HSBC 2012 Annual Report Download - page 360

HSBC HOLDINGS PLC
Directors’ Remuneration Report (continued)
2012 remuneration outcomes
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Committee felt unable to make any award under
this opportunity (15%).
Similarly, under the Cost Efficiency Ratio
(‘CER’) element of the scorecard, despite good
progress on sustainable cost savings, the CER
remains well above the target range of 48-52%.
The Committee noted that a major element of the
underperformance relates to legal and regulatory
fines and penalties and customer redress costs which
it cannot view as non-recurring. As a consequence
the Committee judged that no award could be made
under this opportunity (15%).
Non-financial (40% weighting – achieved 18.75%)
Half the opportunity in this section related to the
execution of strategic priorities laid down by the
Board (20%). In assessing performance the
Committee noted but looked beyond the short-term
deliverables of targeted disposals and investments to
review the frameworks being established to improve
capital deployment, establish and enforce Global
Standards, improve cost efficiency while
maintaining strong operational and risk controls
and enhance global business co-operation and
integration. The Committee concluded that it
would be an appropriate reflection of management
achievement to award 75% of the available
opportunity, namely 15%.
A separate but connected appraisal was made
of the human aspect of long-term strategy delivery
where the Committee looked at recruitment of key
personnel to fill critical roles, succession planning,
values training and enforcement and the retention,
motivation and collegiality of the senior
management team in what had been a stressed
environment. Once again the Committee awarded
75% of the available opportunity of 5%, adding
3.75% to the scorecard.
With regard to Compliance and Reputation
(10%), given the legal and regulatory fines and
penalties incurred in 2012 and the continuation of
significant further customer redress costs in the
UK, the Committee concluded no award could be
contemplated.
This conclusion was followed through when
assessing Brand Equity (5%), which technically
scored 50% of the available opportunity as HSBC
maintained a top three ranking in its peer group. The
Committee used its discretion to reduce this award to
nil in light of the reputational damage incurred from
the US legal and regulatory fines and penalties.
This performance assessment resulted in an
overall score of 48.75%. Notwithstanding this,
taking into account the significance of the legal and
regulatory fines and penalties incurred in 2012, the
Committee determined that the initial performance
outcome should be reduced further to give a final
performance outcome for 2012 of 40%.
Contributions and allowances in lieu of
pension entitlements
D J Flint received an allowance of 50% of annual
basic salary in lieu of personal pension
arrangements. The allowance for 2012 amounted
to £750,000.
A A Flockhart retired as an executive Director
on 30 April 2012 and until that date received
employer contributions of 1.8% of basic salary into a
pension plan and an allowance of 48.2% of basic
salary. The employer contributions and the
allowance for 1 January 2012 to 30 April 2012
amounted to £162,500.
S T Gulliver received employer contributions of
4% of basic salary into a personal pension plan and
an allowance of 46% of basic salary from 1 January
2012 to 31 March 2012. From 1 April 2012,
S T Gulliver received an allowance of 50% of basic
salary in lieu of personal pension arrangements. The
employer contributions and the allowance for the
whole of 2012 amounted to £625,000.
I J Mackay received an allowance of 50% of
annual basic salary in lieu of personal pension
arrangements. The allowance for 2012 amounted
to £350,000.
TSR Chart
HSBC TSR and FTSE100 index
Pursuant to the Large and Medium-sized Companies
and Groups (Accounts and Reports) Regulations
2008, the graph below shows the TSR performance
against the FTSE 100 index for the five-year period
ended 31 December 2012. The FTSE 100 index has
been chosen as this is a recognised broad equity
market index of which HSBC Holdings is a member.
70%
80%
90%
100%
110%
120%
Dec 2007 Dec 2008 Dec 2009 Dec 2010 Dec 2011 Dec 2012
HSBC TSR FTSE 100
Source: International Data Corporation