HSBC 2006 Annual Report Download - page 291

289
Date of
award
Year in
which
awards
may vest
Awards at
1 January
2006
Awards
vested
during
year1
Monetary
value of
awards vested
during year
£000
Awards at
31 December
20061
D J Flint ..................... 12 Mar 2001 2006 65,198 65,7602653 –
8 Mar 2002 2007 86,324 – – 90,176
5 Mar 2003 2008 124,367 – – 129,917
4 Mar 2004 2009 130,532 – – 136,357
M F Geoghegan ......... 12 Mar 2001 2006 39,119 39,4562392 –
8 Mar 2002 2007 43,162 – – 45,089
5 Mar 2003 2008 58,040 – – 60,630
4 Mar 2004 2009 97,899 – – 102,268
S K Green .................. 12 Mar 2001 2006 91,276 92,0632914 –
8 Mar 2002 2007 107,905 – – 112,720
5 Mar 2003 2008 124,367 – – 129,917
4 Mar 2004 2009 179,481 – – 187,490
A W Jebson ................ 12 Mar 2001 2006 78,237 78,9112783 –
8 Mar 2002 2007 100,712 104,3353993 –
5 Mar 2003 2008 124,368 – – 127,7545
4 Mar 2004 2009 130,532 – – 134,0865
Vesting of these Performance Share awards is subject to the attainment of predetermined TSR targets over a three-year period from the date
of the award. Full vesting and transfer of the shares will not generally occur until the fifth anniversary of the date of award. A benchmark
for HSBC Holdings’ TSR, weighted by market capitalisation, was established which takes account of the TSR performance of: (1) a peer
group of nine banks weighted by market capitalisation which were considered most relevant to HSBC in terms of size and international
scope. For performance periods up to and including the one beginning in 2003, this group comprised ABN AMRO Holding N.V., The Bank
of East Asia, Limited, Citigroup Inc., Deutsche Bank AG, JPMorgan Chase & Co., Lloyds TSB Group plc, Mitsubishi Tokyo Financial
Group Inc., Oversea-Chinese Banking Corporation Limited and Standard Chartered PLC. To be more relevant to HSBC in terms of size
and international scope, this peer group was amended for conditional awards made in 2004 by the replacement of Lloyds TSB Group plc,
Oversea-Chinese Banking Corporation Ltd., Mitsubishi Tokyo Financial Group Inc. and The Bank of East Asia, Limited with Bank of
America Corporation, The Royal Bank of Scotland Group plc, Banco Santander Central Hispano S.A. and UBS AG; (2) the five largest
banks from each of the US, the UK, continental Europe and the Far East, other than any within (1) above, weighted by market
capitalisation; and (3) the banking sector of the Morgan Stanley Capital International World Index, excluding any within (1) or (2) above,
weighted by market capitalisation. By combining the weighted average TSR for each of the above three groups and weighting that average
so that 50 per cent is applied to (1), 25 per cent is applied to (2) and 25 per cent is applied to (3), a single TSR benchmark for market
comparison was determined. The benchmark was chosen to reward the delivery of sustained financial growth of HSBC Holdings and to
align the interests of participants with those of shareholders. The extent to which each award will vest will be determined by reference to
HSBC Holdings’ TSR measured against the TSR benchmark. If HSBC Holdings’ TSR over the performance period exceeds the benchmark
TSR, awards with a value, at the date of grant, of up to 100 per cent of the individual’s earnings (base salary and bonus in respect of the
previous performance year), will vest. For higher value awards, the greater of 50 per cent of the award or the number of shares equating at
the date of grant to 100 per cent of the individual’s earnings, will vest at this level of performance. If HSBC Holdings’ TSR over the
performance period places it within the upper quartile of the ranked list of the banks comprising the benchmark, these higher value awards
will vest in full. For performance between the median and the upper quartile, vesting will be on a straight-line basis. If the upper quartile
performance level is achieved at the third anniversary of the date of award then an additional award equal to 20 per cent of the initial
Performance Share award will be made and will vest at the same time as the original award to which it relates.
1 Includes additional shares arising from scrip dividends.
2 The performance tests set out above were met in 2004 and the shares have vested. At the date of vesting, 13 March 2006, the market
value per share was £9.925. The market value per share at the date of the award, 12 March 2001, was £8.62.
3 Retired as a Director on 26 May 2006. The awards held at the date of retirement that had passed the performance condition set out
above vested immediately. Consequently, the 2002 awards were released to Sir John Bond on 14 June 2006 when the market value per
share was £9.31 and to A W Jebson on 30 June 2006 when the market value per share was £9.515. The market value per share at the
date of the award, 8 March 2002, was £8.34.
4 In line with the previous practice for executives who had worked significantly beyond retirement age, and where the awards had passed
the performance condition at the time of originally planned retirement, the Remuneration Committee agreed that the Performance
Share awards held by Sir John Bond at retirement should vest in full without time prorating. Consequently, the 2003 award vested on
14 June 2006 when the market value per share was £9.31. The 2004 award vested in two tranches: the first on 16 June 2006
(200,000 shares) when the market value per share was £9.37; and the second on 31 July 2006 (73,058 shares) when the market value
per share was £9.71. The market values per share at the dates of the awards, 5 March 2003 and 4 March 2004, were £6.70 and £8.515
respectively.
5 Interests at date of retirement as a Director (26 May 2006).
On behalf of the Board 5 March 2007
Sir Mark Moody-Stuart, Chairman of Remuneration Committee