HSBC FinCorp 05 Rslts 10K Pt7
HSBC Holdings PLC
06 March 2006
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
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DIRECTORS
Set forth below is certain biographical information relating to the members of
HSBC Finance Corporation's Board of Directors. Each director is elected
annually. There are no family relationships among the directors.
WILLIAM R. P. DALTON, age 62, joined HSBC Finance Corporation's Board in April
2003. Mr. Dalton retired in May 2004 as an Executive Director of HSBC Holdings
plc, a position he held from April 1998. He also served HSBC as Global Head of
Personal Financial Services from August 2000 to May 2004. From April 1998 to
January 2004 he was Chief Executive of HSBC Bank plc. Mr. Dalton held positions
with various HSBC entities for 24 years.
Mr. Dalton is a member of the Compensation Committee.
GARY G. DILLON, age 71, joined HSBC Finance Corporation's Board in 1984. Mr.
Dillon retired as Chairman of the Board of Schwitzer Group (a manufacturer of
engine components) on March 1, 1999. He had served as Chairman of Schwitzer from
1991 and Chief Executive Officer of Schwitzer from 1989. From 1989 to 1997 he
also served as President of Schwitzer. Prior to 1989 he was President and Chief
Executive Officer of Household Manufacturing, Inc., the former diversified
manufacturing subsidiary of HSBC Finance Corporation.
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Mr. Dillon is a member of the Compensation, Executive, Offering and Audit
Committees.
J. DUDLEY FISHBURN, age 59, joined HSBC Finance Corporation's Board in 1995. Mr.
Fishburn became Chairman of the Board of HFC Bank Ltd. (HSBC Finance
Corporation's primary subsidiary in the United Kingdom) in 1998. He previously
served as the Conservative Member of Parliament for Kensington in London from
1988 to 1997. Prior to entering Parliament, Mr. Fishburn was Executive Editor
for The Economist Newspaper Ltd. from 1979 until 1988. He is also a Director of
Altria Inc., First NIS Fund (Luxembourg), Henderson Smaller Companies Investment
Trust plc, The Beazley Group plc, and a Trustee of The Peabody Trust.
Mr. Fishburn is a member of the Nominating & Governance Committee.
CYRUS F. FREIDHEIM, JR., age 70, joined HSBC Finance Corporation's Board in
1992. Mr. Freidheim served as Chairman of the Board and Chief Executive Officer
of Chiquita Brands International, Inc. from March 2002 until January 2004 and
Chairman until May 2004. In March 2002, he retired as Vice Chairman of Booz,
Allen & Hamilton, Inc. (a management consulting firm), with which he had been
affiliated since 1966. He is also a Director of Allegheny Energy, Inc.,
Hollinger International, Inc. and SITEL Corp., Inc. and a Trustee of Thunderbird
Galvin School of Institutional Management and a Trustee of the Brookings
Institution. He was a director until March 2002 of Arasys, Inc. and
Pharmaceutical Industries LLC and until May 2000 of Security Capital Group, Inc.
Mr. Freidheim is the Lead Director and a such is the Chair of the Executive
Committee and an ex-officio member of the Audit, Compensation and Nominating and
Governance Committees.
ROBERT K. HERDMAN, age 57, joined HSBC Finance Corporation's Board in 2004. He
also serves as a member of the Board of Directors of HSBC North America
Holdings, Inc. Mr. Herdman is a Managing Director of Kalorama Partners LLC, a
Washington, D.C. consulting firm. Mr. Herdman was the Chief Accountant of the
U.S. Securities and Exchange Commission from October 2001 to November 2002. The
Chief Accountant serves as the principal advisor to the Commission on accounting
and auditing matters, and is responsible for formulating and administering the
accounting program and policies of the Commission. Prior to joining the SEC, Mr.
Herdman was Ernst & Young's Vice Chairman of Professional Practice for its
Assurance and Advisory Business Services (AABS) practice in the Americas and the
Global Director of AABS Professional Practice for Ernst & Young International.
Mr. Herdman was the senior E&Y partner responsible for the firms' relationships
with the SEC, Financial Accounting Standards Board (FASB) and American Institute
of Certified Public Accountants (AICPA). He was on the AICPA's SEC Practice
Section Executive Committee (1995-2001) and a member of the AICPA's Board of
Directors (2000-2001). Mr. Herdman is a member of the Board of Directors of
Westwood One, Inc. (chair of the Audit Committee and member of the Nominating
and Governance Committee), and a member of the Board of Advisors of EPG, Inc., a
family-owned business in Aurora, Ohio and of Stadia Capital LLC, a New York
hedge fund.
Mr. Herdman is Chair of the Audit Committee.
ALAN W. JEBSON, age 56, joined HSBC Finance Corporation's Board in 2003. He is
an Executive Director and the current Chief Operating Officer of HSBC with
responsibility for HSBC's worldwide operational functions and for managing
certain head office departments. Mr. Jebson has announced his intention to
retire from HSBC effective May 2006. Mr. Jebson joined The Hongkong and Shanghai
Banking Corporation Limited in 1978 as Manager Computer Audit before serving
with The Saudi British Bank in technical services and planning roles. He has
worked in various IT capacities in Hong Kong and London for HSBC from 1978 until
becoming its Chief Operating Officer in June 2003. He served as Group General
Manager, Information Technology in April 1996 and was appointed Group IT
Director and an Executive Director of HSBC Holdings in 2000.
Mr. Jebson is an ex-officio member of the Audit Committee.
GEORGE A. LORCH, age 64, joined HSBC Finance Corporation's Board in 1994. In
August 2000, Mr. Lorch became a Chairman Emeritus of Armstrong Holdings, Inc.
From May until August 2000, Mr. Lorch served as Chairman and President and Chief
Executive Officer of Armstrong Holdings, Inc. (the parent of Armstrong
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World Industries, Inc.). Mr. Lorch served as Chairman of the Board of Armstrong
World Industries, Inc. (a manufacturer of interior finishes) from 1994 and
President and Chief Executive Officer from 1993 until May 2000. Mr. Lorch is a
Director of The Williams Companies, Inc., Autoliv, Inc. and Pfizer Inc.
Mr. Lorch is Chair of the Compensation Committee and a member of the Nominating
& Governance Committee.
SIDDHARTH N. MEHTA, age 47, is the Chairman and Chief Executive Officer of HSBC
Finance Corporation since May 2005 and Chief Executive Officer of HSBC North
America Holdings Inc. since March 2005. He is also Group Managing Director of
HSBC Holdings plc, with responsibility for the strategic management of consumer
finance and credit cards throughout the HSBC Group. Mr. Mehta joined HSBC
Finance Corporation in 1998 as Group Executive - Credit Card Services. Prior to
joining HSBC Finance Corporation, Mr. Mehta was Senior Vice President at The
Boston Consulting Group in Los Angeles and co-leader of Boston Consulting Group
Financial Services Practice in the United States. Mr. Mehta serves on the board
of directors for MasterCard International, U.S. region, and the board of
international advisors for the Monterey, California, Institute of International
Studies. He is a member of the Financial Services Roundtable and serves on the
board of advisors for the Myelin Repair Foundation, a not-for-profit
organization working to fund research for multiple sclerosis.
Mr. Mehta is a member of the Executive Committee.
LARREE M. RENDA, age 47, joined HSBC Finance Corporation's Board in 2001. Ms.
Renda has been employed by Safeway Inc. since 1974. She became Executive Vice
President, Chief Strategist and Administrative Officer in November, 2005. Prior
to her current position she served as Executive Vice President for Retail
Operations, Human Resources, Public Affairs, Labor and Government Relations
since 1999. Prior to this position, she was a Senior Vice President from 1994 to
1999, and a Vice President from 1991 to 1994. She is also a director and
Chairwoman of the Board of The Safeway Foundation and serves on the board of
directors for Casa Ley, S.A. de C.V. in which Safeway Inc. holds a 49% interest.
Ms. Renda is a member of the Retailing Initiative Advisory Board of the Wharton
School of Business and serves as a trustee on the National Joint Labor
Management Committee. Additionally she serves on the board of directors of both
the California and U.S. Chamber of Commerce.
Ms. Renda is Chair of the Nominating & Governance Committee and a member of the
Audit Committee.
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EXECUTIVE OFFICERS
Information regarding the executive officers of HSBC Finance Corporation as of
March 6, 2006 is presented in the following table.
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YEAR
NAME AGE APPOINTED PRESENT POSITION
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Siddharth N. Mehta 47 2005 Chairman and Chief Executive Officer
Sandra L. Derickson 52 2000 Vice Chairman
David D. Gibbons 50 2004 Senior Executive Vice President - Chief Risk
Officer
Simon Penney 57 2003 Senior Executive Vice President
Kenneth H. Robin 59 1989 Senior Executive Vice President - General Counsel
& Corporate Secretary
Andrew C. Armishaw 43 2004 Group Executive - Chief Information Officer
James B. Kauffman 58 2002 Executive Vice President - Policy & Compliance
Steven B. Gonabe 54 2005 Executive Vice President - Administration
Lisa M. Sodeika 42 2004 Executive Vice President - Corporate Affairs
Beverley A. Sibblies 44 2004 Senior Vice President - Chief Financial Officer
J. Denis O'Toole 61 2003 Senior Vice President - Government Relations
Faye M. Polayes 54 2004 Senior Vice President - Taxes
Edgar D. Ancona 53 2002 Senior Vice President - Treasurer
Bruce A. Fletcher 45 2005 Senior Vice President - Chief Credit Officer
Patrick A. Cozza 50 2004 Group Executive
Thomas M. Detelich 49 2002 Group Executive
Walter G. Menezes 60 2004 Group Executive
John J. Haines 42 2004 Managing Director - Auto Finance
Joseph W. Hoff 55 2005 Managing Director - Retail Services
Gary R. Esposito 45 2005 Managing Director - Mortgage Services
James E. Binyon 42 2006 Vice President and Chief Accounting Officer
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Sandra L. Derickson, Vice Chairman of HSBC Finance Corporation since May 2004
and Group Executive of HSBC North America Holdings Inc. since August 2004. From
May 2001 to August 2002 she served as Managing Director-Retail Services of
Household International, Inc., and from August 2002 to May 2004 she served as
Group Executive with responsibilities for insurance, taxpayer financial services
and auto finance businesses and the HFC Bank - UK operations, as well as the
private label credit card operations. Prior to joining HSBC Finance Corporation
Ms. Derickson was an officer at General Electric Company from 1991 until 1999.
Ms. Derickson is also a member of the Board of Directors of Hexcel Corporation.
David D. Gibbons, Senior Executive Vice President, Chief Risk Officer of HSBC
Finance Corporation and of HSBC North America Holdings Inc. since March 2004.
Prior to that Mr. Gibbons was Deputy Comptroller for Special Supervision from
October 2002 to March 2004, Mr. Gibbons was with the OCC from September 1977 to
March 2004 and Deputy Comptroller of the Currency for Credit Risk from 1997 to
2002.
Simon Penney, Senior Executive Vice President of HSBC Finance Corporation since
May 2003 and Senior Executive Vice President and Chief Financial Officer of HSBC
North America Holdings Inc. since January 2004. From May 2003 until October 2005
Mr. Penney served as Chief Financial Officer of HSBC Finance Corporation. From
1995 to April 2003 he was Chief Financial Officer and a member of the executive
committee of the Hongkong and Shanghai Banking Corporation Limited. In 1999 he
was also appointed a non-executive director and a member of the audit committee
of Hang Seng Bank Ltd., a 62.14% owned subsidiary of HSBC. Mr. Penney has spent
a total of 23 years working for various subsidiaries of the HSBC Group.
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Kenneth H. Robin, Senior Executive Vice President, General Counsel and Corporate
Secretary of HSBC Finance Corporation since May 2003 and Senior Executive Vice
President, General Counsel and Corporate Secretary of HSBC North America
Holdings Inc. since January 2004. Prior to that Mr. Robin was Senior Vice
President, General Counsel and Corporate Secretary of Household International,
Inc., the predecessor of HSBC Finance Corporation, since 1993.
Andrew C. Armishaw, Group Executive and Chief Information Officer of HSBC
Finance Corporation and Senior Executive Vice President and Chief Information
Officer of HSBC North America Holdings Inc. since January 2004. From January
2001 to December 2003 Mr. Armishaw was Head of Global Resourcing for HSBC and
from 1994 to 1999 was Chief Executive Officer of First Direct (a subsidiary of
HSBC) and Chief Information Officer of First Direct.
