Annual Financial Report -37 of 48

RNS Number : 3904B

HSBC Holdings PLC

03 April 2013

 



Appendix to Directors' Remuneration Report Additional disclosures

This appendix provides disclosures required under Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, and by the FSA.

The following table shows the 2012 total remuneration of the Group Chairman and executive Directors of HSBC Holdings with annual incentives disclosed on a 2012 performance year basis, pursuant to the UK Listing Rules. Explanations of the constituent parts of the incentives calculated pursuant to the UK Companies Act 2006 and the UK Listing Rules are given in footnotes 4 and 5, respectively.

Directors' remuneration

(Audited)

	D J Flint				A A Flockhart1				S T Gulliver				I J Mackay
	2012		2011		2012		2011		2012		2011		2012		2011
	£000		£000		£000		£000		£000		£000		£000		£000
Salary, allowances and benefits in kind ......	2,355		2,348		564		1,578		2,470		2,043		1,121		1,427
Annual incentive2 .....................................	-		-		-		1,926		1,950		2,156		1,348		1,086
Total remuneration ..................................	2,355		2,348		564		3,504		4,420		4,199		2,469		2,513
US$000 Total remuneration ..................................	3,7323		3,763		894		5,616		7,004		6,729		3,913		4,027

Emoluments table

The following table shows the 2012 emoluments of the Group Chairman and executive Directors of HSBC Holdings, with annual incentives disclosed on an actual paid basis, pursuant to section 421 of the UK Companies Act 2006 and the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008:

Directors' emoluments

(Audited)

	D J Flint				A A Flockhart1				S T Gulliver				I J Mackay
	2012		2011		2012		2011		2012		2011		2012		2011
	£000		£000		£000		£000		£000		£000		£000		£000
Salary .......................................................	1,500		1,500		325		975		1,250		1,250		700		700
Allowances4 ..............................................	750		750		207		366		613		527		350		364
Benefits in kind5........................................	105		98		32		237		607		266		71		363
Prior years deferred annual incentive now released6 ..................................................	1,364		1,054		218		857		5,648		3,697		275		12
Current year non-deferred annual incentive7 ...............................................................	-		-		-		770		780		862		539		434
Total emoluments ....................................	3,719		3,402		782		3,205		8,898		6,602		1,935		1,873
US$000 Total emoluments ....................................	5,893		5,452		1,239		5,136		14,100		10,581		3,066		3,002

1  Retired as an executive Director on 30 April 2012.

2  The annual incentive for 2012 comprises the deferred and non-deferred annual incentives.

3  The reduction in Total Remuneration in US$ between 2012 and 2011 is due to foreign exchange movements.

4  Allowances include an executive allowance paid to fund personal pension arrangements.

5  Benefits in kind include provision of medical insurance, other insurance cover, tax return preparation and travel assistance. S T Gulliver is also provided with HSBC-owned accommodation whilst in Hong Kong. In accordance with the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, the taxable rental value of the property is shown for the whole period notwithstanding that it is only occupied when S T Gulliver is in Hong Kong.

6  Where applicable, comprise, subject to the rules of the respective share plans: (i) the estimated monetary value of 33% of the award of HSBC Holdings Restricted Shares will vest on 12 March 2013 arising from the 2011 annual incentive awarded in March 2012 that was partly deferred into awards of HSBC Holdings Restricted Shares; (ii) the estimated monetary value of 33% of the award of HSBC Holdings Restricted Shares that will vest on 4 March 2013 arising from the 2010 annual incentive awarded in March 2011 that was partly deferred into awards of HSBC Holdings Restricted Shares; (iii) the estimated monetary value of the remainder of the award of HSBC Holdings Restricted Shares that will vest on 5 March 2013 arising from the 2009 annual incentive awarded in March 2010 that was fully deferred into awards of HSBC Restricted Shares; and (iv) 33% of the deferred cash award that will vest on 15 March 2013 arising from the 2010 annual incentive awarded in March 2011.

7  Comprises 40% of the annual incentive in respect of the 2012 performance year that is non-deferred. The non-deferred incentive is payable in HSBC Holdings Restricted Shares, 50% of which are subject to a six month retention period.

Non-executive Directors' fees

Non-executive Directors' fees are regularly reviewed and compared with other large international companies of comparable complexity. The current fee, which was approved by shareholders in 2011, is £95,000 per annum.

