HSBC 2010 Annual Report Download - page 289

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Overview Operating & Financial Review Governance Financial Statements Shareholder Information
to 100% of the award, depending on the scale of achievement against the benchmarks, providing that the minimum
criteria for each performance measure have been met.
For awards made during 2008 and prospectively, each award is divided into three parts for testing attainment
against pre-determined benchmarks. 40% of the award is subject to a TSR measure, based on a free-float market
capitalisation ranking method; 40% is subject to an economic profit measure, calculated as the average annual
difference between return on invested capital and HSBC’s benchmark cost of capital; and 20% is subject to an EPS
target. For the TSR and EPS elements of the awards, shares are released to the employee on a sliding scale from 20%
to 100% of the award, depending on the scale of achievement against the benchmarks. For the economic profit
element of the awards, shares are released to the employee on a sliding scale from zero to 100%, depending on the
scale of achievement against the benchmark. In all cases, shares are only released when the minimum criteria for each
performance measure has been met. The performance conditions are measured over a three year performance period
and awards forfeited to the extent they have not been met.
In addition to the performance conditions mentioned above, before an award can vest, the Remuneration Committee needs
to be satisfied that the Group has shown a sustained improvement in the period since the award was made. In determining
this, the Remuneration Committee will take account of all relevant factors, in particular, comparisons against the TSR
comparator group in areas such as revenue growth and mix, cost efficiency, credit performance as measured by risk-
adjusted revenues, cash return on cash invested, dividend performance and TSR.
Movement in Performance Share awards under the HSBC Share Plan
2010 2009
Number Number
(000s) (000s)
Outstanding at 1 January .......................................................................................................................... 7,360 11,619
Additions during the year1......................................................................................................................... 351 333
Adjustment for rights issue ....................................................................................................................... – 1,712
Released in the year .................................................................................................................................. (1,181) (1,076)
Forfeited in the year .................................................................................................................................. (2,105) (5,228)
Outstanding at 31 December .................................................................................................................... 4,425 7,360
1 Additions during the year comprised reinvested dividend equivalents.
No Performance Shares were awarded by HSBC in 2010 and 2009.
Restricted Share awards
Awards of Restricted Shares are made to employees on the basis of their performance, potential and retention
requirements, to aid recruitment or as a part-deferral of annual bonuses. Shares are awarded without corporate
performance conditions and generally vest between one and three years from the date of award, providing the
employees have remained continually employed by HSBC for this period.
Movement in Restricted Share awards under the HSBC Share Plan
2010 2009
Number Number
(000s) (000s)
Outstanding at 1 January .......................................................................................................................... 184,318 122,206
Additions during the year ......................................................................................................................... 110,711 108,439
Adjustment for rights issue ....................................................................................................................... – 26,119
Released in the year .................................................................................................................................. (55,419) (49,718)
Forfeited in the year .................................................................................................................................. (10,518) (22,728)
Outstanding at 31 December .................................................................................................................... 229,092 184,318
The weighted average fair value of Restricted Share awards in 2010 was US$10.50 (2009: US$6.31).
Share options
A small number of discretionary share options were granted in 2005 exclusively to individuals employed by HSBC
France under the HSBC Share Plan rules, after the expiry of the Group Share Option Plan rules.