James B. Kauffman, Executive Vice President of Policy and Compliance of HSBC
Finance Corporation and of HSBC North America Holdings Inc. since February 2004.
Mr. Kauffman joined HSBC Finance Corporation in June 2002 as Vice President of
Compliance and became Executive Vice President on February 2004. From March 2001
to June 2002 Mr. Kauffman served as Secretary of Banking of the Commonwealth of
Pennsylvania, served as Chairman of the Board of Directors of the Pennsylvania
Housing Finance Agency and sat on several other state economic development
boards. From January 1994 to December 1998, Mr. Kauffman served as Chairman and
Chief Executive Office of Keystone Bank. Mr. Kauffman also served as Chief
Credit Policy Officer for Keystone Financial, Inc. from January 1994 to December
1998.
Steven B. Gonabe, Executive Vice President of Administration of HSBC Finance
Corporation and of HSBC North America Holdings Inc. since July 2005. From June
1997 to July 2005 Mr. Gonabe was Vice President of Human Resources for HSBC
credit card services, auto finance and mortgage services businesses and national
director of human resources for the credit card services group. Mr. Gonabe
serves on the board of directors for the United Way of Monterey County and is a
member of the Junior Achievement of Silicon Valley and Monterey Bay, California.
Lisa M. Sodeika, Executive Vice President of Corporate Affairs of HSBC Finance
Corporation and of HSBC North America Holdings Inc. since June 2005. Ms. Sodeika
directs HSBC North America's public relations, CRA-community development,
consumer affairs, communications, philanthropic services and government
relations activities. From January 2003 to June 2005 Ms. Sodeika was Senior Vice
President - Corporate Affairs and Vice President - Consumer Affairs. From
October 2000 to December 2002 Ms. Sodeika served as Executive Assistant to the
group executive of consumer lending and to the Vice Chairman of Household
International, Inc., and from January 2000 to October 2000 held the position of
Vice President - Underwriting for the consumer lending division.
Beverley A. Sibblies, Senior Vice President and Chief Financial Officer of HSBC
Finance Corporation and Executive Vice President of Finance of HSBC North
America Holdings Inc. since October 2005. Ms. Sibblies joined HSBC Finance
Corporation in December 2004 as the Senior Vice President and Chief Accounting
Officer. Prior to joining HSBC Finance Corporation, she served as Executive Vice
President and Chief Financial Officer for EMC Mortgage from June 2000 to
February 2004. Prior to that, she served as a partner in the financial services
practice of Deloitte & Touche, LLP from July, 1997.
J. Denis O'Toole, Senior Vice President of Government Relations of HSBC Finance
Corporation since January 2003. From September 1992 to December 2002 Mr. O'Toole
was Vice President of Government Relations and in 1992 was hired as Vice
President and Director of HSBC Finance Corporation's Federal government
relations office. From January 1989 to August 2005 Mr. O'Toole was the Executive
Vice President of the Saving and Community Bankers of America, from May 1978 to
December 1988, Director of Legislative Operations and Senior Federal Legislative
Counsel to the American Bankers Association, from April 1973 to April 1978, Vice
President of Government Relations to the National Association of Home Builders,
and from April 1972 to March 1973, a litigation attorney for the Office of
General Counsel of the U.S. Department of Housing.
Faye M. Polayes, Senior Vice President of Tax for HSBC Finance Corporation since
January 2004. She has been Executive Vice President, Tax for HSBC North America
Holdings Inc. since January 2004 and
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Executive Vice President, Tax for HSBC Bank USA since January 1, 2000. Including
Ms. Polayes 18 years at Republic National Bank of New York as Tax Counsel, she
has been with HSBC for 23 years. Ms. Polayes has served on the Board of
Directors of the Organization for International Investment ("OFII") since June
2005. OFII is a not-for-profit organization whose members are foreign owned U.S.
corporations. It provides information to its members regarding legislative and
regulatory matters of common concern and lobbies on the Federal and state level
in connection with proposed legislation. Ms. Polayes has served on the Board of
Directors of the Jump Rhythm Jazz Project, a Chicago based dance company which
is a not-for-profit corporation, since December, 2005.
Edgar D. Ancona, Senior Vice President and Treasurer of HSBC Finance Corporation
and Executive Vice President - Asset and Liability Management of HSBC North
America Holdings Inc. since February 2004. Mr. Ancona joined HSBC Finance
Corporation in 1994, after having spent 17 years at Citicorp in various treasury
and operational functions. He is a director of HSBC Financial Corporation
Limited in Canada. Mr. Ancona is also a director of the LifeSource Blood
Services and the Central Blood Bank.
Bruce A. Fletcher, Senior Vice President and Chief Credit Officer of HSBC
Finance Corporation since April, 2005. Prior to joining HSBC Finance
Corporation, Mr. Fletcher served as Managing Director and Senior Credit Officer
for Citigroup, where during a period of more than 15 years he held a variety of
line and staff risk management positions.
Patrick A. Cozza, Group Executive of HSBC Finance Corporation since April 2004.
Prior to that Mr. Cozza became President - Refund Lending and Insurance Services
in 2002 and Managing Director and Chief Executive Officer - Refund Lending in
2000. He also serves on the board of directors of Junior Achievement in New
Jersey and Cancer Hope Network.
Thomas M. Detelich, Group Executive of HSBC Finance Corporation since July 2002.
Mr. Detelich also held the positions of Managing Director at Beneficial
Corporation from March 2000 to July 2002 and Managing Director of Household
Finance Corporation from January 1999 to July 2002 and regional general manager
of consumer lending. Mr. Detelich was formerly with Transamerica in several
management positions. He was with Transamerica for 21 years.
Walter G. Menezes, Group Executive of HSBC Finance Corporation since April 2004
and is responsible for HSBC Finance Corporation's credit card and private label
credit card operations. Mr. Menezes held the title of President and Chief
Executive Officer for Auto Finance from 2002 to August 2004 and Managing
Director and Chief Credit Officer of Credit Card Services since from 1998 to
2002. He joined HSBC Finance Corporation in 1996 as National Director
Collections - Credit Card Services.
John J. Haines, Managing Director of Auto Finance of HSBC Finance Corporation
since joining HSBC Finance Corporation in August 2004. From May 1989 to August
2004 Mr. Haines worked for General Electric where he was Senior Vice President -
Products and Services for General Electric Fleet Services and Senior Vice
President - North American Operations for General Electric Fleet Services. Mr.
Haines is a member of the Automotive Finance Committee of the Consumer Bankers
Association.
Joseph W. Hoff, Managing Director of Retail Services of HSBC Finance Corporation
since March 2005. Mr. Hoff served as Chief Financial Officer for the Retail
Services business from April 1995 to March 2005. He has been with HSBC Finance
Corporation since 1976 in various accounting and planning, acquisitions and
corporate finance lending and treasury positions.
Gary R. Esposito, Managing Director of Mortgage Services of HSBC Finance
Corporation since September 2005. Prior to that Mr. Esposito held the position
of Head of Consumer Lending Sales from November 2003 to September 2005 and was
the President, Chief Executive Officer and Chairman for HSBC Canada from
September 2000 to November 2003. He was also National Director, branch and
retail operations from 1998 through 2000. He has been with HSBC Finance
Corporation since 1982.
James E. Binyon, Vice President and Chief Accounting Officer since February
2006, and from September 2004 was Vice President and Controller of Corporate
Finance. From November 2001 to August 2004 he served as Finance Director of
First Direct, and from February 1995 to October 2001 was Senior Area
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Accounting Manager, and Manager - Balance Sheet Management for HSBC Hong Kong.
Mr. Binyon was Manager-Asset Management & Funding, and Manager - Treasury Audit
Department between 1992 and 1995. Prior to joining HSBC, Mr. Binyon spent five
years at KPMG.
AUDIT COMMITTEE
The primary purpose of the audit committee is to assist the Board of Directors
in fulfilling its oversight responsibilities relating to HSBC Finance
Corporation's accounting, auditing and financial reporting practices. The audit
committee is currently comprised of the following independent Directors (as
defined by HSBC Finance Corporation's Corporate Governance Standards which are
based upon the rules of the New York Stock Exchange): Gary G. Dillon; Robert K.
Herdman and Larree M. Renda. In addition, Cyrus F. Freidheim, Jr., Lead
Director, and Alan W. Jebson, Chief Operating Officer of HSBC, are non-voting
members of the Committee. The Board has determined that each of these
individuals is financially literate. The Board of Directors has determined that
Robert K. Herdman qualifies as an audit committee financial expert.
CODE OF ETHICS
HSBC Finance Corporation's Board of Directors has adopted a Code of Ethics for
Senior Financial Officers. That Code of Ethics is incorporated by reference in
Exhibit 14 to this Annual Report on Form 10-K. HSBC Finance Corporation also has
a general code of ethics applicable to all employees that is referred to as its
Statement of Business Principles and Code of Ethics. That document is available
on our website at www.hsbcusa.com or upon written request made to HSBC Finance
Corporation, 2700 Sanders Road, Prospect Heights, Illinois 60070, Attention:
Corporate Secretary.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act, as amended, requires certain of our
Directors, executive officers and any persons who own more than ten percent of a
registered class of our equity securities to report their initial ownership and
any subsequent change to the SEC and the New York Stock Exchange ("NYSE"). With
respect to the 6.36% Series B Preferred Stock of HSBC Finance Corporation, we
reviewed copies of all reports furnished to us and obtained written
representations from our Directors and executive officers that no other reports
were required. Based solely on a review of copies of such forms furnished to us
and written representations from the applicable Directors and executive
officers, all Section 16(a) filing requirements were complied with for the 2005
fiscal year.
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ITEM 11. EXECUTIVE COMPENSATION.
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EXECUTIVE COMPENSATION
The following tables and narrative text discuss the compensation awarded to,
earned by or paid to (i) Messrs. Aldinger and Mehta, who served as our Chief
Executive Officer during 2005, and (ii) our four other most highly compensated
executive officers who were serving as executive officers as of December 31,
2005.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
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AWARDS PAYOUTS
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ANNUAL COMPENSATION NUMBER OF
----------------------------------------- RESTRICTED SHARES
NAME AND OTHER ANNUAL STOCK UNDERLYING LTIP
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) RIGHTS(2) OPTIONS PAYOUTS
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Siddharth N. Mehta(4, 6)... 2005 $ 900,000 $3,000,000 $ 58,831 $10,999,992 - -
Chairman & 2004 650,000 2,500,000 109,063 - 204,000 -
Chief Executive Officer 2003 550,000 2,000,000 53,000 4,999,988 408,000 -
William F. Aldinger III(5,
6)....................... 2005 $1,000,000 $ - $ 68,299 - - -
Former Chairman & 2004 1,000,000 4,000,000 162,076 - - -
Chief Executive Officer 2003 1,000,000 4,000,000 147,958 $ 9,999,986 - -
Sandra L. Derickson(6)..... 2005 $ 700,000 $2,100,000 $ 11,298 $ 8,499,990 - -
Vice Chairman 2004 600,000 1,800,000 14,158 - 102,000 -
2003 500,000 1,200,000 15,184 3,749,988 204,000 -
Thomas M. Detelich......... 2005 $ 650,000 $1,800,000 $ 6,578 $ 5,499,998 - -
Group Executive 2004 550,000 1,500,000 6,074 - 102,000 -
2003 500,000 650,000 2,481 3,749,998 204,000 -
Walter G. Menezes.......... 2005 $ 600,000 $1,300,000 $ 2,444 $ 5,499,998 - -
Group Executive 2004 500,000 1,000,000 3,755 - 150,000 -
2003 350,000 500,501 1,650 - 150,000 -
Kenneth H. Robin(6)........ 2005 $ 600,000 $1,150,000 $ 18,591 $ 3,199,986 - -
Senior EVP - 2004 400,000 1,000,000 23,923 - 102,000 -
General Counsel & 2003 400,000 900,000 22,047 1,499,997 204,000 -
Corporate Secretary
NAME AND ALL OTHER
PRINCIPAL POSITION COMPENSATION(3)
--------------------------- ---------------
Siddharth N. Mehta(4, 6)... $ 204,971
Chairman & 160,568
Chief Executive Officer 11,082,743
William F. Aldinger III(5,
6)....................... $25,603,038
Former Chairman & 310,062
Chief Executive Officer 20,461,842
Sandra L. Derickson(6)..... $ 155,151
Vice Chairman 111,259
3,316,678
Thomas M. Detelich......... $ 132,279
Group Executive 74,340
2,531,871
Walter G. Menezes.......... $ 109,582
Group Executive 63,861
1,484,830
Kenneth H. Robin(6)........ $ 105,601
Senior EVP - 88,062
General Counsel & 4,901,703
Corporate Secretary
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(1) Other Annual Compensation includes items such as financial planning
services, physical exams, club initiation fees, expatriate benefits, and car
allowances. SEC rules require disclosure of the specific type and amount of
compensation when a benefit exceeds 25% of the total Other Annual
Compensation for an individual executive officer. That itemization follows:
Car allowances for Mr. Aldinger were $15,000 in each of years 2003 and 2004
and $5,481 for 2005 and for Messrs. Mehta and Robin were $11,000 for each of
2003, 2004 and 2005 respectively. (Ms. Derickson and Messrs. Detelich and
Menezes are not eligible for a car allowance). Personal use of aircraft for
Mr. Aldinger for 2003, 2004 and 2005 was $110,678, $123,291 and $56,449
respectively. Mr. Aldinger, while Chairman of HSBC Finance Corporation was
expressly directed by corporate policy to use our corporate aircraft to the
fullest extent for business and personal travel; however, the value of
personal aircraft use was reported as income. Club Initiation fees for Mr.
