HSBC 2015 Annual Report Download - page 297

HSBC HOLDINGS PLC
295
Strategic Report Financial Review Corporate Governance Financial Statements Shareholder Information
Performance measures for long-term incentives
Financial measures
Global Standards, including risk
and compliance Strategy
Will be strongly aligned to the business
strategy and based on primary long-term
financial goals.
Measures may include but are not limited
to:
• return on equity;
• cost efficiency (jaws); and
• relative TSR against a global financial
services peer group.
Targets set for threshold and maximum
vesting will be based on long-term financial
goals.
Will be used in line with the Monitor’s
guidance and as part of regulatory
requirement to use non-financial measures
as part of a balanced scorecard.
Measures may include but are not limited
to:
• completion of US DPA commitments;
• management of key risks; and
• regulatory transparency.
Targets set will be based on achievement
of key long-term commitments and
achievement of a successful Global
Standards roll-out.
Will drive delivery of long-term Group
strategic actions.
Changes in remuneration policy for 2016
The following table provides a summary of key changes to the remuneration policy for 2016.
Remuneration component Policy changes Rationale for change
Base salary No change N/A
Fixed pay allowance Released pro rata over a period of five years. Retention period changed to be consistent with
market practice and to reflect longer deferral
requirements.
Cash in lieu of pension Maximum reduced from 50% of base salary to
30% of base salary.
Feedback from shareholders that cash in lieu of
pension was high relative to large FTSE
companies.
Annual incentive Maximum is 215% of base salary.
Delivered 100% in shares, subject to a retention
period.
The Committee considered it appropriate to
have the annual incentive subject to a retention
period, to align with the overall variable pay
structure of the PRA Remuneration Rules and to
take into account the overall time horizons of
the total remuneration package of the executive
Directors.
Long-term incentive Maximum is 320% of base salary.
Prior performance will be taken into consideration
when assessing the value of the grant.
Performance targets set annually for each three-
year forward-looking performance period.
Introduction of relative TSR as a performance
measure.
Awards to vest, subject to the outcome of the
performance conditions at the end of the three-
year performance period, in equal instalments
between the third and seventh anniversary of
the grant date.
A retention period may be applied to ensure
compliance with regulatory requirements.
Shareholder feedback on preference to have a
more conventional long-term incentive structure,
with a forward-looking performance period in
line with FTSE practice.
Longer deferral period required under the PRA
Remuneration Rules.