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RNS Number : 9472D HSBC Holdings PLC 21 February 2024
Directors' remuneration report
"The Group's financial and strategic performance is reflected in the positive
remuneration outcomes for our colleagues, and we remain committed to sharing
the benefits of our performance with shareholders."
Dame
Caro
lyn
Fair
bair
n
Chai
r
Grou
p
Remu
nera
tion
Comm
itte
e
Membership(1) Key responsibilities
Member since Meeting attendance in 2023 The Committee's key responsibilities include:
- making recommendations to the Board, for approval by shareholders,
on the Group's remuneration policy;
- setting the overarching principles, parameters and governance
framework of the Group's remuneration policy;
- approving the remuneration of executive Directors and other senior
Group employees; and
- regularly reviewing the effectiveness of the remuneration policy of
the Group and its subsidiaries in the context of consistent and effective risk
management.
Dame Carolyn Fairbairn (Chair) Sep 2021 7/7
Geraldine Buckingham May 2022 7/7
Rachel Duan Sep 2021 7/7
James Forese(2) May 2020 3/3
Ann Godbehere(3) Sep 2023 2/2
José Antonio Meade Kuribreña May 2021 7/7
Eileen Murray(4) May 2023 4/4
1 All members of the Committee are independent non-executive Directors of
HSBC Holdings plc.
2 James Forese stepped down from the Committee on 5 May 2023.
3 Ann Godbehere joined the Committee on 1 September 2023.
4 Eileen Murray joined the Committee on 5 May 2023.
All disclosures in the Directors' remuneration report are unaudited unless
otherwise stated. Disclosures marked as audited should be considered audited
in the context of financial statements taken as a whole.
Dear Shareholder
I am delighted to present our 2023 Directors' remuneration report on behalf of
the members of the Group Remuneration Committee.
I would like to thank Jamie Forese for the counsel he provided to us all as a
member of the Group Remuneration Committee. We welcomed Eileen Murray and Ann
Godbehere as members. They have already made valuable contributions since
their respective appointments in 2023.
2023 was a year of good performance and positive progress for the Group. Our
colleagues were critical to delivering those outcomes, remaining committed to
serving our customers and clients around the world. Against that backdrop, the
Committee's focus in 2023 was on ensuring we deliver an exceptional experience
to colleagues. This is crucial to attract, retain and energise the people we
need to sustain our performance and grow in markets that are highly
competitive.
We also spent considerable time in 2023 thinking about executive Director
remuneration, in the context of our strategy, performance and the removal of
the 2:1 UK regulatory cap between variable and fixed pay. We have started to
consider policy options ahead of the renewal of the Directors' remuneration
policy in 2025.
The Committee reflected on feedback from investors following the vote on the
implementation of our current policy at the Annual General Meeting ('AGM') in
2023, which received 79.75% of votes cast in favour.
We explained in our statements of 5 May 2023 and 3 November 2023 that our
largest shareholder voted against the Board's recommendations on a number of
resolutions including the Directors' remuneration report, which impacted the
voting results on these resolutions. The Board was pleased that a large
majority of shareholders voting at the AGM supported HSBC's approach. I have
met with several of our large institutional investors and proxy advisory firms
since the AGM, and there remains strong support for our current Directors'
remuneration policy.
We will continue to engage with our major shareholders and listen to their
views as we develop the Directors' remuneration policy next year.
Performance in 2023
Financial performance
Our financial performance in 2023 reflected the strength of our balance sheet
in a higher interest rate environment and the good progress made executing our
strategy over the last four years.
We delivered a reported profit before tax of $30.3bn, which was up $13.3bn
compared with 2022. This included a favourable year-on-year impact of $2.5bn
relating to the sale of our retail banking operations in France and a
provisional gain of $1.6bn recognised on the acquisition of Silicon Valley
Bank UK Limited ('SVB UK'), which were partly offset by the recognition of a
$3.0bn impairment charge relating to the investment in our associate, Bank of
Communications Co., Limited ('BoCom').
Reported revenue of $66.1bn grew by 30% or $15.4bn compared with 2022, due to
good performance by all three businesses reflecting higher net interest income
from interest rate rises.
Reported costs fell by 2% to $32.1bn, primarily due to the non-recurrence of
restructuring and other related costs. On our cost target basis, 2023 costs
grew by 6% versus our target of approximately 3% compared with 2022.
Our return on average tangible equity ('RoTE') for 2023 was 14.6%, compared
with 10.0% in 2022. Excluding strategic transactions and the BoCom impairment,
our RoTE was 15.6%.
This performance together with our 50% payout ratio commitment for 2023
(excluding material notable items and related impacts) enables us to approve a
full year dividend of $0.61 per share.
Strategic performance
In 2023, there was further good progress in executing our strategy across the
four strategic pillars aligned to our purpose, values and ambition. The
completion of the sale of our retail banking operations in France on 1 January
2024 was an important milestone in the turnaround of our business. However,
the strategic focus has shifted to investing for growth. The acquisition of
SVB UK, and subsequent launch of HSBC Innovation Banking, is a good example of
this.
We continued to capitalise on our strengths, which are our two home markets of
Hong Kong and the UK, as well as our international wholesale, transaction
banking and wealth businesses. The digitisation of our services for personal
and corporate customers helped to improve our net promoter scores in key
markets and businesses. Meanwhile the growth of transaction banking revenue,
fee income in Commercial Banking, and net new invested assets in Wealth all
underlined our focus on improving our earnings sustainability, which remains a
key priority.
Our colleagues are the driving force behind our performance and progress, with
our 2023 employee Snapshot survey demonstrating that they are more engaged
than ever. Our employee focus index, which gauges how colleagues feel about
their day-to-day work, was 76%, which was an increase of four percentage
points on 2022. Our employee engagement index is at an all time high of 77%,
which was also an increase of three percentage points and meant we matched or
exceeded the global financial services benchmark in all eight of our indices.
We also continued to support our customers in challenging economic times,
particularly in the UK where we supported our personal and business customers
by enhancing our range of digital resources and targeting those most in need.
Rewarding our colleagues
Our goal is to deliver a unique and exceptional experience to colleagues so
that we sustain our performance in competitive markets. Our reward principles
and commitments centre on rewarding colleagues responsibly, recognising their
success and supporting them to grow.
Pay is a critical part of our proposition. We were encouraged by a nine
percentage point improvement to 52% in colleagues' perceptions they are paid
fairly because of actions we took through 2022. The Committee remains very
focused on the need to improve this further. For 2024, we are putting more
structure in place to improve transparency and clarity about how we make pay
decisions.
Beyond pay we have a strong proposition of benefits, well-being support,
flexible working options, and learning and career opportunities to support our
colleagues.
In 2023, we saw the maturity of the 2020 three-year Sharesave plan, which had
the highest take-up rate and contribution level in recent years. The share
price at maturity was more than double the option price, meaning colleagues
benefited from our share price growth at a time when they needed it most. Over
90% of colleagues have access to share ownership plans globally with 25% of
our global population taking part.
For further details, see 'Our approach to workforce reward' on page 292.
Fixed pay
For the majority of our colleagues, fixed pay is the biggest part of their
reward, and many continue to be impacted by the economic environment including
inflation and cost of living challenges. Our focus is on ensuring that we
provide financial security through fixed pay.