Mehta for 2003 and 2004 were $40,000 and $20,000 respectively. Personal use
of Corporate Apartment for Mr. Mehta in 2005 was $700, for Mr. Aldinger in
2003 was $2,880 and in 2004 was $1,020 and for Mr. Robin in 2003 was $540
and in 2004 was $1,020. Personal use of Corporate Limo for Mr. Mehta was
$8,576 in 2005, for Mr. Aldinger $7,400 in 2003, $7,600 in 2004 and $2,191
in 2005 and for Mr. Robin $335 in 2005. Financial Counseling for Mr. Mehta
was $4,000 in 2004 and $10,000 in 2005, for Mr. Aldinger $10,000 in each of
years 2003 and 2004, for Ms. Derickson $4,000 in 2003 and $3,750 in 2004,
for Mr. Detelich $481 in 2003, and $3,500 in each of 2004 and 2005, and for
Mr. Robin $4,000 in each of 2003 and 2004 and $3,100 in 2005. Executive
Physical expenses for Mr. Mehta was $1,671 in 2004 and $2,131 in 2005, for
Mr. Aldinger $3,105 for 2004 and $2,079 for 2005, for Ms. Derickson $9,184
for 2003, $2,915 for 2004 and $9,198 for 2005, for Mr. Detelich $978 in
2005, for Mr. Menezes $1,650 in 2003, $1,695 in 2004 and $344 in 2005 and
for Mr. Robin $4,507 in 2003, $2,408 in 2004 and $2,056 in 2005. All named
executive officers received Executive Umbrella Liability Coverage in the
amounts of $2,000 for 2003, $2,060 in 2004 and $2,100 in 2005. In 2004 and
2005 Mr. Mehta had $39,994 and $24,324 in relocation and moving expenses,
including a tax gross up for the 2004 payment.
(2) For 2003 this amount represents the dollar value of restricted shares issued
to the named executive officers under the HSBC Holdings Restricted Share
Plan 2000. The dollar value reflected in the table is based on the fair
market value of the underlying HSBC Holdings plc ordinary shares on April
15, 2003 (the date of grant) converted into U.S. dollars using the exchange
rate applied at the time of
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grant. For Messrs. Aldinger and Robin the shares vest ratably over 3 years
from the date of grant. For Messrs. Mehta and Detelich and Ms. Derickson the
shares vest ratably over 5 years from the date of grant. For 2005, this
amount represents the dollar value of the restricted shares issued to the
named executive officers under the HSBC Share Plan. The named executive
officers were awarded two separate grants in 2005. The dollar value
reflected in the table is based on the fair market value of the underlying
HSBC Holdings plc ordinary shares on March 31, 2005 (the date of grant) and
on May 27, 2005 (the date of grant) and converted into U.S. dollars using
the exchange rates applied at the time of grant. The March 31, 2005 grant is
performance based and the shares will vest in whole or in part 3 years from
the date of grant if all or some of the performance conditions are met as
follows: 50% of the award is subject to a total shareholder return measure
("TRS") against a competitor group, depending on HSBC's ranking against the
group at the end of the performance period, the TRS portion of the grant may
vest on a sliding scale from 100% to 0%. The remaining 50% of the award is
subject to an earning per share measure ("EPS") and the EPS portion of the
grant may vest based on an incremental EPS percentage in accordance with a
defined formula. If the aggregate incremental EPS is less than 24%, the EPS
portion will be forfeited and if it is 52% or more, the EPS component will
vest in full. The May 27, 2005 grant was a special grant made to 6 key
executives to assist in retention and to reward outstanding performance and
vests ratably over 5 years for each of Messrs. Mehta, Detelich and Menezes
and Ms. Derickson and ratably over 2 years for Mr. Robin. These valuations
do not take into account the diminution in value attributable to the
restrictions applicable to the underlying shares. As of December 31, 2005,
the total number of shares and values of the restricted shares held by the
named executive officers were as follows: Mr. Mehta 977,057 shares
($15,683,978), Ms. Derickson 748,632 shares ($12,017,239), Mr. Detelich
559,239 shares ($8,977,053), Mr. Menezes 347,107 shares ($5,571,854) and Mr.
Robin 250,148 shares ($4,015,442). Mr. Aldinger's restricted stock vested in
full on the date of termination. The value of shares was calculated using a
share price of GBP9.33 per share and a currency exchange rate of 1.7205.
Dividend equivalents, in the form of additional shares, are paid on all
underlying shares for restricted stock at the same rate as paid to ordinary
share shareholders.
(3) Includes life insurance premiums paid by HSBC Finance Corporation in 2003,
2004 and 2005 for the benefit of executives as follows: Mr. Mehta, $3,510,
$3,645, $3,510; Mr. Aldinger, $10,062, $10,062, $3,870; Ms. Derickson,
$4,727, $5,336, $5,382; Mr. Detelich, $2,318, $3,379, $3,510; Mr. Menezes,
$6,611, $6,946, $13,813 and Mr. Robin, $10,062, $10,062, $10,062. Also
includes HSBC Finance Corporation's contribution for the named executive
officer's participation in the Tax Reduction Investment Plan and
Supplemental Tax Reduction Investment Plan in 2003, 2004 and 2005 as
follows: Mr. Mehta, $108,000, $156,923, $201,461; Mr. Aldinger, $180,000,
$300,000, $616,923; Ms. Derickson, $90,000, $105,923, $149,769; Mr.
Detelich, $69,000, $70,962, $128,769; Mr. Menezes, $42,000, $56,915, $95,769
and Mr. Robin, $66,000, $78,000, $95,539. For 2003, the remaining amounts
represent parachute payments and accelerated vesting of restricted stock
rights in connection with the change in control provisions contained in the
named executive officers' employment agreements. Mr. Aldinger's 2005
compensation also includes payments made pursuant to his employment
agreement under which he received a separation payment in the amount of
$5,000,000 and accelerated vesting of all outstanding restricted stock.
(4) Mr. Mehta assumed the role of Chairman and Chief Executive Officer of HSBC
Finance Corporation on May 1, 2005.
(5) Mr. Aldinger resigned as Chairman and Chief Executive Officer of HSBC
Finance Corporation April 30, 2005.
(6) Part of the compensation payable to these individuals includes compensation
for services rendered to HSBC North America.
INCENTIVE AND STOCK OPTION PLANS
Pre-Merger
Following HSBC's acquisition of HSBC Finance Corporation in 2003, all
outstanding options and other equity based awards approved under the Household
International 1996 Long-Term Executive Incentive Compensation Plan (the "1996
Plan") and various option plans assumed by HSBC Finance Corporation in
connection with the mergers with Beneficial Corporation in 1998 and Renaissance
Holdings, Inc. in 2000 were converted into rights to receive HSBC Holdings plc
ordinary shares in the same ratio as the share exchange offer for the
acquisition of HSBC Finance Corporation (2.675 HSBC Holdings plc ordinary shares
for each HSBC Finance Corporation common share) and the exercise prices per
share were adjusted accordingly.
All outstanding options granted prior to November 12, 2002 immediately vested on
completion of the acquisition and remain exercisable through their respective
expiration dates. Options granted on or after November 13, 2002 but prior to
March 28, 2003, the date of the completion of the merger, are exercisable on
their original terms, subject to adjustment to reflect the exchange ratio.
As of December 31, 2005, options to buy 35,251,439 shares of HSBC ordinary stock
were outstanding under the 1996 Plan and options to purchase 780,567 ordinary
shares were outstanding under the Beneficial Corporation and Renaissance
Holdings Inc. option plans. At the time of merger, HSBC established employee
benefit trusts to hold shares underlying the options. As of December 31, 2005,
the HSBC (Household) Employee Benefit Trust 2003 held 3,006,623 HSBC ordinary
shares and 2,198,829 American Depository
197
Shares, each of which represents five HSBC ordinary shares, which may be used to
satisfy the exercise of employee stock options.
The average purchase price for all outstanding options held by the 322
participants in the 1996 Plan, Beneficial Corporation and Renaissance Holdings
Inc. plans at December 31, 2005, was $16.09 with expiration dates from 2006 to
2012.
All outstanding restricted stock rights ("RSRs") granted prior to November 12,
2002 immediately vested on completion of the merger. RSRs granted after November
12, 2002 but prior to March 28, 2003 remain exercisable on their original terms,
except that they have been adjusted to reflect the exchange ratio. A holder of
RSRs is not entitled to any of the rights of a holder of ordinary shares until
the shares are issued; however, the Remuneration Committee (the "Remuneration
Committee") of HSBC Holdings plc may direct HSBC Finance Corporation to pay the
holder cash equal to the cash dividends declared on ordinary shares for each
share of stock subject to an RSR. As of December 31, 2005, 1,309,073 shares were
subject to issuance under outstanding RSR awards under the 1996 Plan. The
issuance of any underlying stock pursuant to vesting of RSRs will be newly
issued ordinary shares.
The number of options, RSRs and underlying shares will be proportionately
adjusted for any stock dividends, stock splits, consolidations or
reclassifications. No further options or other equity based awards will be
granted under any of the pre-merger plans.
Post Merger
Beginning March 28, 2003 but prior to May 27, 2005, options and other equity
based awards were made to HSBC Finance Corporation employees under the HSBC
Holdings Group Share Option Plan ("Group Share Option Plan") and the HSBC
Restricted Share Plan 2000 ("Restricted Share Plan"). Under both the Group Share
Option Plan and the Restricted Share Plan, the Remuneration Committee has the
discretion to grant employees awards of stock options or restricted shares with
or without company performance conditions. Generally option and RSR awards
granted in 2003 were granted without any company performance conditions and
options and RSR awards granted in 2004 were granted subject to performance
conditions to better align the HSBC Finance Corporation employees with the
interests of HSBC. Both the Group Share Option Plan and the Restricted Share
Plan terminated in May 2005 and no further awards may be made under either of
these plans. The number of options, RSRs and underlying shares will be
proportionately adjusted for any stock dividends, stock splits, consolidations
or reclassifications.
In May 2005, the HSBC Holdings plc Board of Directors adopted and the
shareholders approved the HSBC Share Plan ("Group Share Plan"). The Remuneration
Committee at its discretion may make awards of restricted shares and
market-price options, each with or without performance conditions. For 2005, as
an incentive and a retention tool, HSBC awarded restricted shares to middle
management and performance shares to executive management. The restricted shares
generally vest in full 3 years after the date of grant and the performance
shares will vest in full or in part 3 years after the date of grant if certain
company performance conditions are met. A holder of restricted shares or
performance shares is not entitled to any of the rights of a holder of ordinary
shares until the shares are issued; however, the Remuneration Committee may
direct the trustee of the employee benefit trusts to record a share based
dividend equivalent to the cash dividends declared on ordinary shares for each
share of stock subject to a restricted share.