A fee of £45,000 per annum is payable to the senior independent non-executive Director. In addition, non-executive Directors received the following fees for service on Board Committees:

Board Committee annual fees

	Chairman		Member		Number of        meetings    held during
	£000		£000		2012
Group Audit Committee ...............................................................................	50		30		5
Group Risk Committee .................................................................................	50		30		7
Group Remuneration Committee ..................................................................	50		30		8
Financial System Vulnerabilities Committee1 ................................................	50		30		-
Nomination Committee ...............................................................................	40		25		4
Corporate Sustainability Committee .............................................................	40		25		4

1  Established on 18 January 2013.

Fees paid to non-executive Directors

(Audited)

	2012		2011
	£000		£000
S A Catz ..................................................................................................................................	95		95
L M L Cha1 .............................................................................................................................	548		465
M K T Cheung2 .......................................................................................................................	166		165
J D Coombe ............................................................................................................................	205		205
J Faber3 ...................................................................................................................................	104		-
R A Fairhead ...........................................................................................................................	200		200
A A Flockhart4 .......................................................................................................................	70		-
J W J Hughes-Hallett ...............................................................................................................	138		150
W S H Laidlaw ........................................................................................................................	125		125
J P Lipsky3 .............................................................................................................................	119		-
J R Lomax ..............................................................................................................................	155		155
G Morgan5 ..............................................................................................................................	50		125
N R N Murthy6 .......................................................................................................................	135		135
Sir Simon Robertson ................................................................................................................	180		166
J L Thornton7 .........................................................................................................................	1,092		1,081
Sir Brian Williamson5 ..............................................................................................................	48		120
Total8 .....................................................................................................................................	3,430		3,187
Total (US$000)8 .....................................................................................................................	5,435		5,108

1  Includes fees as non-executive Director and Deputy Chairman of The Hongkong and Shanghai Banking Corporation Limited and a member of its nomination committee.

2  Includes fees as non-executive Director and member of the audit committee of Hang Seng Bank Limited.

3  Appointed on 1 March 2012.

4  A non-executive Director from 1 May to 31 July 2012. Includes fees as a non-executive Director and Chairman of HSBC Bank plc and a non-executive Director of HSBC Bank Middle East Limited from 1 May to 31 July 2012.

5  Retired on 25 May 2012.

6  Retired on 31 December 2012.

7  Includes fees as non-executive Chairman of HSBC North America Holdings Inc.

8  Total fees for 2011 and 2012 include the fees of non-executive Directors who retired in that year.

Non-executive Directors are appointed for fixed terms not exceeding three years, subject to their re-election by shareholders at Annual General Meetings. Non-executive Directors have no service contract and are not eligible to participate in our share plans. Non-executive Directors' current terms of appointment will expire as follows:

·      in 2013, R A Fairhead;

·      in 2014, S A Catz, L M L Cha, J D Coombe, J W J Hughes-Hallett and W S H Laidlaw; and

·      in 2015, M K T Cheung, J Faber, J P Lipsky, J R Lomax, Sir Simon Robertson and J L Thornton.

Subject to their re-election by shareholders, the terms of appointment of R Fassbind and J B Comey will expire in 2016.

Other directorships

Executive Directors, if so authorised by either the Nomination Committee or the Board, may accept appointments as non-executive directors of suitable companies which are not part of HSBC. Approval will not be given for an executive Director to accept a non-executive directorship of more than one FTSE 100 company nor the chairmanship of such a company. When considering a non-executive appointment, the Nomination Committee or Board will take into account the expected time commitment of such appointment. The time commitment for executive Directors' external appointments will be reviewed as part of the annual Board review. Any remuneration receivable in respect of an external appointment is normally paid to HSBC, unless otherwise approved by the Nomination Committee.

Share Plans

At 31 December 2012, the undernamed Directors held options and awards of Restricted Shares under the HSBC Share Plan and the HSBC Share Plan 2011 (including conditional awards of shares under the GPSP) to acquire the number of HSBC Holdings ordinary shares set against their respective names.