Fixed pay is primarily reviewed through our annual pay cycle. Fixed pay ranges
were introduced for over 190,000 colleagues to improve clarity and
transparency and simplify decision making for our people managers. Effective
in 2024, we have awarded an overall fixed pay increase of 4.4%. The level of
increases vary by market, depending on the economic situation and individual
roles. The highest increases were made to lower paid colleagues, and then
focused on middle management, so that we keep pace with wage inflation.
We have also established Living Wage benchmarks for every market and were
certified as a global Living Wage employer by the Fair Wage Network for 2024.
This is critical to give us further confidence in meeting our commitments to
reward colleagues responsibly.
We continued to take tangible actions to address the most significant
inflationary pressures for colleagues. For example, in Argentina and Türkiye,
we adjusted fixed pay regularly through the year. In Egypt, we supported our
colleagues with a one-off pay adjustment in response to high inflation.
Variable pay
In determining the 2023 variable pay pool, the Committee wanted to recognise
our strong financial and strategic performance, and the contribution
colleagues have made to that.
The Committee determined an overall variable pay pool of $3,774m, 12% higher
than $3,359m in 2022. This was determined based on a review of our performance
against financial and non-financial metrics set out in the Group risk
framework. The Committee considered the strength of our financial performance
in 2023, and the ratio between variable pay and pre-variable pay profit before
tax. The Committee considered the impact of margins on interest rates in our
results, and lowered the total pool in line with our countercyclical funding
approach. We also considered our total compensation position compared with the
market, and the broader economic outlook.
The Committee considered in respect of all its remuneration decisions for 2023
the Prudential Regulation Authority's ('PRA') 29 January 2024 Notice relating
to HSBC Bank plc's and HSBC UK's compliance with the UK Financial Services
Compensation Scheme ('FSCS') and related Depositor Protection rules. The PRA
penalty was reflected in the calculation of profitability used to determine
the pool. The Committee carefully considered input from the Group Risk
Committee ('GRC') and determined that no further discretionary adjustment
should be made to the overall variable pay pool. The circumstances leading to
the penalty require a more detailed review internally to address potential
responsibility of individuals, which will be completed by the Committee in
2024, with any remuneration adjustments applied once it is complete.
Total compensation across all our businesses increased relative to 2022,
rewarding our colleagues for their contribution to our performance. The
distribution of the pool by business considered relative performance against
revenue, reported profit before tax and cost targets. Strong differentiation
has meant our highest performers received the largest increases in variable
pay compared with the previous year.
Key remuneration decisions for executive Directors
Annual incentive for 2023 performance
The Group's financial and strategic performance is reflected in the executive
Directors' annual scorecards. The Committee believes this reflects their
individual leadership and contribution to delivery of the Group's performance.
At the start of the year, the Committee set the scorecards to align with our
reported financial performance. The Committee considered carefully the impact
of strategic transactions and one-offs on the Group's financial performance in
2023, including the favourable year-on-year impact of $4.1bn relating to the
sale of our retail banking operations in France and the provisional gain on
the acquisition of SVB UK, balanced with the $3.0bn impairment charge
relating to the investment in BoCom.
Consistent with the approach in prior years, the Committee judged that it was
appropriate to assess financial performance for the purpose of the annual
scorecard excluding these items, to ensure that out-turns were not impacted by
one-offs. The assessment of RoTE and profit before tax measures therefore
excluded strategic transactions and the BoCom impairment.
The Committee also considered the impact of interest rates on performance and
noted that macroeconomic fluctuations remain a frequent driver of the Group's
business outcomes for our executives to manage. In recent years these factors
have not led to discretionary scorecard adjustments for our executive
Directors, either positive or negative, which the Committee continues to
believe is appropriate.
As part of its deliberations, the Committee reflected on the overall risk
management in the year, and in respect of the PRA Notice: the nature of the
failings identified; the regulator's finding that the breaches identified were
not deliberate or reckless; fines levied; and the tenure and specific
responsibilities of the executive Directors in relation to the issues covered.
Taking into account inputs from the GRC and the overall accountability of the
Group Chief Executive for the performance and risk management of the Group in
2023, the Committee used its judgement and applied a downward adjustment of
7.50% to Noel Quinn's scorecard outcome.
This results in a final scorecard outcome of 70.24% of the maximum opportunity
for Group Chief Executive Noel Quinn (2022: 75.35%) and an annual incentive of
£2,018,000, which is 7% lower than £2,164,000 in 2022.
The scorecard for Group Chief Financial Officer Georges Elhedery was 76.75%,
resulting in an annual incentive of £1,287,000.
The Committee considered that these final outcomes were a balanced and
appropriate reflection of Group and individual performance delivered in 2023,
and appropriate in the context of the pay decisions made for the wider
workforce.
2021-2023 long-term incentive ('LTI') vesting
Noel Quinn and Ewen Stevenson (the former Group Chief Financial Officer)
participated in the 2021-2023 LTI that will vest in March 2024. As disclosed
in our 2020 Directors' remuneration report, the Committee considered windfall
gains at the time of award and determined no adjustment was appropriate.
The maximum RoTE and relative total shareholder return ('TSR') targets were
exceeded. The capital reallocation to Asia measure was not met and the
environment and sustainability measures were assessed to be 100% met. Overall,
75.00% of the original award will vest on a pro-rata basis over the next five
years. Ewen Stevenson's awards have been pro-rated for time in employment.
As this is the first LTI vesting for Noel Quinn, his single figure of
remuneration for 2023 is materially changed. The 2023 single figure of
remuneration for Noel Quinn is £10,641,000 (compared with £5,562,000 for
2022). The value of the LTI award reflects the Group's improvement in
performance, shareholder returns and share price over 2021 to 2023, and Noel
Quinn's leadership in reshaping the Group to deliver more sustainable returns
to shareholders.
Noel Quinn's LTI vesting also means that the pay ratio measuring the total pay
of the Group Chief Executive against the median pay of our UK employees has
increased to 169:1 compared with 95:1 last year. Excluding the LTI vesting in
respect of the year, the median ratio remained broadly in line with prior
years at 86:1. This is consistent with the pay and progression policies for
our UK workforce, considering the diverse mix of employees, the pay mix for
various roles and the differences in pay structure compared with executive
Directors.
2024-2026 LTI awards
We have reviewed the performance measures for LTI awards considering the next
phase of our strategy over 2024 to 2026. We will retain Group RoTE, relative
TSR and environment targets, reflecting our strategic commitments, and to
measure relative performance compared with peers. The capital reallocation to
Asia measure was previously included to retain focus on repositioning the
Group's capital base through the transformation of the business. While our
operations in Asia continue to be of significant strategic importance to the
Group, it was the Committee's view that this measure no longer appropriately
incentivises the delivery of sustainable returns achievable across wider
markets in which HSBC operates. We are simplifying the 2024-2026 LTI by
removing this metric and increasing the weighting of RoTE and relative TSR.
The relative TSR peer group was amended for 2023 to include more Asian peers
to better reflect our growth and investment focus. We do not propose to make
any changes for 2024 other than the removal of the Credit Suisse Group
following its acquisition by UBS Group.
Noel Quinn and Georges Elhedery will each receive a 2024-2026 LTI award of
320% of base salary in respect of their performance for 2023 (Noel Quinn:
£4,275,000; Georges Elhedery: £2,496,000). Subject to performance over the
next three years, awards will vest over a further five years with a one-year
retention period on vesting shares. Further details on our targets can be
found on page 286.