As of December 31, 2005, employees of HSBC Finance Corporation held options to
buy 6,175,800 shares of HSBC ordinary stock under the Group Share Option Plan
and RSRs representing 11,787,706 under the Restricted Share Plan and the Group
Share Plan.
The average purchase price for all outstanding options held by the participants
under the Group Share Option Plan at December 31, 2005 was $14.96 with
expiration dates from 2013-2014.
HSBC Finance Corporation did not issue stock options to its named executive
officers in 2005.
198
The following table shows that the named executive officers did not exercise any
stock options in 2005. The table also shows the number of options that have not
been exercised and their potential value using the fair market value on December
31, 2005. The fair market value has been converted from British Pounds Sterling
to U.S. dollars using an exchange rate of 1.7205.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT OPTIONS AT
DECEMBER 31, 2005 DECEMBER 31, 2005(1)
SHARES VALUE --------------------------- ---------------------------
NAME EXERCISED REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-----------------------------------------------------------------------------------------------------------
Siddharth N. Mehta....... - $- 3,034,150 541,750 $ 1,122,367 $1,088,113
William F. Aldinger
III.................... - - 9,656,750 - 16,409,788 -
Sandra L. Derickson...... - - 543,375 270,875 1,115,029 544,056
Thomas M. Detelich....... - - 576,813 270,875 1,240,219 490,028
Walter G. Menezes........ - - 500,325 251,750 639,786 438,933
Kenneth H. Robin......... - - 1,364,600 270,875 2,323,273 577,716
---------------
(1) Calculated based on the fair market value of HSBC Holdings plc. ordinary
shares on December 31, 2005 (L9.33 per share).
SAVINGS AND PENSION PLANS
HSBC North America maintains the HSBC-North America (U.S.) Tax Reduction
Investment Plan ("TRIP"), which is a deferred profit-sharing and savings plan
for its eligible employees. With certain exceptions, a U.S. employee who has
been employed for 30 days and who is not part of a collective bargaining unit
may contribute into TRIP, on a pre-tax and after-tax basis, up to 40% (15% if
highly compensated) of the participant's cash compensation (subject to a maximum
annual pre-tax contribution by a participant of $15,000, as adjusted for cost of
living increases, and certain other limitations imposed by the Internal Revenue
Code) and invest such contributions in separate equity or income funds.
If the employee has been employed for at least one year, HSBC Finance
Corporation contributes 3% of compensation on behalf of each participant who
contributes 1% and matches any additional participant contributions up to 4% of
compensation. However, matching contributions will not exceed 6% of a
participant's compensation if the participant contributes 4% or more of
compensation. The plan provides for immediate vesting of all contributions. With
certain exceptions, a participant's after-tax contributions which have not been
matched by us can be withdrawn at any time. Both our matching contributions made
prior to 1999 and the participant's after-tax contributions which have been
matched may be withdrawn after five years of participation in the plan. A
participant's pre-tax contributions and our matching contributions after 1998
may not be withdrawn except for an immediate financial hardship, upon
termination of employment, or after attaining age 59 1/2. Participants may
borrow from their TRIP accounts under certain circumstances.
HSBC North America also maintains the Supplemental Tax Reduction Investment Plan
("Supplemental TRIP") which is an unfunded plan for eligible employees of HSBC
Finance Corporation and its participating subsidiaries prior to the merger with
HSBC whose participation in TRIP is limited by the Internal Revenue Code. Only
matching contributions required to be made by us pursuant to the basic TRIP
formula are invested in Supplemental TRIP through a credit to a bookkeeping
account maintained by us which deems such contributions to be invested in equity
or income funds selected by the participant.
The HSBC-North America (U.S.) Retirement Income Plan ("RIP") is a
non-contributory, defined benefit pension plan for employees of HSBC North
America and its U.S. subsidiaries who are at least 21 years of age with one year
of service and not part of a collective bargaining unit. RIP contains plan
formulas for pre-merger Household employees as well as a cash balance formula
for hires after 1999. Under the pre-merger Household
199
formula, annual pension benefits equal a percentage of an employee's "Final
Average Salary" (as defined below) not in excess of "Covered Compensation" (as
defined below) plus a percentage of an employee's Final Average Salary that
exceeds Covered Compensation. "Covered Compensation" is the average of the
Social Security taxable wage base over the 35-year period ending in the year of
retirement or earlier termination of employment. "Final Average Salary" equals
the average of salary plus bonus for the 48 successive highest paid months out
of the employee's last 10 years of service. The percentage applied to Final
Average Salary and Covered Compensation is determined on the basis of years of
employment and age at retirement. This percentage increases as years of
employment and age at retirement increase. Participants become fully vested in
their accrued pension benefits after three years of vesting service. Payment of
vested pension benefits normally begins at age 65, but an early retirement
benefit at reduced levels may be paid if a participant is at least 55 years of
age with 10 years of employment or, if the participant was an employee on
December 31, 1989, is at least 50 years of age with 15 years of employment.
Effective January 1, 2000, RIP was amended to provide a cash balance
account-based formula instead of the traditional defined benefit formula
described above for employees hired after 1999. The account-based formula
provides a benefit based upon a percentage of compensation for each year of
service and an assumed rate of return. The contribution percentage is 2% and the
assumed rate of return is tied to the lesser of the 10-year or 30-year Treasury
rate. Effective January 1, 2005, RIP was amended to reflect the merger of the
HSBC Bank USA Pension Plan into RIP and the continuance of that plan formula for
participants transferred to RIP.
In 1997, HSBC Finance Corporation's Board of Directors adopted a Supplemental
Executive Retirement Plan ("SERP") for Mr. Aldinger because he would not
otherwise qualify for a full benefit under RIP and the Household Supplemental
Retirement Income Plan ("Supplemental RIP") due to his age when he joined HSBC
Finance Corporation. In 2000, the SERP was subsequently amended and restated to
provide for a benefit based upon the RIP 1989 formula but with 20 years of
benefit service being added and with an offset not only for RIP and Supplemental
RIP but also for pension benefits received from Wells Fargo and Citibank. The
benefit under the SERP formula (before offset) will not be increased, however,
except for interest, after Mr. Aldinger attains age 60. Upon the change of
control triggered by the purchase of HSBC Finance Corporation by HSBC, the
pension benefit for Mr. Aldinger was projected out for three years and then
accruals ceased.
TRIP and RIP may be made available to members of a collective bargaining unit if
inclusion results from good faith bargaining.
A portion of the benefits payable under RIP to certain executive officers
(including those named in the Summary Compensation Table) may be paid by us
through the Supplemental RIP. Supplemental RIP was established due to the
limitation imposed on the RIP by Federal laws limiting benefits payable under
tax-qualified plans.
The following table illustrates the amount of RIP (including Supplemental RIP)
total annual pension benefits on a straight-life annuity basis for eligible
employees retiring at age 65 who were employed before 1990. If the employee was
hired after 1989 and does not have at least 30 years of employment at
retirement, his/her benefit will be reduced for each month less than 30 years.
The amounts in this table are not subject to
200
deduction for Social Security or other offset amounts and do not reflect any
limitations on benefits imposed by ERISA or Federal tax laws. Ms. Derickson is
covered under the cash balance account based formula.
The years of employment of Messrs. Detelich, Robin, Aldinger, Menezes, Mehta and
Ms. Derickson for purposes of RIP are, respectively, 30 years, 17 years, 12
years, 10 years, 8 years, and 6 years.
AVERAGE ANNUAL
COMPENSATION
USED AS BASIS FOR 15 TO 30 YEARS OF 35 YEARS OF 40 OR MORE YEARS OF
COMPUTING PENSIONS EMPLOYMENT EMPLOYMENT EMPLOYMENT
-------------------------------------------------------------------------------------------------------
$1,500,000..................................... $ 852,071 $ 889,571 $ 927,071
2,000,000...................................... 1,137,071 1,187,071 1,237,071
2,500,000...................................... 1,422,071 1,484,571 1,547,071
3,000,000...................................... 1,707,071 1,782,071 1,857,071
3,500,000...................................... 1,992,071 2,079,571 2,167,071
4,000,000...................................... 2,277,071 2,377,071 2,477,071
4,500,000...................................... 2,562,071 2,674,571 2,787,071
5,000,000...................................... 2,847,071 2,972,071 3,097,071
5,500,000...................................... 3,132,071 3,269,571 3,407,071
6,000,000...................................... 3,417,071 3,567,071 3,717,071
DIRECTOR COMPENSATION
In 2005, the non-management Directors of HSBC Finance Corporation received an
annual cash retainer of $170,000 (except the Chair of the Executive Committee,
who received a retainer of $182,000). HSBC Finance Corporation does not pay
additional compensation for committee membership, with the exception of the
Audit Committee for which each member received an additional $15,000 (except the
Chair of the Audit Committee, who instead received an additional $25,000), or
meeting attendance fees to its Directors. The Chairs of the Compensation and
Nominating & Governance Committees received an additional $15,000, and the Lead
Director as Chair of the Executive Committee received an additional $50,000.
Directors who are employees of HSBC Finance Corporation or any of its
subsidiaries do not receive any additional compensation related to their Board
service. In February 2006, the Board reviewed its directors compensation
philosophy compared to other same sized financial and professional service
organizations and determined to make no changes to the current compensation
structure.
Directors have the ability to defer up to 100% of their yearly retainers and/or
fees into the HSBC-North America Directors Non-Qualified Deferred Compensation
Plan. Under this plan, Directors have the ability to defer pre-tax dollars with
the choice of a scheduled in-service withdrawal or distribution at termination
with lump sum, quarterly or annual installments.
We provide each Director with $250,000 of accidental death and dismemberment
insurance and a $10,000,000 personal excess liability insurance policy.
Independent Directors also are offered, on terms that are not more favorable
than those available to the general public, a MasterCard/Visa credit card issued
by one of our subsidiaries with a credit limit of $15,000. HSBC Finance
Corporation guarantees the repayment of amounts charged on each card. Directors
may use an apartment we maintain in New York City for their personal use, as
available. Directors are credited with $340 additional compensation for tax
purposes for each night the apartment is used for personal use.
Under HSBC Finance Corporation's Matching Gift Program, we match charitable
gifts to qualified organizations (subject to a maximum of $10,000 per year),
with a double match for the first $500 donated to higher education institutions
(both public and private) and eligible non-profit organizations which promote
neighborhood revitalization or economic development for low and moderate income
populations. Each current independent Director may ask us to contribute up to
$10,000 annually to charities of the Director's choice which qualify under our
philanthropic program.
201
Prior to the merger, independent Directors could elect to receive all or a
portion of their cash compensation in shares of former Household common stock,
defer it under the Deferred Fee Plan for Directors or purchase options to
acquire common stock. Under the Deferred Fee Plan, Directors were permitted to
invest their deferred compensation in either units of phantom shares of the
former Household common stock, with dividends credited toward additional stock
units, or cash, with interest credited at a market rate set under the plan.
Prior to 1995, HSBC Finance Corporation had a Directors' Retirement Income Plan
where the present value of each Director's accrued benefit was deposited into
the Deferred Phantom Stock Plan for Directors. Under the Deferred Phantom Stock
Plan, Directors with less than ten years of service received 750 phantom shares
of former Household common stock annually during the first ten years of service
as a Director. In January 1997, the Board eliminated this and all future
Director retirement benefits. Any payouts to current Directors earned under the
Deferred Phantom Stock Plan will be made only when a Director leaves the Board
due to death, retirement or resignation and were to be paid in shares of
Household common stock either in a lump sum or installments as selected by the
Director.
Following the acquisition, all rights to receive Household common stock under
both plans above were converted into rights to receive HSBC Holdings plc
ordinary shares and in May 2004, those rights were further converted into rights
to receive American Depository Shares, each of which represents five ordinary
shares, when the plans were rolled into a non-qualified deferred compensation
plan for Directors. No new shares may be issued under the plans. As of December
31, 2005, 56,459 American Depository Shares were held in the deferred
compensation plan account for Directors.
