HSBC 2015 Annual Report Download - page 289

HSBC HOLDINGS PLC
287
Strategic Report Financial Review Corporate Governance Financial Statements Shareholder Information
The following graph illustrates when the variable pay
awards for 2015 will be paid to our executive Directors.
New remuneration policy for 2016
We will be seeking approval for a new remuneration policy
at the AGM on 22 April 2016. The policy on pages 288 to
299 takes into account the new PRA Remuneration Rules,
which require deferral of variable pay over a longer period
of seven years, rather than three as is currently the case.
It also takes into account changes based on the EBA’s
Guidelines published in December 2015.
Changes to the policy also address shareholder feedback,
mainly the desire to implement a long-term incentive
structure in line with that of other FTSE companies and to
introduce forward-looking performance conditions. The
performance measures for both the annual incentive and
the long-term incentive have also been revised to reflect
the strategic and financial objectives set out in the update
presented to investors in June 2015.
First awards under the new policy will be granted in
March 2017, in respect of the 2016 performance year.
We have discussed the proposed changes to our
remuneration policy with a number of our large
shareholders and proxy advisory bodies, and overall
they have been broadly supportive of the changes.
I hope you will support the new remuneration policy, which
requires your approval to take effect, by voting for the
resolution.
Key changes
Element of pay Changes
Cash in lieu of pension • Reduced from 50% of base salary to 30% of base salary.
Fixed pay allowance • To be released on a pro rata basis over five years.
Annual incentive • To be delivered in shares, subject to a minimum six-month retention period.
• The Committee will retain the discretion to apply longer retention periods or apply deferral to a proportion
of the award (with vesting aligned to the long-term incentive).
Long-term incentives • Prior performance will be taken into consideration when determining the value of the grant.
• Awarded in shares, subject to a three-year forward-looking performance period commencing from the
start of the financial year in which the awards are granted.
• Awards will commence vesting after the end of the three-year performance period. Awards will vest in five
equal instalments with the first vesting on or around the third anniversary of the date of grant and the last
instalment vesting on or around the seventh anniversary of grant.
• A retention period may be applied to ensure compliance with regulatory requirements.
Shareholding requirement • Expressed as a percentage of base salary.
Looking ahead to 2016
The new PRA Remuneration Rules are more stringent than
the rules in force in the EU, US and Asia-Pacific, making it
challenging for UK banks to attract talent with transferable
skills or from other industries. We believe more regulator
co-ordination is required to ensure there are globally
consistent remuneration standards and a level playing
field.
The Committee will monitor the impact of the changes
to our remuneration policy to ensure it continues to be
aligned with our strategy, protects our business and
delivers shareholder value.
Sam Laidlaw Chairman
Group Remuneration Committee
22 February 2016
1,187
588 588 605
4,171
0
1,000
2,000
3,000
4,000
5,000
2016 2017 2018 2019 … Later of
2021 or
retirement
Group CEO Group Finance Director Group CRO
£000