Fixed pay for 2024
We have increased the base salary of our executive Directors by 3%, effective
from 1 March 2024. The increase is lower than the overall fixed pay increase
of 4.4% for our wider workforce.
Remuneration in 2024
The Committee welcomes the change announced by the PRA and the Financial
Conduct Authority ('FCA') to remove the existing limits on the ratio between
fixed and variable pay.
The announcement, together with the wider considerations on the overall
competitiveness of the UK capital markets, provides us an opportunity to
consider the competitiveness of our remuneration arrangements for our
executive Directors and wider workforce.
At the 2024 AGM, we will seek shareholder approval to provide the Committee
with discretion, where regulations allow, to set an appropriate variable to
fixed pay ratio considering all relevant factors, including our business
activities and associated prudential and conduct risks.
This will improve flexibility in the structure of remuneration to increase the
amount of pay that is variable, subject to the delivery of performance. It
will also strengthen our ability to recruit and retain people in competitive
markets where many of our international competitors do not have similar
restrictions.
We remain very supportive of the use of deferral mechanisms and the
requirements to deliver a substantial portion of variable remuneration in
shares to ensure alignment between shareholders, good risk management and
individual reward.
For our executive Directors, we have started early engagement with
institutional shareholders and proxy advisory bodies ahead of the renewal of
our Directors' remuneration policy in 2025. Over several years, the Committee
has expressed concerns around the competitiveness of the executive Director
remuneration opportunity and indicated that our preference would be to operate
a policy with a higher proportion of the package based on variable pay linked
to performance. The Committee continues to believe in a more performance-based
structure, and we will seek shareholder approval for a new Directors'
remuneration policy at the 2025 AGM in line with the normal three-year cycle
after engaging with shareholders through 2024.
Conclusion
On behalf of the Committee, I would like to thank our shareholders for the
time taken to engage with us during the year. We welcome the feedback on our
approach to remuneration and I look forward to engaging with you further in
the year ahead as we continue our review of the Directors' remuneration
policy, in advance of the 2025 AGM.
As Chair of the Committee, I hope you will support the 2023 Directors'
remuneration report and the resolution to remove the 2:1 cap on variable pay
for our Material Risk Takers at this year's AGM.
Dame Carolyn Fairbairn
Chair
Group Remuneration Committee
21 February 2024
Executive remuneration at a glance
This section sets out an overview of our performance, 2023 remuneration
outcomes for executive Directors and a summary of the policy approved by
shareholders at our 2022 AGM, including how we will implement the policy in
2024.
Our performance
Reported profit before tax Net new invested assets Operating expenses Return on average tangible equity
$30.3bn $84bn $32.1bn 14.6%
(2022: $17.1bn) (2022: $80bn) (2022: $32.7bn) (2022: 10.0%)
Employee engagement index(1) Inclusion index Percentage of colleagues of Asian heritage in senior leadership roles Percentage of women in senior leadership roles(2)
77% 78% 37.8% 34.1%
(2022: 74%) (2022: 76%) (2022: 34.0%) (2022: 33.3%)
1 The 2022 employee engagement index score has been recalculated to reflect
a change in the composition of questions in the 2023 index to ensure
comparisons remain valid. In 2022 the employee engagement index was reported
as 73%.
2 The percentage of women in senior leadership roles excluded the Canada
business held for sale.
Remuneration outcomes for executive Directors
Summary remuneration outcomes for 2023 are set out below. Further details are
set out in our annual report on Directors' remuneration on pages 284 to 286.
Noel Quinn Georges Elhedery
Annual incentive outcome (£000)
Long-term incentive outcome (£000)
(XX% of maximum)
Georges Elhedery did not participate in the
2021-2023 long-term incentive
Single figure of remuneration (£000)
Shareholding (% of base salary)
Remuneration policy summary - executive Directors
Our Directors' remuneration policy was approved at the AGM on 29 April 2022.
The full policy can be found on pages 257 to 265 of our Annual Report and
Accounts 2021 and in the Directors' Remuneration Policy Supplement, which is
available under Group results and reporting in the 'Investors' section of
www.hsbc.com.
Base salary - Base salary is paid in cash on a monthly basis. Base salary will increase by 3% for 2024 and will be:
- Other than in exceptional circumstances, the base salary for the current - Noel Quinn: £1,376,000
executive Directors will not increase by more than 15% above the level at the
start of the policy period in total for the duration of the policy. - Georges Elhedery: £803,000
Fixed pay allowance ('FPA') - The FPA is granted in instalments of immediately vested shares. FPA will not be increased for 2024 and will remain:
- On vesting, the net number of shares delivered (after those withheld to - Noel Quinn: £1,700,000
cover any income tax and social security) are subject to a retention period
and released annually on a pro-rata basis over five years, starting from the - Georges Elhedery: £1,085,000
March immediately following the end of the financial year for which the shares
are granted.
- Dividends are paid on the vested shares held during the retention
period.
Cash in lieu of pension - 10% of base salary is paid on a monthly basis. - No change to percentage of base salary.
- This allowance, as a percentage of salary, is aligned with the maximum
contribution rate that HSBC could make for a majority of employees who are
defined contribution members of the HSBC Bank (UK) Pension Scheme.
Annual incentive - The maximum opportunity is up to 215% of base salary. - No change to opportunity.
- Performance is measured against an individual scorecard. - See page 288 for 2024 measures.
- At least 50% of any award is delivered in shares, which are normally
immediately vested.
- On vesting, the net number of shares that have vested (after those sold
to cover any income tax and social security payable) will be held for a
retention period of up to one year, or such period as required by regulators.
- Awards will be subject to clawback (i.e. repayment or recoupment of paid
vested awards) for a period of seven years from the date of award, extending
to 10 years in the event of an ongoing internal/regulatory investigation at
the end of the seven-year period. Any unvested awards will be subject to malus
(i.e. reduction and/or cancellation) during any applicable deferral period.
Long-term incentive ('LTI') - The maximum opportunity is up to 320% of base salary. - No change to opportunity.
- The LTI award is granted if the Committee considers that there has been - See page 287 for details of the 2024-2026 LTI awards.
satisfactory performance over the prior year, and is subject to a
forward-looking three-year performance period from the start of the financial
year in which the awards are granted.
- At the end of the performance period, awards will vest in five equal
instalments, with the first vesting on or around the third anniversary of the
grant date and the last instalment vesting on or around the seventh
anniversary of the grant date.
- On vesting, the net number of shares that have vested (after those sold
to cover any income tax and social security payable) will be held for a
retention period of up to one year, or such period as required by regulators.
- Awards are subject to malus provisions prior to vesting. Vested shares
are subject to clawback on the same terms as the annual incentive.
- Awards may be entitled to dividend equivalents during the vesting
period, paid on vesting. Where awards do not receive dividend equivalents, the
number of shares awarded can be determined using the share price discounted
for the expected dividend yield.
Benefits - Benefits include the provision of medical insurance, accommodation, car, - Benefits to be provided as per policy and details disclosed in the
club membership, independent legal advice in relation to a matter arising out Annual Report and Accounts 2024 single figure of remuneration table.
of the performance of employment duties for HSBC, tax return assistance or
preparation, and travel assistance (including any associated tax due, where
applicable).
- Additional benefits may also be provided when an executive is relocated
or spends a substantial proportion of his/her time in more than one
jurisdiction for business needs.