EMPLOYMENT AGREEMENTS
Upon completion of the merger with HSBC, Messrs. Detelich, Mehta and Robin and
Ms. Derickson received new employment agreements that, except as noted below
with respect to Mr. Mehta and Ms. Derickson, will end on March 28, 2006. Under
the new employment agreements, each executive will generally serve in the same
position that such executive held as of the date of the merger. During the term,
each executive will be paid an annual base salary of not less than such
executive's annual base salary as of the date of the merger and will receive an
annual bonus in an amount at least equal to 75 percent of the annual average of
such executive's bonuses earned with respect to the three-year period ended
December 31, 2001 (pro rated for any partial year). During the term of the
agreements, each of the executives will be eligible to participate, as approved
by the HSBC Board of Directors, in any equity-based incentive compensation plan
or program of HSBC as in effect from time to time for similarly situated senior
executives of HSBC Finance Corporation. In addition, during the term, each
executive will be eligible to participate in the various retirement, medical,
disability and life insurance plans, programs and arrangements of HSBC Finance
Corporation in accordance with the terms of such plans, programs and
arrangements, provided that they will not receive age and service credit under
the HSBC North America retirement plans that would be duplicative of the age and
service credit that they are entitled to under the prior employment agreements
or employment protection agreements, as applicable.
If during the term of the new employment agreement, an executive's employment is
terminated by HSBC Finance Corporation other than for "cause" or disability or
the executive resigns for "good reason," subject to the executive's execution of
a general release in favor of HSBC Finance Corporation and its affiliates, the
executive will continue to receive the executive's base salary and annual bonus
described above at that time and in the manner such payments would have been
paid had the executive remained employed for the remainder of the term of the
employment agreement and, to the extent permitted under the terms of the
applicable plans, the continuation of welfare benefits, umbrella liability
insurance and automobile and financial counseling allowances from the date of
termination until the earlier of the executive becoming eligible to participate
in similar plans of another employer and the last day of the term of the
employment agreement.
These new employment agreements superseded each executive's prior employment
agreement or employment protection agreement, as applicable, with HSBC Finance
Corporation (except that the excise tax gross-up
202
provision in the pre-merger agreements survived). At the merger with HSBC,
Messrs. Aldinger, Detelich, Mehta and Robin and Ms. Derickson had employment or
employment protection agreements that were deemed to have terminated due to a
"qualifying termination," entitling the executives to cash payments under the
prior agreements. Payments were made to those executives under the formula
described below under "Employment Protection Agreement of Mr. Menezes" except
that for Messrs. Aldinger, Mehta and Robin the protection period was based on 36
months instead of 18 and there was no reduction in payments to avoid an excise
tax.
The contracts for Sandra L. Derickson and Siddharth N. Mehta were extended by
two years and now will expire as of March 28, 2008. Under Mr. Mehta's extended
contract, he will serve as Chairman and Chief Executive Officer of HSBC Finance
Corporation and also Chief Executive Officer of HSBC North America Holdings Inc.
His base salary was increased to $900,000. The annual bonus for Mr. Mehta and
for Ms. Derickson with respect to each fiscal year after 2005 shall be at least
equal to 75 percent of the annual average of the bonuses earned by each of them
with respect to fiscal years 2003, 2004 and 2005 (pro rated for any partial
year). Mr. Mehta and Ms. Derickson were also awarded in 2005 one-time special
retention grants of HSBC restricted shares equal to $8 million and $6 million,
respectively, based on the closing price of HSBC ordinary shares as of the date
of the grant. These shares will vest in five equal installments on each of the
first five anniversaries of March 26, 2005, subject to accelerated vesting upon
termination of employment by HSBC Finance Corporation without cause, or by Mr.
Mehta or Ms. Derickson, in each case, for good reason.
EMPLOYMENT PROTECTION AGREEMENT OF MR. MENEZES
Mr. Menezes, has an employment protection agreement pursuant to which if, during
the 18 month period following a change in control of HSBC Finance Corporation,
Mr. Menezes' employment is terminated due to a "qualifying termination" (which
includes a termination other than for "cause" or disability, or resignation by
Mr. Menezes for "good reason"), he will be entitled to receive a cash payment
consisting of:
- A pro rata annual bonus through the date of termination, based on the
highest of the annual bonuses payable during the three years preceding
the year in which the termination occurs;
- A payment equal to 1.5 times the sum of the applicable base salary and
highest annual bonus; and
- A payment equal to the value of 18 months of additional employer
contributions under HSBC North America's tax-qualified and supplemental
defined contribution plans.
In addition, upon a qualifying termination following a change in control, Mr.
Menezes will be entitled to continued welfare benefit coverage for 18 months
after the date of termination, 18 months of additional age and service credit
under HSBC North America's tax-qualified and supplemental defined benefit
retirement plans, and outplacement services. If any amounts or benefits received
under the employment protection agreements or otherwise are subject to the
excise tax imposed under section 4999 of the Internal Revenue Code, an
additional payment will be made to restore Mr. Menezes to the after-tax position
in which he would have been if the excise tax had not been imposed. However, if
a small reduction in the amount payable would render the excise tax
inapplicable, then this reduction will be made instead.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
--------------------------------------------------------------------------------
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
HSBC Finance Corporation's common stock is 100% owned by HSBC Investments (North
America) Inc. ("HINO"). HINO is an indirect wholly owned subsidiary of HSBC.
203
SECURITY OWNERSHIP BY MANAGEMENT
The following table lists the beneficial ownership, as of January 31, 2006, of
HSBC ordinary shares or interests in ordinary shares and Series B Preferred
Stock of HSBC Finance Corporation by each director and the executive officers
named in the Summary Compensation Table on page 196, individually, and the
directors and executive officers as a group. Each of the individuals listed
below and all directors and executive officers as a group own less than 1% of
the ordinary shares of HSBC and the Series B Preferred Stock of HSBC Finance
Corporation.
NUMBER OF SERIES B SHARES THAT MAY
SHARES PREFERRED OF BE ACQUIRED
BENEFICIALLY HSBC WITHIN 60 DAYS NUMBER OF
OWNED OF HSBC FINANCE BY EXERCISE OF COMMON STOCK
HOLDINGS PLC(1)(2) CORPORATION OPTIONS(3) EQUIVALENTS(4) TOTAL
--------------------------------------------------------------------------------------------------------------------
DIRECTORS
William R. P. Dalton......... 118,508 - - - 118,508
Gary G. Dillon............... 210,587 - 131,076 37,890 379,553
J. Dudley Fishburn........... 15,678 - 90,950 4,050 110,678
Cyrus F. Freidheim, Jr. ..... 15,755 - 151,264 21,347 188,366
Robert K. Herdman............ - - - - -
Alan W. Jebson............... 109,032 - - 180,491 289,523
George A. Lorch.............. 13,605 - 145,789 30,190 189,584
Siddharth N. Mehta........... 277,838 - 3,034,150 61,172 3,373,160
Larree M. Renda.............. 8,250 2,000 40,125 130 50,505
NAMED EXECUTIVE OFFICERS
William F. Aldinger III...... - - 9,656,750 - 9,656,750
Sandra L. Derickson.......... 129,820 - 543,375 27,474 700,669
Thomas M. Detelich........... 4,000 - 576,813 4,134 584,947
Walter G. Menezes............ 109,370 - 522,616 - 631,986
Kenneth H. Robin............. 335,990 - 1,364,000 68,508 1,768,498
ALL DIRECTORS AND EXECUTIVE
OFFICERS AS A GROUP........ 1,348,433 2,000 16,256,908 435,386 18,042,727
---------------
(1) Directors and executive officers have sole voting and investment power over
the shares listed above, except as follows.
The number of ordinary shares held by spouses, children and charitable or
family foundations in which voting and investment power is shared (or
presumed to be shared) is as follows: Mr. Dalton, 56,019 and Mr. Lorch,
13,650; and Directors and executive officers as a group, 69,669.
(2) Some of the shares included in the table above were held in American
Depository Shares, each of which represents five HSBC ordinary shares.
(3) Represents the number of ordinary shares which may be acquired by HSBC
Finance Corporation's Directors and executive officers through April 1,
2006, pursuant to the exercise of stock options.
(4) Represents the number of ordinary share equivalents owned by executive
officers under HSBC Finance Corporation's TRIP and HSBC North America
Employee Non-Qualified Deferred Compensation Plan and by Directors under
HSBC North America Directors Non-Qualified Deferred Compensation Plan. Some
of the shares included in the table above were held in American Depository
Shares, each of which represents five HSBC ordinary shares.
204
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
--------------------------------------------------------------------------------
None.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
--------------------------------------------------------------------------------
AUDIT FEES. The aggregate amount billed by our principal accountant, KPMG LLP,
for audit services performed during the fiscal years ended December 31, 2005 and
2004 was $6,785,000 and $5,565,000, respectively. Audit services include the
auditing of financial statements, quarterly reviews, statutory audits, and the
preparation of comfort letters, consents and review of registration statements.
AUDIT RELATED FEES. The aggregate amount billed by KPMG LLP in connection with
audit related services performed during the fiscal years ended December 31, 2005
and 2004 was $1,272,000 and $691,000, respectively. Audit related services
include employee benefit plan audits, translation services, and audit or
attestation services not required by statute or regulation.
TAX FEES. Total fees billed by KPMG LLP for tax related services for the fiscal
years ended December 31, 2005 and 2004 were $658,000 and $2,656,000,
respectively. These services include tax related research, general tax services
in connection with transactions and legislation and tax services for review of
Federal and state tax accounts for possible overassessment of interest and/or
penalties.
ALL OTHER. Other than those fees described above, there were no other fees
billed for services performed by KPMG LLP during the fiscal years ended December
31, 2005 and December 31, 2004.
All of the fees described above were approved by HSBC Finance Corporation's
audit committee.
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES. HSBC Finance Corporation's
audit committee pre-approves the audit and non-audit services performed by KPMG
LLP, our principal accountants, in order to assure that the provision of such
services does not impair KPMG LLP's independence. Unless a type of service to be
provided by KPMG LLP has received general pre-approval, it will require specific
pre-approval by the audit committee. In addition, any proposed services
exceeding pre-approval cost levels will require specific pre-approval by the
audit committee.
The term of any pre-approval is 12 months from the date of pre-approval, unless
the audit committee specifically provides for a different period. The audit
committee will periodically revise the list of pre-approved services, based on
subsequent determinations, and has delegated pre-approval authority to the Chair
of the audit committee. In the event the Chair of the audit committee exercises
such delegated authority, he will report such pre-approval decisions to the
audit committee at its next scheduled meeting. The audit committee does not
delegate its responsibilities to pre-approve services performed by the
independent auditor to management.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
--------------------------------------------------------------------------------
(a)(1) Financial Statements.
The consolidated financial statements listed below, together with an opinion of
KPMG LLP dated March 6, 2006 with respect thereto, are included in this Form
10-K pursuant to Item 8. Financial Statements and Supplementary Data of this
Form 10-K.
HSBC FINANCE CORPORATION AND SUBSIDIARIES:
Report of Independent Registered Public Accounting Firm
Consolidated Statement of Income
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Shareholder's(s') Equity
Notes to Consolidated Financial Statements
205
Selected Quarterly Financial Data (Unaudited)
(a)(2) Not applicable
(a)(3) Exhibits.
3(i) Amended and Restated Certificate of Incorporation of HSBC
Finance Corporation effective as of December 15, 2004, as
amended (incorporated by reference to Exhibit 3.1 of HSBC
Finance Corporation's Current Report on Form 8-K filed June
22, 2005 and Exhibit 3.1(b) of HSBC Finance Corporation's
Current Report on Form 8-K filed December 19, 2005).
3(ii) Bylaws of HSBC Finance Corporation, as amended December 15,
2004 (incorporated by reference to Exhibit 3(ii) of HSBC
Finance Corporation's Annual Report on Form 10-K for the
year ended December 31, 2004 filed February 28, 2005).
4.1 Amended and Restated Standard Multiple-Series Indenture
Provisions for Senior Debt Securities of HSBC Finance
Corporation dated as of December 15, 2004 (incorporated by
reference to Exhibit 4.1 of Amendment No. 1 to HSBC Finance
Corporation's Registration Statements on Form S-3 Nos.
333-120494, 333-120495 and 333-120496 filed December 16,
2004).
4.2* Amended and Restated Indenture for Senior Debt Securities
dated as of December 15, 2004 between HSBC Finance
Corporation and JPMorgan Chase Bank, N.A., as Trustee
(incorporated by reference to Exhibit 4.2 of Amendment No. 1
to HSBC Finance Corporation's Registration Statements on
Form S-3 Nos. 333-120495 and 333-120496 filed December 16,
2004).