HSBC Holdings savings-related share option plans

(Audited)

HSBC Holdings ordinary shares

	Dates of		Exercise		Exercisable				At            1 Jan		At 31 Dec 2012    (or date of
	award		price (£)		from1		until		2012		retirement)
D J Flint .......................................	25 Apr 2007		6.1760		1 Aug 2012		31 Jan 2013		2,650		2,650
D J Flint .......................................	24 Apr 2012		4.4621		1 Aug 2015		31 Jan 2016		-		2,016
A A Flockhart ..............................	29 Apr 2009		3.3116		1 Aug 2014		31 Jan 2015		4,529		-2
			US$
I J Mackay ...................................	30 Apr 2008		11.8824		1 Aug 2011		31 Jan 2012		1,531		-3

The HSBC Holdings savings-related share option plans are all-employee share plans under which eligible employees may be granted options to acquire HSBC Holdings ordinary shares. Employees may make contributions of up to £250 (or equivalent) each month over a period of one, three or five years which may be used on the first, third or fifth anniversary of the commencement of the relevant savings contract, at the employee's election, to exercise the options. The plans help align the interests of employees with the creation of shareholder value. The options were awarded for nil consideration and are exercisable at a 20% discount to the average market value of the ordinary shares on the five business days immediately preceding the invitation date. There are no performance criteria conditional upon which the outstanding options are exercisable and there have been no variations to the terms and conditions since the awards were made. The market value per ordinary share at 31 December 2012 was £6.47. The highest and lowest market values per ordinary share during the year were £6.55 and £4.91. Market value is the mid-market price derived from the London Stock Exchange Daily Official List on the relevant date. Under the Securities and Futures Ordinance of Hong Kong, the options are categorised as unlisted physically settled equity derivatives.

1  May be advanced to an earlier date in certain circumstances, e.g. retirement.

2  Options lapsed on 31 October 2012 following the end of the six month period following retirement within which employees may exercise options under the HSBC Holdings savings-related share option plans. A A Flockhart retired as an employee on 30 April 2012.

3  Option lapsed on 31 January 2012 following the end of the exercise period.

Awards of Restricted Shares

HSBC Share Plan

(Audited)

HSBC Holdings ordinary shares

			Year in        which		Awards       held at		Awards made during year				Awards vested during year				Awards       held at 3131 Dec 2012
	Date of             award		awards   may vest		1 Jan           2012		Number		Monetary              value		Number		Monetary              value		(or date of     retirement)1
									£000				£000
D J Flint ........	1 Mar 2010		2011-20132		220,201		-		-		111,3403		617		116,700
	15 Mar 2011		2012-20142		133,280		-		-		44,5164		256		94,569
A A Flockhart5 .....	2 Mar 2009		2012		535,162		-		-		541,6516		3,028		-
	1 Mar 2010		2011-20132		212,927		-		-		107,6623		596		110,704
	15 Mar 2011		2012-20142		86,062		-		-		28,7454		165		59,906
S T Gulliver ...	1 Mar 2010		2011-20132		943,723		-		-		477,1743		2,644		500,148
	15 Mar 2011		2012-20142		825,072		-		-		275,5754		1,585		585,436
I J Mackay ....	2 Mar 2009		2012		104,244		-		-		105,5086		590		-
	1 Mar 2010		2011-20132		41,263		-		-		20,8643		116		21,868
	15 Mar 2011		2012-20142		35,954		-		-		12,0084		69		25,513

Vesting of Restricted Share awards is normally subject to the Director remaining an employee on the vesting date. The vesting date may be advanced to an earlier date in certain circumstances, e.g. death. Under the Securities and Futures Ordinance of Hong Kong, interests in Restricted Share awards are categorised as the interests of a beneficial owner.

1  Includes additional shares arising from scrip dividends.

2  33% of the award vests on each of the first and second anniversaries of the date of the award, with the balance vesting on the third anniversary of the date of the award. In the case of the awards granted on 15 March 2011 the shares (net of tax) are subject to a six month retention period following each vesting date.

3  At the date of vesting, 27 February 2012, the market value per share was £5.54. The market value per share on the date of the award, 1 March 2010, was £6.82.

4  At the date of vesting, 15 March 2012, the market value per share was £5.75. The market value per share on the date of the award, 15 March 2011, was £6.46.

5  Retired as an executive Director on 30 April 2012. The vesting of the awards will continue in line with the vesting schedule set at the date of grant and will also continue to accrue scrip dividends subject to the terms of the Plan.

6  At the date of vesting, 5 March 2012, the market value per share was £5.59.  The market value per share on the date of the award, 2 March 2009, was £3.99.