Shareholding guidelines Executive Directors are expected to satisfy the following shareholding - No change to percentage of base salary.
requirement as a percentage of base salary within five years from the date of
their appointment:
- Group Chief Executive: 400%
- Group Chief Financial Officer: 300%
All-employee share plans Executive Directors are eligible to participate in all-employee share plans, - Participation will be disclosed in the respective Annual Report and
such as HSBC Sharesave, on the same basis as all other employees. Accounts, as required.
Annual report on Directors' remuneration
This section sets out how our approved Directors' remuneration policy was
implemented during 2023.
Determining executive Directors' incentive outcomes
(Audited)
For any annual incentive award to be made, each executive Director must
achieve a minimum standard of conduct and values-aligned behaviour. Both
executive Directors met this requirement for 2023.
The award is determined by applying the outcome of their annual scorecard to
the maximum opportunity, set at 215% of base salary.
The financial measures, weightings and targets were set at the start of the
financial year to align with our reported financial performance and before
significant changes in the interest rate environment. They considered the 2023
financial plan, data from 2022, external commitments, scenario testing of
upside and downside risks in the plan, and analyst consensus where relevant.
The Committee considered carefully the wider context in which performance was
delivered and the impact of strategic transactions and one-offs on the Group's
financial performance in 2023, including the favourable year-on-year impact of
$4.1bn relating to the sale of our retail banking operations in France and the
provisional gain on the acquisition of SVB UK, balanced with the $3.0bn
impairment charge relating to the investment in BoCom.
Consistent with the approach in prior years, the Committee judged that it was
appropriate to assess financial performance for the purpose of the annual
scorecard excluding these items, to ensure that out-turns were not impacted by
one-offs. The assessment of RoTE and profit before tax measures therefore
excluded strategic transactions and the BoCom impairment.
The Committee also considered the impact of interest rates on performance and
noted that macroeconomic fluctuations remain a frequent driver of the Group's
business outcomes for our executives to manage. In recent years these factors
have not led to discretionary scorecard adjustments for our executive
Directors, either positive or negative, which the Committee continues to
believe is appropriate.
Performance was above the maximum targets for Group profit before tax, Group
RoTE and Asia RoTE. On our cost target basis, growth was 6% versus our target
of approximately 3% compared with 2022 and below the performance range.
For strategic measures, diversity representation targets were set based on a
trajectory to meet our external commitments. Other
measures were set based on maintaining or improving when compared with 2022
performance and/or market benchmarks.
The Inclusion index in our employee Snapshot survey exceeded target, and was
significantly above the financial services benchmark.
We met or exceeded our senior leadership diversity representation targets. Our
customer net promoter score ('NPS') performance was largely positive relative
to our competitors in most areas of our business.
The Committee considered that the scorecard outcome for personal measures for
both Noel Quinn and Georges Elhedery was appropriate against the targets set
at the start of the year.
Overall, this resulted in a formulaic scorecard outcome of 75.93% of the
maximum for Noel Quinn and 76.75% for Georges Elhedery.
The Committee discussed at length whether the risk and compliance modifier
should be applied for 2023 for the Group's performance against key risk
metrics, including the historical failings identified by the PRA in its Notice
of 29 January 2024.
As part of its deliberations, the Committee reflected on the overall risk
management in the year, and in respect of the PRA Notice: the nature of the
failings identified; the regulator's finding that the breaches identified were
not deliberate or reckless; fines levied; and the tenure and specific
responsibilities of the executive Directors in relation to the issues covered.
Taking into account inputs from the Group Risk Committee and Noel Quinn's
overall accountability for the performance and risk management of the Group in
2023, the Committee used its judgement and applied a downward adjustment of
7.50% to his scorecard outcome.
This results in a final outcome of 70.24% of the maximum opportunity for Noel
Quinn (2022: 75.35%) and an annual incentive of £2,018,000, which is 7% lower
than £2,164,000 in 2022.
No risk and compliance modifier was applied for Georges Elhedery who was
appointed as Group Chief Financial Officer on 1 January 2023, after all
underlying issues identified by the PRA had been fully remediated. Georges
Elhedery's scorecard outcome of 76.75% results in an annual incentive of
£1,287,000.
Annual incentive scorecard assessment
(Audited)
Summary assessment
Minimum (25.0% payout) Maximum (100.0% payout) Noel Quinn Georges Elhedery
Performance(2) Weighting (%) Assessment (%) Outcome (%) Weighting (%) Assessment (%) Outcome (%)
Profit before tax(1) ($bn) 25.8 30.3 31.6 15.0 100.00 15.00 15.0 100.00 15.00
Target basis operating expenses ($bn) 31.0 30.5 31.6 15.0 - - 15.0 - -
Group RoTE(1) 12.0% 14.5% 15.6% 15.0 100.00 15.00 15.0 100.00 15.00
Asia RoTE(1) 12.8% 15.0% 16.8% 5.0 100.00 5.00 5.0 100.00 5.00
Fee income ($bn) 11.8 13.1 11.84 5.0 25.55 1.28 5.0 25.55 1.28
Growth in net new invested assets ($bn) Total (ex Hong Kong) 36.6 56.8 55.1 2.5 93.73 2.34 2.5 93.73 2.34
Total 58.8 79.0 84.3 2.5 100.00 2.50 2.5 100.00 2.50
Customer satisfaction See following tables for commentary 15.0 91.67 13.75 15.0 91.67 13.75
Employee experience 15.0 93.75 14.06 15.0 93.75 14.06
Personal objectives 10.0 7.00 10.0 7.81
Total 100.0 75.93 100.0 76.75
Scorecard outcome (000) £2,181 £1,287
7.50% risk adjustment per Committee judgement (000) £(163) £0
Annual incentive (000) £2,018 £1,287
1 Assessed excluding strategic transactions and BoCom impairment.
2 The CET1 capital ratio underpin was met.
Stakeholder measures for Noel Quinn and Georges Elhedery
Measures Weighting (%) Assessment considerations by the Committee Assessment (%) Outcome (%)
Customer satisfaction Maintain and improve NPS in the UK and Hong Kong, in digital markets, and in 15.0% - NPS is sourced from our strategic NPS surveys with results gathered 91.67% 13.75%
key growth markets through independent third-party research agencies. The assessment is against
quantitative targets set based on the level of improvement from the prior year
and in rank position.
- In the UK and Hong Kong, we met our maximum NPS target and largely met
the target in digital markets. Across other growth markets we met our maximum
NPS target.
- In WPB, our NPS increased in five of our six key markets (Hong Kong,
mainland China, Mexico, India and Singapore). In the UK, the slight decline of
our NPS was driven by mass affluent customers. We ranked among the top three
banks in three of our six key markets. In Hong Kong, we remained in first
place overall, leading the market with our mobile app performance. Our rank
remained in the top three in mainland China, and rose to the top in India.
- In CMB, we ranked among the top three banks in four of our six key
markets. We were first place in Hong Kong and within the top three in mainland
China, Singapore and Mexico.
- In GBM, we ranked in first place globally for NPS and digital
satisfaction.
Employee experience Improve diversity and inclusion 15.0% - The Inclusion index in our employee Snapshot survey increased by two 93.75% 14.06%
percentage points and exceeded the maximum target of 77%. The score is seven
points above the external financial services benchmark.
- The percentage of Black heritage colleagues in senior leadership roles
increased by 0.5 percentage points to 3.0%, meeting the maximum target and on
track to meet our external commitment of 3.4% by 2025.
