HSBC 2009 Annual Report Download - page 340

HSBC HOLDINGS PLC
Directors’ Remuneration Report (continued)
Executive Director remuneration > Salary / Annual bonus / Performance Shares
338
Salary
2010 2009 2008
£000 £000 £000
D J Flint ...............
.
800 700 700
M F Geoghegan ...
.
– 1,070 1,070
S K Green ............
.
1,250 1,250 1,250
S T Gulliver1 ........
.
800 800 800
HK$000 HK$000 HK$000
V H C Cheng1 ......
.
9,300 9,300 9,300
A A Flockhart1 .....
.
10,000 8,000 8,000
M F Geoghegan2 ..
.
13,495 – –
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 for 2008 represent the full year equivalent
salary for these individuals.
2 Currency change reflects the change in location of the
principal office of the Group Chief Executive. 2010 salary is
equivalent to 2009 salary. With effect from 26 January 2010,
in recognition of the relocation to Hong Kong and the
associated additional costs of living that will be incurred, a
fixed allowance of HK$3,767,256 (equivalent to £300,000)
per annum, is payable together with housing and other
benefits in kind that are normal within this location. The
fixed allowance is not pensionable and is not considered as
part of salary in determining the maximum annual bonus
and Performance Share awards.
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. The individual awards
are fully discretionary rather than formulaic,
enabling a rounded and balanced view of
performance.
In 2009, the Group Chief Executive,
M F Geoghegan, the then Group Finance Director,
D J Flint and the then Chief Executive of Global
Banking and Markets and HSBC Global Asset
Management, S T Gulliver, requested that they not
be considered for a bonus in respect of 2008 in view
of the general financial market conditions. The
Committee decided not to award these individuals
a bonus in respect of 2008 notwithstanding the
performance of HSBC and the wholesale businesses
in relation to their comparators.
As noted above the Group Chairman,
S K Green, at his request, no longer receives an
annual bonus payment. In line with this, no bonus
award is being made to him in respect of 2009.
The awards made in 2010 to the Group Chief
Executive, M F Geoghegan, and the Chief Financial
Officer, Executive Director, Risk and Regulation,
D J Flint, reflect the overall achievements and
performance of the Group under the balanced
scorecard framework as described in ‘HSBC
performance and market context’, set within the
context of each role.
The award made to the Chairman, Europe,
Middle East and Global Businesses, S T Gulliver,
reflects the delivery of exceptional performance
within Global Banking and Markets which
contributed pre-tax profits of US$10.5 billion, an
increase of 201 per cent. Robust revenues were
reported in core constituent businesses such as Rates
and Balance Sheet Management which delivered
strong growth. A significant reduction in write-
downs on legacy positions in credit trading,
leveraged and acquisition finance and monoline
exposures also contributed to the strong revenue
performance. Revenues grew faster than costs and
consequently the cost efficiency ratio improved by
29.1 percentage points to 39.1 per cent on an
underlying basis. Global Banking and Markets was
recognised for the continuing success of its emerging
markets-led and financing focused strategy, with
numerous industry awards.
Awards for executive Directors with
responsibilities for Asia reflect robust performance
underpinned by a market-leading share in deposits,
residential mortgages, cards and insurance, within a
challenging environment. In Hong Kong, HSBC
reported a decline in pre-tax profit of 8 per cent on
an underlying basis due to lower revenue from
compressed deposit spreads, partly offset by a
reduced level of loan impairment charges and credit
risk provisions. Overall, customer lending balances
were flat, as higher lending in Personal Financial
Services and Global Banking and Markets was
broadly offset by a decline in Commercial Banking,
reflecting weakened demand for exports. In the Rest
of Asia-Pacific region, HSBC reported an 8 per cent
decline in pre-tax profit on an underlying basis,
reflecting the difficult economic conditions; this
masked, however, a strong contribution from HSBC’s
associates in the region, notably in mainland China.
Bonus awards to be made in 2010 in respect
of 2009 performance, and bonus awards made in
respect of 2008 and 2007, are shown in the table
below. The awards made to executive Directors and
seven Group Managing Directors in respect of 2009
performance will be fully deferred. All executive
Directors’ awards will be fully deferred into awards
of Restricted Shares issued under the HSBC Share
Plan. With the exception of the award for V H C
Cheng, 33 per cent of the executive Directors’
awards will vest on each of the first and second
anniversaries of the date of the award, with the
balance vesting on the third anniversary of the date
of the award. The award for V H C Cheng has a
vesting date three years from the date of the award.