Awards of Restricted Shares

HSBC Share Plan 2011

(Audited)

HSBC Holdings ordinary shares

			Year in        which		Awards       held at		Awards made during year				Awards vested during year				Awards       held at 3131 Dec 2012
	Date of             award		awards   may vest		1 Jan           2012		Number		Monetary              value		Number		Monetary              value		(or date of     retirement)1
									£000				£000
A A Flockhart2 .....	28 Feb 20123		2012		-		68,941		385		68,941		385		-
	12 Mar 20124		2013-2015		-		207,546		1,154		-		-		213,044
	12 Mar 20125		2012		-		69,182		385		69,182		385		-
S T Gulliver ...	28 Feb 20123		2012		-		77,167		431		77,167		431		-
	12 Mar 20124		2013-2015		-		232,312		1,292		-		-		243,078
	12 Mar 20125		2012		-		77,437		431		77,437		431		-
I J Mackay ....	28 Feb 20123		2012		-		38,854		217		38,854		217		-
	12 Mar 20124		2013-2015		-		116,968		650		-		-		122,390
	12 Mar 20125		2012		-		38,989		217		38,989		217		-

Vesting of Restricted Share awards is normally subject to the Director remaining an employee on the vesting date. The vesting date may be advanced to an earlier date in certain circumstances, for example, death. Under the Securities and Futures Ordinance of Hong Kong, interests in Restricted Share awards are categorised as the interests of a beneficial owner.

1  Includes additional shares arising from scrip dividends.

2  Retired as an executive Director on 30 April 2012. The vesting of the awards will continue in line with the vesting schedule set at the date of grant and will also continue to accrue scrip dividends subject to the terms of the plan.

3  The non-deferred award vested immediately on 28 February 2012. At the date of vesting the market value per share was £5.59.

4  At the date of the award, 12 March 2012, the market value per share was £5.56. 50% of these deferred awards are subject to a six month retention period upon vesting. 33% of the awards vest on each of the first and second anniversaries of the date of the awards, with the balance vesting on the third anniversary of the date of the award.

5  The non-deferred award vested immediately on 12 March 2012 and the shares (net of tax) were subject to a six month retention period. At the date of vesting, the market value per share was £5.56.

Conditional Awards under the GPSP

HSBC Share Plan 2011

(Audited)

HSBC Holdings ordinary shares

			Year in             which		Awards          held at		Awards made during year1				Awards          held at 31 Dec 2012
	Date of award		awards        may vest		1 Jan              2012		Number		Monetary            value		(or date of   retirement)2
									£000
A A Flockhart3 .............................	23 Jun 2011		2016		178,373		-		-		185,319
S T Gulliver ..................................	23 Jun 2011		2016		392,119		-		-		415,270
	12 Mar 2012		2017		-		673,370		3,744		704,583
I J Mackay ...................................	23 Jun 2011		2016		109,626		-		-		116,099
	12 Mar 2012		2017		-		125,695		699		131,522

The GPSP is the long-term incentive plan under the HSBC Share Plan 2011. Vesting of GPSP awards is normally subject to the Director remaining an employee on the vesting date. Any shares (net of tax) which the Director becomes entitled to on the vesting date are subject to a retention requirement until cessation of employment. Under the Securities and Futures Ordinance of Hong Kong, interests in awards are categorised as the interests of a beneficial owner.

1  At the date of award, 12 March 2012, the market value per share was £5.56.

2  Includes additional shares arising from scrip dividends.

3  Retired as an executive Director on 30 April 2012. The vesting of the awards will continue in line with the vesting schedule set at the date of grant and will also continue to accrue scrip dividends.

Pensions

Defined Benefit Pension arrangements

(Audited)

	Accrued         annual   pension at 31 December             2012		Increase in       accrued      pension        during            2012		Increase in        accrued       pension during 2012,    excluding any increase  for inflation		Transfer             value     of accrued     pension at   31 December             20111		Transfer            value   of accrued   pension at 31 December             20121		Increase of transfer value      of accrued pension (less       personal contributions)          in 20121		Transfer value         (less personal    contributions) at 31 December 2012 relating to increase in accrued pension           during 2012,         excluding any  increase for                  inflation1
	£000		£000		£000		£000		£000		£000		£000
A A Flockhart2 ...............	339		32		15		5,638		6,105		467		251

1  The transfer value represents a liability of HSBC's pension fund (the International Staff Retirement Benefits Scheme ('ISRBS')) and not a sum paid or due to the individual; it cannot therefore meaningfully be added to annual remuneration.

2  A A Flockhart ceased accrual of pension in the ISRBS on 30 November 2008 and he has deferred commencement of his pension. The ISRBS retains a liability for a contingent spouse's pension of £140,000 per annum as at 31 December 2012. Although A A Flockhart retired as an executive Director on 30 April 2012, this does not affect his benefits within the ISRBS.

The following table shows unfunded pension payments, in respect of which provision has been made, during 2012 to six former Directors of HSBC Holdings.