- We made a 3.8 percentage point year-on-year net gain in senior
leadership representation of colleagues with Asian heritage, against a 2022
year-end baseline of 34.0%
- The percentage of women in senior leadership roles increased by
0.8 percentage points to 34.1%, meeting the target, and below the maximum.
The targets excluded the Canada business held for sale. Including colleagues
in HSBC Canada, gender representation in senior leadership is 34.2%.
Personal objectives for Noel Quinn and Georges Elhedery
For each executive Director, personal objectives were set at the start of the
year and measured by the Committee against agreed targets and key performance
indicators.
Technology transformation 4.0% 50.00% - Our Cloud adoption rate, which is the percentage of our technology
services on the private or public Cloud, increased to 43% (2022: 35%). At the
end of 2023, about 54% of our WPB customers were 'mobile active' users (2022:
49%) and the proportion of WPB sales completed digitally increased to 49%
(2022: 43%).
- The Committee's assessment balanced strong progress automating our
organisation at scale against the targets set, and progress to deliver our
wider multi-year technology strategy.
Progress on innovation programmes 4.0% 100.00% - Several strategic investments were made in Asia including Meditrust, a
unicorn start-up, which will support HSBC Life's Pinnacle proposition in
mainland China. Investments were made in a joint venture with Tradeshift, an
existing Ventures investment, which will support the trade finance business to
deploy a range of technology solutions.
- In 2023, Zing, our new international payments business aimed at non-HSBC
customers, was launched, and a digital currency capability with eHKD was
piloted in Hong Kong. We became the first bank to pioneer quantum protection
for foreign exchange trading, and were one of the first international banks to
participate in China's eCNY programme.
- Progress was made on several generative AI use cases including developer
productivity, knowledge management and content generation. Our first AI patent
to be used to detect cyber threats, was filed.
Simplification of processes and organisation 2.0% 50.00% - Strong progress was made with the completion of the exit from Greece,
merger in Oman, and sale of the New Zealand WPB mortgage portfolio.
- The sale of our retail banking portfolio in France was completed on 1
January 2024 and we remain on track to sell our retail banking operations in
Canada in the first quarter of 2024.
- The timing of our planned exit from our business in Russia was impacted
by dependency on the regulatory and government approval process, which is
outside of HSBC's control.
- Exits from our WPB business in Mauritius and our hedge fund
administration business were announced.
Total 7.00% out of 10.00%
Deliver activities relating to regulatory priorities 2.5% 58.33% - The Integrity of Regulatory Reporting programme continues to remediate
against known gaps to deliver improvements in quality of regulatory returns.
- The Bank of England Resolvability Assessment Framework self-assessment
was submitted, demonstrating an uplift in the Group's capabilities.
- Certain climate considerations have been assessed and incorporated into
the annual financial planning cycle. We also enhanced our climate scenario
analysis capabilities in line with plan.
Deliver Finance change transformation and digitisation 2.5% 62.50% - For the remediation of interest rate risk in the banking book, all 2023
targeted actions were completed from a first line of defence perspective,
subject to second and third line of defence review and confirmation in early
2024 as planned.
- Identified Finance change transformation activities have been deployed
in line with plans.
More energised Finance workforce 2.5% 100.00% - Global Finance employee engagement index increased to 79% (2022: 74%),
exceeding the target set.
- Global Finance career index increased to 69% (2022: 65%), exceeding the
target set.
Drive liquidity and capital management across the Group 2.5% 91.67% - The Group's CET1 capital ratio was delivered above our target operating
range.
- Planned liquidity optimisation outcomes were successfully met.
- Targets relating to earnings stabilisation were assessed as met.
Total 7.81% out of 10.00%
Single figure of remuneration
(Audited)
The following table shows the single figure of remuneration of each executive
Director for 2023, together with comparative figures. This is the first
vesting LTI for Noel Quinn since his appointment as Group Chief Executive in
2020 and so materially changes the composition of his single figure of
remuneration for 2023.
Single figure of remuneration
(£000) 2023 2022 2023 2022
Base salary 1,336 1,329 780 -
Fixed pay allowance ('FPA') 1,700 1,700 1,085 -
Cash in lieu of pension 134 133 78 -
Taxable benefits(2) 127 119 4 -
Non-taxable benefits 89 86 52 -
Total fixed 3,386 3,367 1,999 -
Annual incentive(3) 2,018 2,164 1,287 -
Notional returns(4) 43 31 6 -
Replacement award - - - -
Long-term incentive(5) 5,195 - - -
Total variable 7,256 2,195 1,293 -
Total fixed and variable 10,641 5,562 3,292 -
1 Georges Elhedery was appointed Group Chief Financial Officer from 1
January 2023.
2 Taxable benefits include the provision of medical insurance, car
benefit, accommodation and tax return assistance (including any associated tax
due, where applicable). Non-taxable benefits include the provision of life
assurance and other insurance cover.
3 Annual incentive awards to the executive Directors are awarded 50%
in cash and 50% in shares. The shares portion of the award vests immediately
at grant and is subject to a retention period of one year and clawback
provisions.
4 Deferred cash awards granted in prior years include a right to
receive notional returns for the period between the grant and vesting date.
This is determined by reference to a rate of return specified at the time of
grant and paid annually, with the amount disclosed on a paid basis.
5 An LTI award over 1,118,554 shares was made in February 2021 (in
respect of 2020) at a share price of £4.262 for which the performance period
ended on 31 December 2023. The value has been computed based on a share price
of £6.192, the average share price during the three-month period to 31
December 2023. The value attributable to share price appreciation is
£1,619,106. See the following section for details of the assessment outcomes,
which resulted in 75.00% vesting due to performance.
Benefits
The values of the significant benefits in the single figure table are set out
in the following table. The insurance benefit for Noel Quinn has increased
year on year because of the increase in premium at annual renewal. The car
benefits for Georges Elhedery are not included in the table below as they were
not deemed significant.
(£000) 2023 2022 2023 2022
Insurance benefit (non-taxable) 84 82 49 -
Accommodation in Hong Kong (taxable) 67 39 - -
Car and driver in UK and Hong Kong (taxable) 47 69 - -
Long-term incentive ('LTI') awards
(Audited)
LTI awards over 2021 to 2023 performance period
The 2021-2023 LTI award was granted to Noel Quinn and Ewen Stevenson in
February 2021. Georges Elhedery was in a different role at the time and did
not receive the 2021-2023 LTI award.
The scorecard delivered an outcome of 75.00%, reflecting a significant
improvement in shareholder returns across the performance period.
In line with the terms of his departure, Ewen Stevenson is a good leaver and
his award has been pro-rated for time in employment. Based on the performance
outcome, 838,915 shares will vest for Noel Quinn and 371,697 shares will vest
for Ewen Stevenson. The awards will vest in five equal annual instalments
commencing in March 2024.
The Committee is mindful of executives not experiencing 'windfall gains'
through the granting of LTI awards when a share price is particularly low. We
introduced an upfront windfall gains check for the 2021-2023 LTI award such
that if the LTI grant share price experienced a greater than 30% decline since
the previous grant, then a downward adjustment would be made. The Committee
determined that there were no windfall gains to consider for this award given
the share price at grant (£4.26) was 24% below the share price at the
previous LTI grant (£5.62).