4.3 The principal amount of debt outstanding under each other
instrument defining the rights of Holders of our long-term
senior and senior subordinated debt does not exceed 10
percent of our total assets. HSBC Finance Corporation agrees
to furnish to the Securities and Exchange Commission, upon
request, a copy of each instrument defining the rights of
holders of our long-term senior and senior subordinated
debt.
12 Statement of Computation of Ratio of Earnings to Fixed
Charges and to Combined Fixed Charges and Preferred Stock
Dividends.
14 Code of Ethics for Senior Financial Officers (incorporated
by reference to Exhibit 14 of HSBC Finance Corporation's
Annual Report on Form 10-K for the year ended December 31,
2004 filed February 28, 2005).
21 Subsidiaries of HSBC Finance Corporation.
23 Consent of KPMG LLP, Independent Registered Public
Accounting Firm.
24 Power of Attorney (included on page 207 of this Form 10-K).
31 Certification of Chief Executive Officer and Chief Financial
Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
32 Certification of Chief Executive Officer and Chief Financial
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
99.1 Ratings of HSBC Finance Corporation and its significant
subsidiaries.
Upon receiving a written request, we will furnish copies of the exhibits
referred to above free of charge. Requests should be made to HSBC Finance
Corporation, 2700 Sanders Road, Prospect Heights, Illinois 60070, Attention:
Corporate Secretary.
---------------
* Substantially identical indentures exist with U.S. Bank National Association,
BNY Midwest Trust Company and JPMorgan Trust Company, National Association.
206
SIGNATURES
--------------------------------------------------------------------------------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, HSBC Finance Corporation has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized on this, the 6th day
of March, 2006.
HSBC FINANCE CORPORATION
By: /s/ Siddharth N. Mehta
------------------------------------
Siddharth N. Mehta
Chairman and Chief Executive
Officer
Each person whose signature appears below constitutes and appoints P.D. Schwartz
as his/her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him/her in his/her name, place and stead,
in any and all capacities, to sign and file, with the Securities and Exchange
Commission, this Form 10-K and any and all amendments and exhibits thereto, and
all documents in connection therewith, granting unto each such attorney-in-fact
and agent full power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all intents and purposes
as he/she might or could do in person, hereby ratifying and confirming all that
such attorney-in-fact and agent or their substitutes may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of HSBC Finance
Corporation and in the capacities indicated on the 6th day of March, 2006.
SIGNATURE TITLE
--------------------------------------------------------------------------------------------------------
/s/ S. N. MEHTA Chairman and Chief Executive Officer and
------------------------------------------------------ Director (as Principal Executive Officer)
(S. N. Mehta)
/s/ W. R. P. DALTON Director
------------------------------------------------------
(W. R. P. Dalton)
/s/ G. G. DILLON Director
------------------------------------------------------
(G. G. Dillon)
/s/ J. D. FISHBURN Director
------------------------------------------------------
(J. D. Fishburn)
/s/ C. F. FREIDHEIM, JR. Director
------------------------------------------------------
(C. F. Freidheim, Jr.)
/s/ R. K. HERDMAN Director
------------------------------------------------------
(R. K. Herdman)
/s/ A. W. JEBSON Director
------------------------------------------------------
(A. W. Jebson)
/s/ G. A. LORCH Director
------------------------------------------------------
(G. A. Lorch)
207
SIGNATURE TITLE
--------------------------------------------------------------------------------------------------------
/s/ L. M. RENDA Director
------------------------------------------------------
(L. M. Renda)
/s/ B. A. SIBBLIES Senior Vice President and Chief Financial
------------------------------------------------------ Officer
(B. A. Sibblies)
/s/ J. E. BINYON Vice President and Chief Accounting Officer
------------------------------------------------------
(J. E. Binyon)
208
EXHIBIT INDEX
--------------------------------------------------------------------------------
3(i) Amended and Restated Certificate of Incorporation of HSBC
Finance Corporation effective as of December 15, 2004, as
amended (incorporated by reference to Exhibit 3.1 of HSBC
Finance Corporation's Current Report on Form 8-K filed June
22, 2005 and Exhibit 3.1(b) of HSBC Finance Corporation's
Current Report on Form 8-K filed December 19, 2005).
3(ii) Bylaws of HSBC Finance Corporation, as amended December 15,
2004 (incorporated by reference to Exhibit 3(ii) of HSBC
Finance Corporation's Annual Report on Form 10-K for the
year ended December 31, 2004 filed February 28, 2005).
4.1 Amended and Restated Standard Multiple-Series Indenture
Provisions for Senior Debt Securities of HSBC Finance
Corporation dated as of December 15, 2004 (incorporated by
reference to Exhibit 4.1 of Amendment No. 1 to HSBC Finance
Corporation's Registration Statements on Form S-3 Nos.
333-120494, 333-120495 and 333-120496 filed December 16,
2004).
4.2* Amended and Restated Indenture for Senior Debt Securities
dated as of December 15, 2004 between HSBC Finance
Corporation and JPMorgan Chase Bank, N.A., as Trustee
(incorporated by reference to Exhibit 4.2 of Amendment No. 1
to HSBC Finance Corporation's Registration Statements on
Form S-3 Nos. 333-120495 and 333-120496 filed December 16,
2004).
4.3 The principal amount of debt outstanding under each other
instrument defining the rights of Holders of our long-term
senior and senior subordinated debt does not exceed 10
percent of our total assets. HSBC Finance Corporation agrees
to furnish to the Securities and Exchange Commission, upon
request, a copy of each instrument defining the rights of
holders of our long-term senior and senior subordinated
debt.
12 Statement of Computation of Ratio of Earnings to Fixed
Charges and to Combined Fixed Charges and Preferred Stock
Dividends.
14 Code of Ethics for Senior Financial Officers (incorporated
by reference to Exhibit 14 of HSBC Finance Corporation's
Annual Report on Form 10-K for the year ended December 31,
2004 filed February 28, 2005).
21 Subsidiaries of HSBC Finance Corporation.
23 Consent of KPMG LLP, Independent Registered Public
Accounting Firm.
24 Power of Attorney (included on page 207 of this Form 10-K).
31 Certification of Chief Executive Officer and Chief Financial
Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
32 Certification of Chief Executive Officer and Chief Financial
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
99.1 Ratings of HSBC Finance Corporation and its significant
subsidiaries.
---------------
* Substantially identical indentures exist with U.S. Bank National Association,
BNY Midwest Trust Company and JPMorgan Trust Company, National Association.
EXHIBIT 12
HSBC FINANCE CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
MARCH 29 JANUARY 1
YEAR ENDED YEAR ENDED THROUGH THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31, MARCH 28,
2005 2004 2003 2003 2002 2001
------------------------------------------------------------------------------------------------------------------------
(SUCCESSOR) (SUCCESSOR) (SUCCESSOR) (PREDECESSOR) (PREDECESSOR) (PREDECESSOR)
(IN MILLIONS)
Net income..................... $1,772 $1,940 $1,357 $ 246 $1,558 $1,848
Income taxes................... 891 1,000 690 182 695 970
------ ------ ------ ------ ------ ------
Income before income taxes..... 2,663 2,940 2,047 428 2,253 2,818
------ ------ ------ ------ ------ ------
Fixed charges:
Interest expense(1).......... 4,832 3,143 2,031 898 3,879 4,197
Interest portion of
rentals(2)................. 61 54 40 18 68 64
------ ------ ------ ------ ------ ------
Total fixed charges............ 4,893 3,197 2,071 916 3,947 4,261
------ ------ ------ ------ ------ ------
Total earnings as defined...... $7,556 $6,137 $4,118 $1,344 $6,200 $7,079
Ratio of earnings to fixed
charges...................... 1.54 1.92(4) 1.99 1.47(5) 1.57(6) 1.66
====== ====== ====== ====== ====== ======
Preferred stock dividends(3)... 125 108 86 32 91 24
====== ====== ====== ====== ====== ======
Ratio of earnings to combined
fixed charges and preferred
stock dividends.............. 1.51 1.86(4) 1.91 1.42(5) 1.54(6) 1.65
====== ====== ====== ====== ====== ======
---------------
(1) For financial statement purposes, these amounts are reduced for income
earned on temporary investment of excess funds, generally resulting from
over-subscriptions of commercial paper issuances.
(2) Represents one-third of rentals, which approximates the portion representing
interest.
(3) Preferred stock dividends are grossed up to their pretax equivalents.
(4) The 2004 ratios have been negatively impacted by $121 million (after-tax)
from the adoption of FFIEC charge-off policies for our domestic private
label (excluding retail sales contracts at our consumer lending business)
and MasterCard and Visa portfolios in December 2004 and positively impacted
by the $423 million (after-tax) gain on the bulk sale of our domestic
private label receivables (excluding retail sales contracts at our consumer
lending business) to HSBC Bank USA in December 2004. Excluding these items,
our ratio of earnings to fixed charges would have been 1.83 percent and our
ratio of earnings to combined fixed charges and preferred stock dividends
would have been 1.77 percent. These non-GAAP financial ratios are provided
for comparison of our operating trends only.
(5) The 2003 ratios have been negatively impacted by the $167 million
(after-tax) of HSBC acquisition related costs and other merger related items
incurred by HSBC Finance Corporation. Excluding these charges, our ratio of
earnings to fixed charges would have been 1.69 percent and our ratio of
earnings to combined fixed charges and preferred stock dividends would have
been 1.63 percent. These non-GAAP financial ratios are provided for
comparison of our operating trends only.
(6) The 2002 ratios have been negatively impacted by the $333 million
(after-tax) settlement charge and related expenses and the $240 million
(after-tax) loss on the disposition of Thrift assets and deposits. Excluding
these charges, our ratio of earnings to fixed charges would have been 1.80
percent and our ratio of earnings to combined fixed charges and preferred
stock dividends would have been 1.76 percent. These non-GAAP financial
ratios are provided for comparison of our operating trends only.
EXHIBIT 21
SUBSIDIARIES OF HSBC FINANCE CORPORATION
US -- STATE
NAMES OF SUBSIDIARIES ORGANIZED
--------------------- --------------
AHLIC Investment Holdings Corporation....................... Delaware
B.I.G. Insurance Agency, Inc. .............................. Ohio
Beaver Valley, Inc. ........................................ Delaware
Bencharge Credit Service Holding Company.................... Delaware
Beneficial Alabama Inc. .................................... Alabama
Beneficial Arizona Inc...................................... Delaware
Beneficial California Inc. ................................. Delaware
Beneficial Colorado Inc. ................................... Delaware
Beneficial Commercial Corporation........................... Delaware
Beneficial Commercial Holding Corporation................... Delaware
Beneficial Company LLC (f/k/a Beneficial Corporation)....... Delaware
Beneficial Connecticut Inc. ................................ Delaware
Beneficial Consumer Discount Company........................ Pennsylvania
dba BMC of PA
Beneficial Credit Services Inc. ............................ Delaware
Beneficial Credit Services of Connecticut Inc. ............. Delaware
Beneficial Credit Services of Mississippi Inc. ............. Delaware
Beneficial Credit Services of South Carolina Inc. .......... Delaware
Beneficial Delaware Inc. ................................... Delaware
Beneficial Direct, Inc. .................................... New Jersey
Beneficial Discount Co. of Virginia......................... Delaware
Beneficial Facilities Corporation........................... New Jersey
Beneficial Finance Co. ..................................... Delaware
Beneficial Finance Co. of West Virginia..................... Delaware
Beneficial Finance Services, Inc. .......................... Kansas
Beneficial Florida Inc. .................................... Delaware
dba Beneficial Credit Services Inc.
