HSBC 2008 Annual Report Download - page 319

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Process objectives focused on efficiency and
qualitative measures which, in themselves, impact
financial performance and mitigate risk. Although
the Group did not meet its target to reduce
operational losses as a percentage of revenue, the
overall management of risk mitigation was judged
to be strong, taking into account sound relationships
with global regulatory bodies and the global
investment community.
The Group improved its customer development
score compared to the prior year, as measured by
customer recommendation and brand health in its
Personal Financial Services businesses and met its
overall 2008 target relating to brand health. Both
were assisted by a significant increase in intra-group
referrals.
Regarding the Group’s human capital, HSBC
exceeded its 2008 employee engagement target as
measured in a global staff survey. All regions and
businesses improved their engagement scores
compared to 2007 and the Group’s 2008 score also
exceeded the sector and global norms despite the
challenging market environment. Some 316,000
(93 per cent) of staff worldwide participated in the
2008 survey, a 5 per cent increase on the prior year.
This high and improving level of participation
evidences alignment of employees to the Group.
Management of risk
Since 2008 the Group’s Risk function has been
involved in the approval of relevant incentive plans.
Within the Group’s wholesale businesses, where
appropriate, specific conditionality will be applied to
the release of HSBC Restricted Shares issued by way
of deferred bonuses. From 2009, the concept of
imputing the cost of capital in the determination of
bonus funding will be expanded progressively across
the Group, starting with the Group’s wholesale
businesses. Further information relating to the
Group’s approach to risk management is set out on
pages 191 to 192.
Executive Director remuneration
Salary
The Committee reviews salary levels for executive
Directors each year.
Given the relative positioning of current salaries
against the remuneration comparator group, no
increases in salaries were made in 2008 other than to
reflect promotions to the Board.
For 2009, there will be no increase to salaries
for executive Directors. A similar approach has been
adopted for other executives across the Group other
than in exceptional circumstances.
The table below shows salaries in 2008 and with
effect from 1 March 2009.
Salary
2009 2008
£000 £000
D J Flint ........................ 700 700
M F Geoghegan ............ 1,070 1,070
S K Green ...................... 1,250 1,250
S T Gulliver1 .................. 800 800
HK$000 HK$000
V H C Cheng1 ................ 9,300 9,300
A A Flockhart1 .............. 8,000 8,000
1 V H C Cheng joined the Board on 1 February 2008 and
A A Flockhart and S T Gulliver on 1 May 2008. The salaries
shown above represent the full year equivalent salary for
these individuals.
Annual bonus
In determining annual bonus awards, the Committee
took into account the extent to which the Group’s
annual objectives had been met under the balanced
scorecard approach, the Group’s absolute and
relative performance compared to its peers, and
competitive market practice where discernable.
The consequence of this is a material fall in bonus
awards across the Group in 2008.
Within the policy parameters described above in
the section Application to executive Directors, the
Committee has determined that no cash bonuses will
be paid to executive Directors for 2008. Instead, any
bonuses will be in the form of HSBC Holdings
Restricted Shares with vesting deferred for three
years.
As noted above the Group Chairman,
S K Green, is, at his request, no longer eligible to
receive an annual bonus payment. In line with this,
no bonus award is being made to him in respect
of 2008. In view of general conditions in the
financial markets, the Group Chief Executive,
M F Geoghegan, the Group Finance Director,
D J Flint, and the Chief Executive of Global Banking
and Markets and HSBC Global Asset Management,
S T Gulliver, have requested that they not be
considered for a bonus in respect of 2008. The
Remuneration Committee has therefore decided, in
spite of the performance of HSBC and the wholesale
businesses in relation to its comparators, not to
award these individuals a deferred bonus.
Other executive Directors have been awarded
bonuses in deferred form in line with performance
under the balanced scorecard framework and the