The 2021-2023 LTI award is subject to a risk and compliance modifier. The
Committee received input from the GRC who assessed that the performance
targets were delivered with appropriate risk management. On this basis, the
Committee considered that no adjustment for risk should be made to the
2021-2023 LTI award. The CET1 capital ratio underpin for the 2021-2023 LTI
award was also met.
Assessment of the 2021-2023 LTI awards
RoTE with CET1 capital ratio underpin(2) (25.0%) 8.0% 9.0% 10.0% 14.6% 100.0% 25.00%
Capital reallocation to Asia with CET1 capital ratio underpin(3) (25.0%) 45.0% 47.0% 50.0% 43.4% 0.0% 0.00%
Transition to net zero(4) (25.0%) Carbon reduction (own emissions) 42.0% 48.0% 51.0% 57.3% 100.0% 12.50%
Sustainable finance and investment $200.0bn $240.0bn $260.0bn $294.0bn 100.0% 12.50%
Relative TSR(5) (25.0%) At median of the peer group Straight-line vesting between minimum and maximum At upper quartile of the peer group Above upper quartile 100.0% 25.00%
Total 75.00%
1 Awards vest on a straight-line basis for performance between the
minimum, target and maximum levels of performance set out in this table.
2 Assessed based on RoTE in the 2023 financial year. The CET1 capital
ratio underpin was met.
3 Assessed based on share of Group tangible equity (on a constant currency
basis and excluding associates) allocated to Asia by 31 December 2023, which
was not met.
4 Carbon reduction assessed on percentage reduction in total energy and
travel emissions achieved by 31 December 2023 using 2019 as the baseline.
Sustainable finance and investment assessed on cumulative financing provided
over the performance period.
5 The peer group was: Bank of America, Barclays, BNP Paribas, Citigroup,
DBS Group Holdings, Deutsche Bank, J.P. Morgan Chase & Co., Lloyds Banking
Group, Morgan Stanley, Standard Chartered and UBS Group. Credit Suisse Group
was removed from the peer group following its acquisition by UBS Group in June
2023.
LTI awards over 2024 to 2026 performance period
After taking into account performance for 2023, the Committee decided to grant
Noel Quinn an LTI award of £4,275,000 and Georges Elhedery an LTI award of
£2,496,000 (both 320% of base salary).
The awards will have a three-year performance period starting on 1 January
2024.
The Committee has reviewed the performance measures considering feedback from
shareholders and the next phase of our strategy. We are simplifying and
improving the focus on shareholder returns by assessing performance on three
measures, including RoTE and relative TSR which are equally-weighted financial
measures, and a third measure linked to our climate ambitions.
The capital reallocation to Asia measure was previously included to retain
focus on repositioning the Group's capital base through the transformation of
the business. While our operations in Asia continue to be of significant
strategic importance to the Group, it was the Committee's view that this
measure no longer appropriately incentivised the delivery of sustainable
returns achievable across wider markets in which HSBC operates.
Targets have been set to balance stretch and achievability so that awards act
as an effective incentive for management, and incentivise outperformance,
aligned to our external strategic commitments.
- The minimum threshold for the RoTE measure is aligned to our
external commitment of mid-teens RoTE over the medium term.
- The relative TSR peer group was amended for 2023 to include more
Asian peers to better reflect our growth and investment focus. No changes have
been made for 2024 other than the removal of the Credit Suisse Group following
its acquisition by UBS Group.
-
Our emissions reduction targets have been set based on meeting our commitments
to procure 90% renewable energy by 2025 and halve energy consumption and
travel emissions by 2030.
- Our sustainable finance and investments measure is based on our
ambition announced in 2020 to provide $750bn to $1tn of financing and
investment by 2030. Although the target range is lower than for the 2023-2025
LTI awards, we are on track to meet our 2030 ambition, with changing market
conditions slightly impacting our year-on-year trajectory.
The LTI is subject to a risk and compliance modifier, which gives the
Committee the discretion to ensure performance targets are delivered with
appropriate risk management.
The RoTE measure is subject to a CET1 capital ratio underpin. If the CET1
capital ratio at the end of the performance period is below the CET1 risk
tolerance level set in the risk appetite statement, then the assessment for
this measure will be reduced to nil.
The number of shares to be awarded will be adjusted to reflect the expected
dividend yield of the shares over the vesting period, as awards are not
entitled to dividend equivalents in accordance with regulatory requirements.
To the extent performance conditions are satisfied at the end of the
three-year performance period, the awards will vest in five equal annual
instalments commencing from around the third anniversary of the grant date. On
vesting, shares equivalent to the net number of shares that have vested (after
those sold to cover any income tax and social security payable) will be held
for a retention period of up to one year, or such period as required by
regulators.
Performance conditions for the 2024-2026 LTI awards
RoTE with CET1 capital ratio underpin(2) (37.5%) 14.0% 16.0% 17.0%
Environment(3) (25.0%) Carbon reduction (own emissions) 66.0% 70.0% 74.0%
Sustainable finance and investment $539.0bn $641.0bn $693.0bn
Relative TSR(4) (37.5%) At the median of the peer group Straight-line vesting between minimum and maximum At the upper quartile of the peer group
Subject to risk and compliance modifier
The Group Remuneration Committee retains the discretion to revise down the
formulaic outcome taking into account performance against risk and compliance
factors during the performance period.
1 Awards will vest on a
straight-line basis for performance between the minimum, target and maximum
levels of performance set in this table.
2 To be assessed based on RoTE at
the end of the performance period, subject to the CET1 capital ratio underpin.
3 Carbon reduction will be measured based on percentage reduction in
total energy and travel emissions achieved by 31 December 2026 using 2019 as
the baseline. The sustainable finance and investment metric will assess the
cumulative amount provided and facilitated over the period ending 31 December
2026.
4 The peer group for the 2023 award is: Bank of China (Hong Kong),
Barclays, BNP Paribas, China Merchants Bank, Citigroup, DBS Group Holdings,
J.P. Morgan Chase & Co., Lloyds Banking Group, OCBC Bank, Standard
Chartered and UBS Group.
Annual incentive measures for 2024
The 2024 annual incentive scorecard measures for our executive Directors have
been set to incentivise the delivery of the next phase of our strategy.
We have reduced the number of financial measures, reflecting feedback from
shareholders to simplify our approach and ensure focus on our key strategic
commitments. The weighting of Group RoTE has increased to 25% (from 15% in
2023). The overall weighting of financial measures remains at 60%.
Financial measures will be assessed on a reported basis excluding notable
items so that the outcome reflects performance excluding the impact of one-off
and items not controlled by management.
Our first net zero transition plan was launched in January 2024 setting out
our approach to net zero and the actions we are taking. To support our
ambition, a sustainability measure has been added to the annual scorecard,
which will be assessed based on the execution of our sustainability
commitments against Board approved plans.
Personal measures have been set to ensure meaningful weighting for the most
critical objectives for each executive Director.
The Committee will continue to retain discretion to adjust the formulaic
outcomes of scorecards, taking into account factors such as Group profits,
wider business performance and stakeholder experience, to ensure executive
reward is aligned with underlying Group performance and the broader
stakeholder experience.
The weightings and performance measures for the 2024 annual incentive
scorecard for executive Directors are in the adjacent table.
The targets have been set to reflect the Group's 2024 plan, while considering
macroeconomic uncertainty, including the interest rate environment and
inflation. The performance targets are commercially sensitive and it would be
detrimental to the Group's interests to disclose them at the start of the
financial year. Subject to commercial sensitivity, we will disclose the
targets in the 2024 Directors' remuneration report.
