HSBC 2005 Annual Report Download - page 202

HSBC HOLDINGS PLC
Report of the Directors (continued)
200
Bank of Bermuda
Directors’ Share Option Plan
HSBC Holdings ordinary shares of US$0.50
Date of
award
Exercise
price (US$)
Exercisable
from
Exercisable
until
Options at
1 January
2005
Options
exercised
during period
Options
lapsed
during period
Options at
31 December
2005
22 Sep 1999 8.02 22 Sep 2000 22 Sep 2009 7,706 – – 7,706
20 Sep 2000 11.31 20 Sep 2001 20 Sep 2010 9,440 – – 9,440
28 Mar 2001 15.76 28 Mar 2002 28 Mar 2011 18,205 – 2,697 15,508
3 Apr 2002 16.01 3 Apr 2003 3 Apr 2012 34,328 – 4,904 29,424
30 Apr 2003 12.23 30 Apr 2004 30 Apr 2013 9,808 – – 9,808
Valuation of freehold and leasehold
land and buildings
HSBC’s freehold and long leasehold properties,
together with all leasehold properties in Hong Kong,
were valued in 2005. The value of these properties
was US$1.1 billion in excess of their carrying
amount in the consolidated balance sheet.
Further details are included in Note 23 on the
Financial Statements on page 298.
Corporate Governance Report
The information set out on pages 184 to 233 and
information incorporated by reference constitutes the
Corporate Governance Report of HSBC Holdings.
Board of Directors
The objective of the management structures within
HSBC, headed by the Board of Directors of HSBC
Holdings and led by the Group Chairman, is to
deliver sustainable value to shareholders.
Implementation of the strategy set by the Board is
delegated to the Group Management Board under the
leadership of the Group Chief Executive.
The Board sets the strategy for HSBC through
the five-year strategic plan and approves the annual
operating plans presented by management for the
achievement of the strategic objectives. The annual
operating plans ensure the efficient disposition of
HSBC’s resources for the achievement of these
objectives. The Board delegates the management and
day to day running of HSBC to the Group
Management Board but retains to itself approval of
certain matters including annual plans and
performance targets, procedures for monitoring and
control of operations, specified senior appointments,
acquisitions and disposals above predetermined
thresholds and any substantial change in balance
sheet management policy.
The Board of Directors meets regularly and
Directors receive information between meetings
about the activities of committees and developments
in HSBC’s business. All Directors have full and
timely access to all relevant information and may
take independent professional advice if necessary.
HSBC Holdings has a unitary Board of
Directors. The authority of each Director is exercised
in Board Meetings where the Board acts collectively
as a unit. At 6 March 2006 the Board comprises five
executive and 15 non-executive Directors. The roles
of Group Chairman and Group Chief Executive are
separated and held by experienced executive
Directors. Before assuming the role of Group
Chairman in 1998, Sir John Bond had been the
Group Chief Executive for five years. The Group
Chairman’s knowledge of HSBC’s complex and
widespread geographical business from his previous
service as Group Chief Executive has been a
considerable benefit to HSBC.
On 28 November 2005, it was announced that
S K Green, the Group Chief Executive since 2003,
would succeed Sir John Bond as Group Chairman at
the conclusion of the 2006 Annual General Meeting
on 26 May 2006 and that M F Geoghegan would
succeed S K Green as Group Chief Executive. Sir
Brian Moffat, the senior independent non-executive
Director and the Chairman of the Nomination
Committee, wrote to shareholders regarding these
appointments.
He explained that the decision by the Board to
appoint S K Green as Group Chairman was made
after a thorough selection process. This was
conducted by the Nomination Committee, assisted
by external advisers, and included extensive
benchmarking against external candidates. The
Committee considered carefully the requirements of
the position in terms of HSBC’s size, geographical
spread and complexity; the need for full time
executive commitment and experience of
international banking at the highest level; and took
account of the need for the Group Chairman to have
a wide range of skills, the capacity for strategic
thinking and the ability to sustain and enhance the
Group’s corporate character. The Committee also