The payments in respect of R Delbridge and Sir Brian Pearse were made by HSBC Bank plc as former directors of that bank. The payment in respect of C F W de Croisset was made by HSBC France as a former director of that bank.

Unfunded pension payments

(Audited)

	2012 £		2011 £
B H Asher ...............................................................................................................................	111,763		106,441
C F W de Croisset ...................................................................................................................	239,423		250,910
R Delbridge .............................................................................................................................	160,754		153,099
Lord Green ..............................................................................................................................	42,174		40,946
Sir Brian Pearse .......................................................................................................................	67,036		63,844
Sir William Purves ..................................................................................................................	118,313		112,679
	739,463		727,919

Employee compensation and benefits

(Unaudited)

Set out below are details of emoluments paid to senior management (being executive Directors and Group Managing Directors of HSBC Holdings) for the year ended 31 December 2012 or for the period of appointment as a Director or Group Managing Director.

Emoluments of senior management

	Senior management £000
Basic salaries, allowances and benefits in kind ....................................................................................................	15,461
Pension contributions ........................................................................................................................................	315
Performance-related pay paid or receivable .......................................................................................................	33,066
Inducements to join paid or receivable ...............................................................................................................	-
Compensation for loss of office ........................................................................................................................	715
Total .................................................................................................................................................................	49,557
Total (US$000) .................................................................................................................................................	78,531

The aggregate emoluments of senior management for the year ended 31 December 2012 was US$78,531,390. The emoluments of senior management were within the following bands:

	Number senior management
£0 - £1,000,000 ...............................................................................................................................................	3
£1,000,001 - £2,000,000 .................................................................................................................................	1
£2,000,001 - £3,000,000 .................................................................................................................................	5
£3,000,001 - £4,000,000 .................................................................................................................................	4
£4,000,001 - £5,000,000 .................................................................................................................................	1
£7,000,001 - £8,000,000 .................................................................................................................................	2

The aggregate amount set aside or accrued to provide pension, retirement or similar benefits for executive Directors and senior management for the year ended 31 December 2012 was US$499,285.

Set out below are details of remuneration paid to the five individuals whose emoluments were the highest in HSBC (including two executive Directors and two Group Managing Directors of HSBC Holdings), for the year ended 31 December 2012.

Emoluments of the five highest paid employees

	5 highest paid employees £000
Basic salaries, allowances and benefits in kind ....................................................................................................	6,112
Pension contributions ........................................................................................................................................	155
Performance-related pay paid or receivable .......................................................................................................	21,513
Inducements to join paid or receivable ...............................................................................................................	-
Compensation for loss of office ........................................................................................................................	-
Total .................................................................................................................................................................	27,780
Total (US$000) .................................................................................................................................................	44,022

The emoluments of the five highest paid employees were within the following bands:

	Number of 5 highest paid      employees
£3,800,001 - £3,900,000 .................................................................................................................................	1
£4,600,001 - £4,700,000 .................................................................................................................................	1
£4,800,001 - £4,900,000 .................................................................................................................................	1
£7,000,001 - £7,100,000 .................................................................................................................................	1
£7,400,001 - £7,500,000 .................................................................................................................................	1

Remuneration of eight highest paid senior executives (members of the GMB, but not Directors of HSBC Holdings)

	Employee
	1		2		3		4		5		6		7		8
	£000		£000		£000		£000		£000		£000		£000		£000
Fixed
Cash based ..................	650		632		650		650		650		650		851		488
Total fixed .................	650		632		650		650		650		650		851		488
Annual incentive1
Cash ...........................	955		331		262		340		277		272		227		180
Non-deferred shares2....	955		331		262		340		277		272		227		180
Deferred cash3 ............	1,433		496		393		510		415		407		341		270
Deferred shares3...........	1,433		496		393		510		415		407		341		270
Total annual incentive	4,776		1,654		1,310		1,700		1,384		1,358		1,136		900
Long-term incentive plan (GPSP)
Deferred shares ...........	1,560		1,517		1,560		1,040		780		780		681		976
Total variable pay ......	6,336		3,171		2,870		2,740		2,164		2,138		1,817		1,876
Total remuneration ....	6,986		3,803		3,520		3,390		2,814		2,788		2,668		2,364
US$000
Total remuneration.....	11,070		6,026		5,578		5,372		4,459		4,418		4,228		3,746

1  Annual incentive in respect of performance year 2012.

2  Awards vested, subject to a six month retention period.

3  Awards vest 100% after five years subject to the successful completion of the Deferred Prosecution Agreements and subject to the terms of the Plan.

 

END

 

 

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