Financial (all measures subject to CET1 capital ratio underpin, and excluding 60.0%
notable items)
Profit before tax 15.0%
Operating expenses 15.0%
Group RoTE 25.0%
Asia RoTE 5.0%
Stakeholders 30.0%
Customer satisfaction 15.0%
Improvement in NPS scores/rank
Employee experience 10.0%
Gender and ethnicity representation and Inclusion index score
Execution of our sustainability commitments against Board approved plans 5.0%
Personal measures 10.0%
- Group Chief Executive: Technology transformation and enhanced Board
information
- Group Chief Financial Officer: Delivery of regulatory change programmes
(including regulatory reporting), enhancement of external disclosures and
robust liquidity and capital management
Subject to risk and compliance modifier
The Group Remuneration Committee retains the discretion to revise down the
formulaic outcome taking into account performance against risk and compliance
factors during the performance period.
Our approach to workforce reward
Our goal is to deliver a unique and exceptional experience to energise
colleagues to perform at their best. This is critical to strengthening our
ability to attract, retain and motivate the people we need, in competitive
markets where employee expectations continue to evolve.
Our approach is centred on our purpose and values, and our reward principles
and commitments are:
- We will reward our colleagues responsibly through fixed pay security
and protection through core benefits, a competitive total compensation
opportunity, pay equity, and a more inclusive and sustainable benefits
proposition over time.
- We will recognise colleagues' success through our performance
culture and routines, including feedback and recognition, pay for performance,
and all employee share ownership opportunities.
-
We will support our colleagues to grow through our proposition beyond pay,
with a focus on future skills and development, support for well-being, and
flexibility.
Pay is an important part of our overall proposition. Our focus is improving
transparency and clarity for colleagues so they understand better how we make
pay decisions.
For 2024, we will introduce a new variable pay structure for over 150,000
junior and middle management colleagues, providing more clarity around the
variable pay levels for on-target performance, while retaining flexibility to
differentiate outcomes for performance.
We have been certified by the Fair Wage Network as a global Living Wage
employer for 2024. This is an important commitment to give colleagues
confidence that our fixed pay levels are sufficient to provide financial
security.
The section below highlights some of our achievements in 2023.
We will reward you responsibly
78% ▲ up 5% from 2022 Many of our colleagues found 2023 to be a challenging year. While inflation
has fallen from levels seen in 2022, it remains high across many of our
of colleagues say pay recommendations determined regardless of personal markets, which has resulted in continued pressures on the cost of living.
characteristics
Fixed pay increases for 2024 were determined based on consistent principles to
help address wage inflation in the markets where we operate. Across the Group,
there was an overall increase in fixed pay of 4.4%. The level of increases
varied by market, depending on the economic situation and individual roles.
Increases were targeted towards more junior and middle management colleagues
where fixed pay is a larger proportion of overall pay.
We continued to take action outside of our annual cycle to address inflation
pressures for colleagues, where the local context required this. In Argentina
and Türkiye, we gave our colleagues fixed pay increases throughout the year.
In Egypt, we supported our colleagues with a one-off pay adjustment in
response to high inflation.
52% ▲ up 9% from 2022
of colleagues say they are paid fairly for what they do
59% same as 2022
of colleagues say my benefits meet my (and my family's) needs well
We will recognise your success
81% ▲ up 7% from 2022 Over 90% of colleagues have access to share ownership plans globally, with 25%
of our global employee population taking part. In the UK, following the
of colleagues say they receive feedback helping them improve performance maturity of the three-year 2020 Sharesave plan with an option price of
£2.627, colleagues benefited from significant share price growth at a time
when they needed it most. The 2020 plan had the highest take up rate and
contribution level in recent years.
1.4 million recognitions
the highest since the At Our Best
recognition platform was launched in 2015
We will support you to grow
78% ▲ up 20% from 2022 Our approach to benefits and well-being balances local market practice with
global minimum standards. More than 95% of colleagues have private medical
of colleagues work flexibly and split their time between home and the insurance, a retirement plan and life insurance.
workplace
Our well-being programme focuses on mental, physical, financial and social
well-being. In our employee Snapshot survey, 83% of colleagues said their
mental health was positive. HSBC has been ranked top tier for mental health in
the global CCLA Corporate Mental Health Benchmark.
We have prioritised supporting colleagues to work flexibly, balancing customer
needs, social connection and individual flexibility. Flexible working remains
one of the most cited reasons why colleagues would recommend HSBC as a place
to work, and a third of new joiners say it is what attracted them to HSBC.
We have delivered a world-class talent marketplace and learning experience
platform, providing learning pathways, projects and networking opportunities
to more than 200,000 colleagues. An average of 23.9 hours of training was
delivered per FTE in 2023.
71% ▲ up 3% from 2022
our career index is higher than the financial services benchmark by 6%
Remuneration structure for employees
We set out below the key features of our remuneration framework, which applies
on a Group-wide basis, subject to compliance with local laws:
Fixed pay - Fixed pay may include base salary, fixed pay allowance, cash in lieu of - Consistent with approach for Group colleagues except fixed pay allowance
pension and other cash allowances in accordance with local market practice. paid in shares.
Attract and retain employees with market competitive pay for the role, skills
and experience required. - It is based on predetermined criteria, non-discretionary, transparent
and not reduced based on performance.
- It represents a higher proportion of total compensation for more junior
colleagues.
- Fixed pay may change to reflect an individual's position, role or grade,
cost of living in the country, individual skills, capabilities and experience.
- Fixed pay is generally delivered in cash on a monthly basis.
Benefits - Benefits may include, but are not limited to, the provision of a - Provision of medical insurance, life insurance, car and tax return
pension, medical insurance, life insurance, health assessment and relocation assistance. Group Chief Executive is eligible to receive accommodation and a
Support the physical, mental and financial health of a diverse workforce in support. car benefit in Hong Kong.
accordance with local market practice.
Annual incentive - All employees are eligible to be considered for a discretionary variable - Annual incentive is determined based on the outcomes of annual scorecard
pay award. Individual awards are determined against objectives for performance of financial and non-financial measures.
Incentivise and reward performance based on annual financial and non-financial set at the start of the year.
measures consistent with the medium- to long-term strategy, stakeholder
- Executive Directors and Group Executives are also eligible to be
interests and values-aligned behaviours. - Variable pay represent a higher proportion of total compensation for considered for a long-term incentive award, which is subject to three-year
more senior colleagues and will be more closely aligned to Group and business forward-looking performance measures.
performance as seniority increases.
- Variable pay for Group employees identified as Material Risk Takers
('MRTs') under European Union Regulatory Technical Standard ('RTS') 2021/923
is limited to 200% of fixed pay, as approved by shareholders at the 2014 AGM
held on 23 May 2014 (98% in favour).
- Awards are generally paid in cash and shares. For MRTs, at least 50% of
the awards are in shares and/or where required by regulations, in units linked
to asset management funds.
Buy-out awards - Buy-out awards may be offered if an individual holds any outstanding - For new hires, the approach is consistent with the approach taken for
unvested awards that are forfeited on resignation from the previous employer. employees and policy approved by shareholders.
Support recruitment of key individuals.
- The terms of the buy-out awards will not be more generous than the terms
attached to the awards forfeited on cessation of employment with the previous
employer.
