HSBC 2015 Annual Report Download - page 312

Directors’ Remuneration Report (continued)
Annual report on remuneration
HSBC HOLDINGS PLC
310
Awards under the GPSP
(Audited)
Awards in respect of 2015 were assessed against the 2015
long-term scorecard published in the Annual Report and
Accounts 2014 and reproduced below, the objectives of
which were set within the context of the risk appetite and
strategic direction agreed by the Board.
As per the annual incentive, in order for GPSP awards to
be made, each executive Director must meet a required
behavioural rating. For 2015, all executive Directors met
the required behavioural rating.
Value of the GPSP awarded to each executive Director
Stuart Gulliver Iain Mackay
Marc Moses
Fixed pay
Value (£000) 3,575 2,000 2,000
GPSP
Maximum multiple of fixed pay 1.33 1.33 1.33
Performance outcome 41.3% 41.3% 41.3%
Multiple awarded 0.55 0.55 0.55
Value (£000) 1,969 1,101 1,101
Assessment – GPSP
Weighting
%
Long-term
target range
Actual 2015
performance
Assessment
%
Outcome
%
Measure
Return on equity 20 >10% 7.2%
–
–
Jaws1 20 Positive adjusted (3.7%)
–
–
Grow dividends2 20 Progressive Progressive 75 15.0
Financial 60 15.0
Strategy execution 15 75 11.3
Global standards including risk and compliance 25 60 15.0
Non-financial 40 26.3
Total performance outcome 100 41.3
1 Revenue growth less operating expense, on an adjusted basis.
2 Dividend per ordinary share (US dollar) in respect of the year, measured year on year; consistent with the growth of the overall profitability of the
Group, predicated on the continued ability to meet with regulatory capital requirements.
FINANCIAL
Return on equity • In February 2015, the Group announced an updated medium-term return on equity target of greater than
10%. The Group did not achieve the stated target in 2015, with return on equity decreasing from 7.3% in
2014 to 7.2% for the year.
• Significant items, including fines, penalties, UK customer redress and associated provisions, as well as the
UK bank levy, continue to have a significant effect, reducing our return on equity in 2015 by 190 basis
points.
• The Committee acknowledged the progress being made to implement the 10 strategic actions announced at
the June 2015 Investor Update which are being undertaken to improve the return on equity. However, the
Committee decided not to make any award under this opportunity.
Jaws • The Group targeted the achievement of positive adjusted jaws in 2015. As this target was not met, the
Committee judged that no award should be made under this element of the scorecard.
• The Group’s ability to generate revenue growth was affected by a slowdown in global trade, reflecting
reduced commodity prices, and weaker investor sentiment in the second half of 2015 following stock
market corrections in Asia. Operating expenses increased, as expected, reflecting wage inflation, continuing
investment in strategic growth areas and in regulatory programmes and compliance.
• The Committee noted positive momentum on costs in the second half of the year, with cost growth slowing
and a reduction in staff numbers. This was achieved through a strong focus on cost management and the
initial effect of our cost saving programmes.
Grow dividends • The Group is committed to increasing the dividends we pay to shareholders each year, measured by
dividends per ordinary share in respect of the year. Prospective dividend growth remains dependent upon
the long term overall profitability of the Group and delivering further release of less efficiently deployed
capital. Actions to address these points are core elements of the Investor Update provided in June 2015.
• The Group was able to increase the dividend per ordinary share in 2015 as well as improve its capital
position. The Group's strong capital position supports its capacity to generate dividend growth, despite a
challenging operating environment.