Beneficial Franchise Company Inc. .......................... Delaware
Beneficial Georgia Inc. .................................... Delaware
Beneficial Hawaii Inc. ..................................... Delaware
Beneficial Homeowner Service Corporation.................... Delaware
Beneficial Idaho Inc. ...................................... Delaware
Beneficial Illinois Inc. ................................... Delaware
Beneficial Income Tax Service Holding Co., Inc. ............ Delaware
Beneficial Indiana Inc. .................................... Delaware
dba Beneficial Mortgage Co. of Indiana
Beneficial Investment Co. .................................. Delaware
Beneficial Iowa Inc. ....................................... Iowa
Beneficial Kansas Inc. ..................................... Kansas
Beneficial Kentucky Inc. ................................... Delaware
Beneficial Land Company, Inc. .............................. New Jersey
Beneficial Leasing Group, Inc. ............................. Delaware
US -- STATE
NAMES OF SUBSIDIARIES ORGANIZED
--------------------- --------------
Beneficial Loan & Thrift Co. ............................... Minnesota
Beneficial Loan Corporation of Kentucky..................... Kentucky
Beneficial Louisiana Inc. .................................. Delaware
Beneficial Maine Inc. ...................................... Delaware
dba Beneficial Credit Services
Beneficial Management Corporation........................... Delaware
Beneficial Management Corporation of America................ Delaware
Beneficial Management Headquarters, Inc. ................... New Jersey
Beneficial Management Institute, Inc. ...................... New York
Beneficial Mark Holding Inc. ............................... Delaware
Beneficial Maryland Inc. ................................... Delaware
Beneficial Massachusetts Inc. .............................. Delaware
Beneficial Michigan Inc. ................................... Delaware
Beneficial Mississippi Inc. ................................ Delaware
Beneficial Missouri, Inc. .................................. Delaware
Beneficial Montana Inc. .................................... Delaware
Beneficial Mortgage Co. of Arizona.......................... Delaware
Beneficial Mortgage Co. of Colorado......................... Delaware
Beneficial Mortgage Co. of Connecticut...................... Delaware
Beneficial Mortgage Co. of Florida.......................... Delaware
Beneficial Mortgage Co. of Georgia.......................... Delaware
Beneficial Mortgage Co. of Idaho............................ Delaware
Beneficial Mortgage Co. of Indiana.......................... Delaware
Beneficial Mortgage Co. of Kansas, Inc. .................... Delaware
Beneficial Mortgage Co. of Louisiana........................ Delaware
Beneficial Mortgage Co. of Maryland......................... Delaware
Beneficial Mortgage Co. of Massachusetts.................... Delaware
Beneficial Mortgage Co. of Mississippi...................... Delaware
Beneficial Mortgage Co. of Missouri, Inc. .................. Delaware
Beneficial Mortgage Co. of Nevada........................... Delaware
Beneficial Mortgage Co. of New Hampshire.................... Delaware
Beneficial Mortgage Co. of North Carolina................... Delaware
Beneficial Mortgage Co. of Oklahoma......................... Delaware
Beneficial Mortgage Co. of Rhode Island..................... Delaware
Beneficial Mortgage Co. of South Carolina................... Delaware
Beneficial Mortgage Co. of Texas............................ Delaware
Beneficial Mortgage Co. of Utah............................. Delaware
Beneficial Mortgage Co. of Virginia......................... Delaware
Beneficial Mortgage Corporation............................. Delaware
Beneficial Mortgage Holding Company......................... Delaware
Beneficial Nebraska Inc. ................................... Nebraska
Beneficial Nevada Inc. ..................................... Delaware
Beneficial New Hampshire Inc. .............................. Delaware
Beneficial New Jersey Inc. ................................. Delaware
Beneficial New Mexico Inc. ................................. Delaware
US -- STATE
NAMES OF SUBSIDIARIES ORGANIZED
--------------------- --------------
Beneficial New York Inc. ................................... New York
Beneficial North Carolina Inc. ............................. Delaware
Beneficial Ohio Inc. ....................................... Delaware
Beneficial Oklahoma Inc. ................................... Delaware
dba Beneficial Credit Services
Beneficial Oregon Inc. ..................................... Delaware
Beneficial Real Estate Company, Inc. ....................... New Jersey
Beneficial Real Estate Joint Venture, Inc. ................. Delaware
Beneficial Rhode Island Inc. ............................... Delaware
Beneficial Service Corporation.............................. Delaware
Beneficial Service Corporation of Delaware.................. Delaware
Beneficial South Carolina Inc. ............................. Delaware
Beneficial South Dakota Inc. ............................... Delaware
Beneficial Systems Development Corporation.................. Delaware
Beneficial Technology Corporation........................... Delaware
Beneficial Tennessee Inc. .................................. Tennessee
Beneficial Texas Inc. ...................................... Texas
Beneficial Trademark Co. ................................... Delaware
Beneficial Utah Inc. ....................................... Delaware
Beneficial Vermont Inc. .................................... Delaware
Beneficial Virginia Inc. ................................... Delaware
Beneficial Washington Inc. ................................. Delaware
Beneficial West Virginia, Inc. ............................. West Virginia
Beneficial Wisconsin Inc. .................................. Delaware
Beneficial Wyoming Inc. .................................... Wyoming
dba Beneficial Credit Services
Benevest Escrow Company..................................... Delaware
Benevest Group Inc. ........................................ Delaware
Benevest Services, Inc. .................................... Washington
BFC Agency, Inc. ........................................... Delaware
BFC Insurance Agency of Nevada.............................. Nevada
BMC Holding Company......................................... Delaware
Bon Secour Properties Inc. ................................. Alabama
Business Lakeview, Inc. .................................... Delaware
Cal-Pacific Services, Inc. ................................. California
Capital Financial Services Inc. ............................ Nevada
dba Capital Financial Services I Inc.
dba Capital Financial Services No. 1 Inc.
dba CFSI, Inc.
dba HB Financial Services
Central Insurance Administrators, Inc. ..................... Delaware
Chattanooga Valley Associates............................... Tennessee
Com Realty, Inc. ........................................... Delaware
Craig-Hallum Corporation.................................... Delaware
Decision One Loan Company of Minnesota...................... Minnesota
US -- STATE
NAMES OF SUBSIDIARIES ORGANIZED
--------------------- --------------
Decision One Mortgage Company, LLC.......................... North Carolina
Eighth HFC Leasing Corporation.............................. Delaware
Eleventh Avenue Properties Corporation...................... Delaware
Fifteenth HFC Leasing Corporation........................... Delaware
Fifth HFC Leasing Corporation............................... Delaware
Financial Network Alliance, L.L.P. ......................... Illinois
First Central National Life Insurance Company of New York... New York
FNA Consumer Discount Company............................... Pennsylvania
Fourteenth HFC Leasing Corporation.......................... Delaware
Fourth HFC Leasing Corporation.............................. Delaware
H I Venture Four, Inc. ..................................... Florida
H I Venture One, Inc. ...................................... Florida
H I Venture Three, Inc. .................................... Florida
Hamilton Investments, Inc. ................................. Delaware
Harbour Island Inc. ........................................ Florida
HFC Agency of Missouri, Inc. ............................... Missouri
HFC Commercial Realty, Inc. ................................ Delaware
HFC Company LLC (f/k/a Household Group, Inc.)............... Delaware
HFC Leasing, Inc. .......................................... Delaware
HFS Investments, Inc. ...................................... Nevada
HFTA Consumer Discount Co. ................................. Pennsylvania
HFTA Corporation............................................ Delaware
HFTA Eighth Corporation..................................... Ohio
HFTA Fifth Corporation...................................... Nevada
HFTA First Financial Corp. ................................. California
HFTA Fourth Corporation..................................... Minnesota
HFTA Ninth Corporation...................................... West Virginia
HFTA Second Corporation..................................... Alabama
HFTA Seventh Corporation.................................... New Jersey
HFTA Sixth Corporation...................................... Nevada
HFTA Tenth Corporation...................................... Washington
HFTA Third Corporation...................................... Delaware
Household Acquisition Corporation........................... Delaware
Household Affinity Funding Corporation II................... Delaware
Household Affinity Funding Corporation III.................. Delaware
Household Aviation, LLC..................................... Delaware
Household Business Services, Inc. .......................... Delaware
Household Capital Markets LLC............................... Delaware
Household Card Funding Corporation.......................... Delaware
Household Commercial Financial Services, Inc. .............. Delaware
Household Commercial of California, Inc. ................... California
Household Company of Maine.................................. Maine
Household Consumer Loan Corporation......................... Nevada
Household Consumer Loan Corporation II...................... Delaware
Household Corporation....................................... Delaware
US -- STATE
NAMES OF SUBSIDIARIES ORGANIZED
--------------------- --------------
Household Credit Services Overseas, Inc. ................... Delaware
Household Finance Consumer Discount Company................. Pennsylvania
Household Finance Corporation............................... Delaware
Household Finance Corporation II............................ Delaware
dba Household Mortgage Company
dba Household Finance Corporation of Virginia
Household Finance Corporation III........................... Delaware
dba HFC Mortgage of Nebraska
dba Household Mortgage Services
dba HSBC Mortgage
Household Finance Corporation of Alabama.................... Alabama
Household Finance Corporation of California................. Delaware
Household Finance Corporation of Nevada..................... Delaware
Household Finance Corporation of West Virginia.............. West Virginia
Household Finance Industrial Loan Company................... Washington
Household Finance Industrial Loan Company of Iowa........... Iowa
Household Finance Realty Corporation of Nevada.............. Delaware
Household Finance Realty Corporation of New York............ Delaware
Household Financial Center Inc. ............................ Tennessee
Household Financial Services, Inc........................... Delaware
Household Global Funding, Inc. ............................. Delaware
Household Industrial Finance Company........................ Minnesota
Household Industrial Loan Co. of Kentucky................... Kentucky
Household Insurance Agency, Inc. ........................... Michigan
Household Insurance Agency, Inc. Nevada..................... Nevada
Household Insurance Group Holding Company................... Delaware
Household Insurance Group, Inc. ............................ Delaware
Household Investment Funding, Inc. ......................... Delaware
Household Ireland Holdings Inc. ............................ Delaware
Household Life Insurance Co. of Arizona..................... Arizona
Household Life Insurance Company............................ Michigan
Household Life Insurance Company of Delaware................ Delaware
Household N Q Pension Company............................... Delaware
Household OPEB I, Inc. ..................................... Illinois
Household Pooling Corporation............................... Nevada
Household Realty Corporation................................ Delaware
Household Receivables Acquisition Company................... Delaware
Household Receivables Acquisition Company II................ Delaware
Household Receivables Funding, Inc. III..................... Delaware
Household Recovery Services Corporation..................... Delaware
Household REIT Corporation.................................. Nevada
Household Relocation Management, Inc. ...................... Illinois
Household Servicing, Inc. .................................. Delaware
Household Tax Masters Acquisition Corporation............... Delaware
Housekey Financial Corporation.............................. Illinois
US -- STATE
NAMES OF SUBSIDIARIES ORGANIZED
--------------------- --------------
HSBC - GR Corp. (f/k/a Household Financial Group, Ltd.)..... Delaware
HSBC Affinity Corporation I (f/k/a HFC Card Funding
Corporation).............................................. Delaware
HSBC Auto Accounts Inc. (f/k/a OFL-A Receivables Corp.)..... Delaware
HSBC Auto Credit Inc. (f/k/a Household Automotive Credit
Corporation).............................................. Delaware
HSBC Auto Finance Inc. (f/k/a Household Automotive Finance
Corporation).............................................. Delaware
HSBC Auto Receivables Corporation (f/k/a Household Auto
Receivables Corporation).................................. Nevada
HSBC Bank Nevada N. A. (f/k/a Household Bank (SB), N.A.).... United States
HSBC Card Services (III) Inc. (f/k/a Household Card
Services, Inc.)........................................... Nevada
HSBC Card Services (III) Inc. (f/k/a Household Credit
Services, Inc.)........................................... Delaware
HSBC Card Services II Inc. (f/k/a Household Credit Services
II, Inc.)................................................. Oregon
HSBC Credit Center, Inc. ................................... Delaware
HSBC Home Equity Loan Corporation I (f/k/a HFC Revolving
Corporation).............................................. Delaware
HSBC Insurance Company of Delaware (f/k/a Service General
Insurance Company)........................................ Ohio
HSBC Mortgage Funding Corporation I (f/k/a Household
Mortgage Funding Corporation III)......................... Delaware
HSBC Mortgage Services Warehouse Lending Inc.(f/k/a HFC
Funding Corporation)...................................... Delaware
HSBC Pay Services, Inc. (f/k/a Household Payroll Services,
Inc.)..................................................... Delaware
HSBC Retail Services Inc. (f/k/a Household Retail Services,
Inc.)..................................................... Delaware
HSBC Single Seller Depositor (USA) LLC...................... Delaware
HSBC Taxpayer Financial Services Inc.(f/k/a Household Tax
Masters Inc.)............................................. Delaware
HSBC TFS I 2005 LLC......................................... Delaware
HSBC TFS I LLC.............................................. Delaware
