HSBC 2006 Annual Report Download - page 282

HSBC HOLDINGS PLC
Directors’ Remuneration Report
Remuneration Committee / Principles / Executive Directors
280
Page
Remuneration policy (not audited)
Remuneration Committee ............................. 280
Overall principles .......................................... 280
Executive Directors ....................................... 280
Salary ......................................................... 281
Annual cash bonus ..................................... 281
Long-term incentive plan ........................... 281
2007 awards ........................................... 281
Performance conditions ......................... 281
Arrangements from 2001-2004 .............. 283
Total Shareholder Return ....................... 283
Pensions ..................................................... 284
Service contracts ........................................ 284
Other directorships .................................... 284
Non-executive Directors ............................... 285
Fees ........................................................... 285
Remuneration review (audited)
Directors’ emoluments .................................. 286
Pensions ........................................................ 286
Share plans .................................................... 287
Remuneration Committee
The Remuneration Committee meets regularly to
consider human resource issues, particularly terms
and conditions of employment, remuneration,
retirement benefits, the development of high
potential employees and key succession planning.
Within the authority delegated by the Board, the
Committee is responsible for approving the
remuneration policy of HSBC including the terms of
bonus plans, share plans and other long-term
incentive plans and for agreeing the individual
remuneration packages of executive Directors and
other senior Group employees. No Directors are
involved in deciding their own remuneration.
Following each meeting the Committee reports to
the Board on its activities. The terms of reference of
the Committee are available at www.hsbc.com/
boardcommittees.
The members of the Remuneration Committee
throughout 2006 were Sir Mark Moody-Stuart
(Chairman), W K L Fung and S Hintze. Sir John
Kemp-Welch was a member of the Committee until
26 May 2006. J D Coombe was appointed a member
of the Committee on 1 June 2006. From the
conclusion of the Annual General Meeting to be held
in 2007, W K L Fung and S Hintze will retire as
members of the Committee and G Morgan will
become a member of the Committee.
There were seven meetings of the Remuneration
Committee during 2006. S Hintze and Sir Mark
Moody-Stuart attended all of these meetings and
W K L Fung attended six meetings. Sir John Kemp-
Welch attended three of the four meetings held
before his retirement. J D Coombe attended each of
the three meetings held following his appointment.
Towers Perrin, a firm of specialist human
resources consultants, has been appointed by the
Committee to provide independent advice on
executive remuneration issues. As a global firm,
Towers Perrin also provides other remuneration,
actuarial and retirement consulting services to
various parts of HSBC. Other than the provision of
expert advice in these areas to the Remuneration
Committee and to HSBC, Towers Perrin has no
connection with HSBC. Other consultants are used
from time to time on specific issues. During the year
the Group Chief Executive provided regular
briefings to the Remuneration Committee. The
Committee received advice from the Group General
Manager, Human Resources, P W Boyles, the Senior
Executive, Group Reward Management, P M Wood
and the Head of Group Performance and Reward,
J Beadle.
Overall principles
In carrying out its responsibilities, the Remuneration
Committee applies the following key principles:
• to ensure that the total remuneration package
(salary, bonus, long-term incentive awards and
other benefits) is competitive in relation to
comparable organisations in each of the markets
in which HSBC operates;
• to offer fair and realistic salaries with an
important element of variable pay, differentiated
by performance;
• through awards of shares to recognise high
performance, retain key talent and provide
alignment with the interests of shareholders; and
• to follow a policy of moving progressively from
defined benefit to defined contribution pension
schemes.
Executive Directors
Consistent with the principles applied by the
Committee, there are four key components to
executive Directors’ remuneration:
• salary;
• annual cash bonus;
• long-term incentives; and
• pension.