Directors to receive information and familiarise
themselves with HSBC’s strategy, operations and
internal controls. Prior to their appointment, each
Director receives comprehensive guidance on the
duties and liabilities of a Director of HSBC
Holdings. Opportunities to update and develop skills
and knowledge, through externally run seminars and