HSBC 2015 Annual Report Download - page 310

Directors’ Remuneration Report (continued)
Annual report on remuneration
HSBC HOLDINGS PLC
308
FINANCIAL
Jaws • The Group targeted the achievement of positive adjusted jaws in 2015. Based on the profile of the Group’s
revenues and cost base, it was judged that no award should be made under this element of the scorecard.
Grow dividends • The Group is committed to paying out progressive dividends to shareholders, predicated on the growth of overall
profitability and the continuing ability to meet regulatory capital requirements. Prospective dividend growth
remains dependent upon the long term overall profitability of the Group and delivering further release of less
efficiently deployed capital.
• The Group was able to increase the dividend per ordinary share in 2015 as well as improve its capital position.
NON-FINANCIAL
Strategy
execution
• Committee reviewed the progress to date in driving the Strategic Actions announced during the June 2015
Investor Update, particularly around re-sizing and simplifying the Group, and re-deploying capital to invest in
higher-return businesses.
• The Group had achieved $124bn reduction in RWAs in the year, ahead of the 2015 target and accounting for
45% of the total RWA reduction to be achieved by the end of 2017 to drive improved profitability.
• The Committee further recognised favourable progress in optimising the global network with the planned sale
of our operations in Brazil. The Committee acknowledged the work under way to re-build profitability in the
United States, although noted that underlying revenue growth remains challenged. The Committee also noted
the implementation of several initiatives to control costs, improve efficiency, and shift the Group’s front office
to back office ratio towards customer facing activities.
• There were advances made in re-deploying capital to invest in higher-return businesses. The Committee
recognised the Group’s progress in leveraging its global network to drive growth from global connectivity, in
particular through its range of transaction banking products, and to deliver revenue synergies from its universal
banking model. The Pivot to Asia strategy is being executed to capture growth opportunities in China's Pearl
River Delta, in the Association of Southeast Asian Nations, and in the Asian Asset Management and Insurance
businesses.
• The Group continues to play a leading role in the Internationalisation of the renminbi, being able to grow
revenues and demonstrate several market firsts during 2015, such as the first Panda bond issued by a foreign
bank in mainland China.
Global Standards
including risk and
compliance
• The Committee was advised that the Group has continued to make progress in the implementation of Global
Standards, including completion of certain milestones related to customer due diligence, transaction monitoring
and sanctions screening. In addition, the global businesses are focusing on increasing operational impact and
improving consistency across geographies to support the implementation of global AML and sanctions policies.
• During 2015, the Global Standards programme assurance function has been strengthened to provide additional
insight into programme outcomes and effectiveness. This has resulted in enhanced visibility of potential risks
and compliance weaknesses and has enabled proactive mitigating actions.
• The Committee recognised that the Group had progressed with the implementation of other compliance and
regulatory programmes in addition to Global Standards, including global stress testing, ring-fencing and global
conduct (e.g. development of Conduct Management Information Dashboard). The Committee further noted
favourable trends in customer redress, regulatory fines and regulatory provisions.
• However, the Committee exercised its discretion and reduced the assessment from 75% to 60%. This was based
on feedback received from the Monitor, matters arising from risk and compliance incidents, and the number and
extent of unsatisfactory internal audits covering AML and sanctions related issues.
Iain Mackay
Iain Mackay achieved a performance outcome for the year
of 80.1% against his annual scorecard.
The chart shows the value and composition of Iain
Mackay’s remuneration based on the current policy in
comparison with the actual 2015 variable pay outcomes.
Annual assessment
Weighting
%
Target Performance Assessment
%
Outcome
%
Measure
Grow both business and dividends 15 Judgement – see commentary 90 13.5
Global Standards including risk and compliance 50 Judgement – see commentary 75 37.5
Streamline processes and procedures 25 Judgement – see commentary 88 21.9
Strategic priorities 90 72.9
People 10 Judgement – see commentary 72 7.2
Promoting HSBC Values Over-riding test Met
Total 100 80.1
50%
33%
48%
17%
22%
26%
33%
45%
26%
4,000
6,000
4,169
Target policy
Maximum policy
2015 actual
Fixed pay Annual incentive GPSP