HSBC TFS II 2005 LLC........................................ Delaware
HSBC TFS II LLC............................................. Delaware
Hull 752 Corporation........................................ Delaware
Hull 753 Corporation........................................ Delaware
JV Mortgage Capital Consumer Discount Company............... Pennsylvania
JV Mortgage Capital, Inc. .................................. Delaware
JV Mortgage Capital, L.P. .................................. Delaware
KMD Center, Inc. ........................................... Delaware
Leasing at Sixty-First Corporation.......................... Delaware
Macray Corporation.......................................... California
magnUS Services, Inc. ...................................... Delaware
MES Insurance Agency, LLC................................... Delaware
Metris Receivables, Inc. ................................... Delaware
Moore's Realty Inc. ........................................ Delaware
Mortgage One Corporation.................................... Delaware
Mortgage Two Corporation.................................... Delaware
MTX LLC..................................................... Delaware
Neil Corporation............................................ Delaware
Nineteenth HFC Leasing Corporation.......................... Delaware
North Indemnity Insurance Company........................... Delaware
Old K & B Corporation....................................... Michigan
Pacific Agency, Inc. ....................................... Nevada
Pacific Finance Loans....................................... California
Pargen Corporation.......................................... California
US -- STATE
NAMES OF SUBSIDIARIES ORGANIZED
--------------------- --------------
Personal Mortgage Corporation............................... Delaware
Personal Mortgage Holding Company........................... Delaware
PPSG Corporation............................................ Delaware
Properties on Twenty-Second Corporation..................... Delaware
Real Estate Collateral Management Company................... Delaware
Renaissance Bankcard Services of Kentucky................... Kentucky
Second HFC Leasing Corporation.............................. Delaware
Service Administrators, Inc. (USA).......................... Colorado
Service Management Corporation.............................. Ohio
Seven Acres Leasing Corporation............................. Delaware
Seventh HFC Leasing Corporation............................. Delaware
Silliman Corporation........................................ Delaware
Sixth HFC Leasing Corporation............................... Delaware
South Property Corporation.................................. Delaware
Southern Trust Company...................................... Delaware
Southwest Beneficial Finance, Inc. ......................... Illinois
Southwest Texas General Agency, Inc. ....................... Texas
SPE 1 2005 Manager Inc. .................................... Delaware
SPE 1 Manager Inc. ......................................... Delaware
Tampa Island Transit Company, Inc. ......................... Florida
Tenth Leasing Corporation................................... Delaware
Third HFC Leasing Corporation............................... Delaware
Thirteenth HFC Leasing Corporation.......................... Delaware
Twenty-Sixth Place Corporation.............................. Delaware
Valley Properties Corporation............................... Tennessee
Wasco Properties, Inc. ..................................... Delaware
Wesco Insurance Company..................................... Delaware
NON-US AFFILIATES
NAMES OF SUBSIDIARIES COUNTRY ORGANIZED
--------------------- -----------------
Amstelveen FSC, Ltd. ....................................... Bermuda
Beneficial (Hungary) Financial Services Limited............. Hungary
Beneficial Building Company Limited......................... England
Beneficial Data Systems Limited............................. England
Beneficial Finance a.s...................................... Czech Republic
Beneficial Financial Services Limited....................... England
Beneficial Financing Limited................................ England
Beneficial Leasing Limited.................................. England
Beneficial Limited.......................................... England
Beneficial Premium Services Limited......................... England
Beneficial Trust Investments Limited........................ England
Beneficial Trust Nominees Limited........................... England
BFC Insurance (Life) Limited................................ Ireland
BFC Insurance Limited....................................... Ireland
BFC Ireland (Holdings) Limited.............................. Ireland
NAMES OF SUBSIDIARIES COUNTRY ORGANIZED
--------------------- -----------------
BFC Pension Plan (Ireland) Limited.......................... Ireland
BFC Reinsurance Limited..................................... Ireland
D.L.R.S. Limited............................................ England
Endeavour Personal Finance Limited.......................... England
First Finance Brokers Limited............................... England
Hamilton Financial Planning Services Ltd. .................. England
Hamilton Insurance Company Limited.......................... England
Hamilton Life Assurance Company Limited..................... England
HFC Bank Limited............................................ England
HFC Financial Services Holdings (Ireland) Limited........... Ireland
HFC Pension Plan (Ireland) Limited.......................... Ireland
HFC Pension Plan Limited.................................... England
Household (Jersey) Limited.................................. Channel Island
Household Commercial Canada, Inc. .......................... Canada
Household Computer Services Limited......................... England
Household Finance Limited................................... England
Household Funding plc....................................... England
Household Global Holdings, BV............................... Netherlands
Household International Europe Limited...................... England
Household International Netherlands B.V..................... Netherlands
Household Investments Limited............................... England
Household Leasing Limited................................... England
Household Management Corporation Limited.................... England & Wales
Household Overseas Limited.................................. England
Household Realty Corporation Limited........................ Canada
Household Trust Company..................................... Canada
HSBC Finance Corporation Canada (f/k/a Household Finance
Corporation of Canada).................................... Canada
HSBC Financial Corporation Limited (f/k/a Household
Financial Corporation Limited)............................ Canada
HSBC Retail Services Limited (f/k/a Household Financial
Corporation Inc.)......................................... Canada
ICOM Limited................................................ Bermuda
Invis Inc. ................................................. Canada
John Lewis Financial Services Limited....................... England
Night Watch FSC, Ltd. ...................................... Bermuda
Overseas Leasing Five FSC, Ltd. ............................ Bermuda
Overseas Leasing Four FSC, Ltd. ............................ Bermuda
Overseas Leasing One FSC, Ltd. ............................. Bermuda
Overseas Leasing Twp FSC, Ltd. ............................. Bermuda
Security Trust Limited...................................... England
Sterling Credit Limited..................................... England
Sterling Credit Management Limited.......................... England
Sterling Mortgages Limited.................................. England
The Loan Corporation Limited................................ England
EXHIBIT 23
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of HSBC Finance Corporation:
We consent to the incorporation of our report dated March 6, 2006, included in
this Annual Report on Form 10-K of HSBC Finance Corporation (the Company) as of
December 31, 2005 (successor basis) and December 31, 2004 (successor basis) and
for each of the years in the two-year period ended December 31, 2005 (successor
basis), and for the period January 1, 2003 through March 28, 2003 (predecessor
basis) and March 29, 2003 through December 31, 2003 (successor basis), into the
Company's previously filed Registration Statements No. 2-86383, No. 33-21343,
No. 33-45454, No. 33-45455, No. 33-52211, No. 33-58727, No. 333-00397, No.
33-44066, No. 333-03673, No. 333-39639, No. 333-58287, No. 333-58289, No.
333-58291, No. 333-47073, No. 333-36589, No. 333-30600, No. 333-50000, No.
333-70794, No. 333-71198, No. 333-83474 and No. 333-99107 on Form S-8 and
Registration Statements No. 333-70744, No. 333-60510, No. 333-01025, No.
333-47945, No. 333-59453, No. 333-82119, No. 333-45740, No. 333-56152, No.
333-73746, No. 333-75328, No. 333-85886, No. 333-33240, No. 333-61964, No.
333-111413, No. 333-53862, No. 333-33052, No. 333-72453, No. 333-60543, No.
333-64175, No. 333-120494, No. 333-120495, No. 333-120496 and No. 333-100737 on
Form S-3.
Our report dated March 6, 2006 contains an explanatory paragraph that states
effective March 28, 2003, HSBC Holdings plc acquired all of the outstanding
stock of Household International, Inc. (now HSBC Finance Corporation) in a
business combination accounted for as a purchase. As a result of the
acquisition, the consolidated financial information for the period after the
acquisition is presented on a different cost basis than that for the periods
before the acquisition and, therefore, is not comparable.
/s/ KPMG LLP
Chicago, Illinois
March 6, 2006
EXHIBIT 31
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Siddharth N. Mehta, Chairman and Chief Executive Officer of HSBC Finance
Corporation, certify that:
1. I have reviewed this annual report on Form 10-K of HSBC Finance
Corporation;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this annual report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
c) disclosed in this annual report any change in the registrant's
internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the registrant's internal control
over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of the registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies and material weaknesses in the design
or operation of internal controls over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
control over financial reporting.
Date: March 6, 2006
/s/ SIDDHARTH N. MEHTA
--------------------------------------
Siddharth N. Mehta
Chairman and Chief Executive Officer
EXHIBIT 31
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Beverley A. Sibblies, Senior Vice President and Chief Financial Officer of
HSBC Finance Corporation, certify that:
1. I have reviewed this annual report on Form 10-K of HSBC Finance
Corporation;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this annual report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
c) disclosed in this annual report any change in the registrant's
internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the registrant's internal control
over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of the registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies and material weaknesses in the design
or operation of internal controls over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
control over financial reporting.
Date: March 6, 2006
/s/ BEVERLEY A. SIBBLIES
--------------------------------------
Beverley A. Sibblies
Senior Executive Vice President
and Chief Financial Officer
EXHIBIT 32
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The certification set forth below is being submitted in connection with the HSBC
Finance Corporation (the "Company") Annual Report on Form 10-K for the fiscal
year ended December 31, 2005 as filed with the Securities and Exchange
Commission on the date hereof (the "Report") for the purpose of complying with
Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the
"Exchange Act") and Section 1350 of Chapter 63 of Title 18 of the United States
Code.
I, Siddharth N. Mehta, Chairman and Chief Executive Officer of the Company,
certify that:
1. the Report fully complies with the requirements of Section 13(a) or
15(d) of the Exchange Act; and
2. the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of
HSBC Finance Corporation.
March 6, 2006
/s/ SIDDHARTH N. MEHTA
--------------------------------------
Siddharth N. Mehta
Chairman and Chief Executive Officer
This certification accompanies each Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the
Sarbanes-Oxley Act of 2002, be deemed filed by HSBC Finance Corporation for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
Signed originals of these written statements required by Section 906 of the
Sarbanes-Oxley Act of 2002 have been provided to HSBC Finance Corporation and
will be retained by HSBC Finance Corporation and furnished to the Securities and
Exchange Commission or its staff upon request.
EXHIBIT 32
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The certification set forth below is being submitted in connection with the HSBC
Finance Corporation (the "Company") Annual Report on Form 10-K for the fiscal
year ended December 31, 2005 as filed with the Securities and Exchange
Commission on the date hereof (the "Report") for the purpose of complying with
Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the
"Exchange Act") and Section 1350 of Chapter 63 of Title 18 of the United States
Code.
I, Beverley A. Sibblies, Senior Vice President and Chief Financial Officer of
the Company, certify that:
1. the Report fully complies with the requirements of Section 13(a) or
15(d) of the Exchange Act; and
2. the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of
HSBC Finance Corporation.
March 6, 2006
/s/ BEVERLEY A. SIBBLIES
--------------------------------------
Beverley A. Sibblies
Senior Vice President
and Chief Financial Officer
This certification accompanies each Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the
Sarbanes-Oxley Act of 2002, be deemed filed by HSBC Finance Corporation for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
Signed originals of these written statements required by Section 906 of the
Sarbanes-Oxley Act of 2002 have been provided to HSBC Finance Corporation and
will be retained by HSBC Finance Corporation and furnished to the Securities and
Exchange Commission or its staff upon request.
EXHIBIT 99.1
HSBC FINANCE CORPORATION AND SUBSIDIARIES
DEBT AND PREFERRED STOCK SECURITIES RATINGS
STANDARD & MOODY'S DOMINION
POOR'S INVESTORS BOARD RATING
CORPORATION SERVICE FITCH, INC. SERVICE
------------------------------------------------------------------------------------------------------
AS OF MARCH 6, 2006
HSBC Finance Corporation
Senior debt................................... A Aa3 AA- AA (low)
Senior subordinated debt...................... A- A2 A+ *
Commercial paper.............................. A-1 P-1 F-1+ R-1 (middle)
Series B preferred stock...................... BBB+ A3 A+ *
HFC Bank Limited
Senior debt................................... A Aa3 AA- *
Commercial paper.............................. A-1 P-1 F-1+ *
HSBC Bank Nevada, National Association
Senior debt................................... A A1 AA- *
HSBC Financial Corporation Limited
Senior notes and term loans................... * * * AA (low)
Commercial paper.............................. * * * R-1 (middle)
---------------
* Not rated by this agency.
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