New hire indicative variable pay - New hire indicative variable pay is awarded in exceptional - For new hires, the approach is consistent with the approach taken for
circumstances, and is limited to an individual's first year of employment employees and policy approved by shareholders.
Support recruitment of key individuals. only, and is subject to a number of factors (such as the respective
performance of the Group, business unit and individual), and the final value
paid remains at the full discretion of HSBC.
- The exceptional circumstances would typically involve a critical new
hire and depend on factors such as the seniority of the individual, whether
the new hire candidate is forfeiting any awards and the timing of the hire
during the performance year.
Deferral - A Group-wide deferral approach is applicable to all employees. A portion - All of the LTI award, or at least 60% of the total variable award
of annual incentive awards above a specified threshold is deferred in shares (including LTI), is deferred. The deferred awards will vest in five equal
Align employee interests with the medium- to long-term strategy, stakeholder vesting annually over a three-year period (33% vesting on the first and second annual instalments, with the first vesting on or around the third anniversary
interests and values-aligned behaviours. anniversaries of grant and 34% on the third). of the grant date and the last instalment vesting on or around the seventh
anniversary of the grant date.
- For MRTs, awards are generally subject to a minimum 40% deferral (60%
for awards of £500,000 or more) over a minimum period of four years. - All deferred awards are in HSBC shares and subject to a post-vesting
retention period of one year.
- A deferral period of five years is applied for senior management and
individuals in specified roles with managerial responsibilities as prescribed
under the PRA and FCA remuneration rules and seven years for individuals in
PRA-designated senior management functions.
- In line with the PRA and FCA remuneration rules, and in compliance with
local regulations, the deferral requirement for MRTs is not applied to
individuals where their total variable pay is £44,000 or less and variable
pay is not more than one-third of total compensation. For these individuals,
the Group standard deferral applies.
- Individuals based outside the UK and identified as MRTs under local
regulations, would be subject to local requirements where necessary.
- All deferred awards are subject to malus provisions, subject to
compliance with local laws. Awards granted to MRTs on or after 1 January 2015
and awards granted to non-MRTs on or after 1 January 2022 are subject to
clawback.
- HSBC operates an anti-hedging policy for all employees, which prohibits
employees from entering into any personal hedging strategies in respect of
HSBC securities.
- For all Group MRTs and the majority of local MRTs, excluding executive
Directors, a minimum 50% of the deferred awards is in HSBC shares and the rest
into deferred cash. Local regulatory requirements would also apply where
necessary.
- For some employees in our asset management business, where required by
the relevant regulations, at least 50% of the deferred award is linked to fund
units reflective of funds managed by those entities, with the remaining
portion in deferred cash awards.
- Variable pay awards made in HSBC shares or linked to relevant fund units
granted to MRTs are generally subject to a one-year retention period
post-vesting.
- MRTs who are subject to a five-year deferral period, except senior
management or individuals in PRA- and FCA-designated senior management
functions, have a six-month retention period applied to their awards.
- Where an employee is subject to more than one regulation, the
requirement specific to the sector and/or country in which the individual is
working is applied.
Severance payments - Where an individual's employment is terminated involuntarily for gross - Any payments will be in line with the policy on loss of office.
misconduct then, subject to compliance with local laws, the Group's policy is
Adhere to contractual agreements with involuntary leavers. not to make any severance payment and all outstanding unvested awards are
forfeited.
- For other cases of involuntary termination of employment, the
determination of any severance will take into consideration the performance of
the individual, contractual notice period, applicable local laws and
circumstances of the case.
- Generally, for good leavers, all outstanding unvested awards will
normally continue to vest in line with the applicable vesting dates. Where
relevant, any performance conditions attached to the awards, and malus and
clawback provisions, will remain applicable to those awards.
- Severance amounts awarded to MRTs are not considered as variable pay for
the purpose of application of the deferral and variable pay cap rules under
the PRA and FCA remuneration rules where such amounts include: (i) payments of
fixed remuneration that would have been payable during the notice and/or
consultation period; (ii) statutory severance payments; (iii) payments
determined in accordance with any approach applicable in the relevant
jurisdictions; and (iv) payments made to settle a potential or actual dispute.
Committee governance
The Group Chief Executive, the Group Chief Risk and Compliance Officer, the
Group Company Secretary and Chief Governance Officer, the Group Chief Human
Resources Officer, and the Group Head of Performance, Reward and Employee
Relations routinely and selectively attend Committee meetings. As detailed
below, the Chair of the Group Remuneration Committee held regular meetings
with management, and Committee advisers to discuss specific issues as they
arose during the year outside the formal Committee process.
The Committee Secretary regularly met with the Chair to ensure the Committee
fulfilled its governance responsibilities, to consider input
from stakeholders when finalising meeting agendas and track progress on
actions and Committee priorities. The Committee Secretary will continue to
support the Chair in ensuring that the Committee has fulfilled its governance
responsibilities.
A copy of the Committee's terms of reference can be found on our website at
www.hsbc.com/who-we-are/leadership-and-governance/board-committees.
Matters considered during 2023
Jan Feb May Jun Jul Sep Dec
Remuneration framework and governance
Group variable pay pool, workforce performance and pay matters, pay gap l l l l l l l
report, and employee insights
Directors' remuneration policy design ô ô ô l l l l
Executive Director remuneration policy implementation, scorecards and pay l l l ô l l l
proposals
Remuneration for other senior executives of the Group l l l ô l ô l
Directors' remuneration report l l ô ô ô ô l
Regulatory, risk and governance
Material risk and audit events, and performance and remuneration impacts for l l l ô l l l
individuals involved
Regulatory updates, including approach and outcomes for the identification of l l l l l l l
Material Risk Takers
Governance matters l l l l l l l
Principal subsidiaries
Matters from subsidiary committees l ô l l ô l l
l Matter considered ô Matter not considered
Advisers
The Committee received input and advice from different advisers on specific
topics during 2023. Deloitte provided independent advice to the Committee.
Deloitte also provided tax compliance and other advisory services to the Group
in 2023. Deloitte is a founding member of the Remuneration Consultants Group
and voluntarily operates under the code of conduct in relation to executive
remuneration consulting in the UK.
The Committee also received advice from Willis Towers Watson on market data
and remuneration trends. Willis Towers Watson also provides actuarial support
to Global Finance, benchmarking data for the wider workforce and services
related to benefits administration for our Group employees. The Committee was
satisfied the advice provided by Deloitte and Willis Towers Watson was
objective and independent in 2023.
For 2023, total fees of £292,800 and £51,492 were incurred in relation to
remuneration advice provided by Deloitte and Willis Towers Watson,
respectively. This was based on pre-agreed fees and a time-and-materials
basis.
Attendees and interaction with other Board committees
During the year, Noel Quinn as the Group Chief Executive provided regular
briefings to the Committee. In addition, the Committee engaged with, and
received updates from, the following:
- Mark Tucker, Group Chairman;
- Elaine Arden, Group Chief Human Resources Officer;
- Georges Elhedery, Group Chief Financial Officer;
- Jenny Craik, Group Head of Performance, Reward and Employee
Relations;
- Pam Kaur, Group Chief Risk and Compliance Officer;
-
Bob Hoyt, Group Chief Legal Officer; and
- Aileen Taylor, Group Company Secretary and Chief Governance Officer.
The Committee also received feedback and input from the Group Risk Committee
and Group Audit Committee on risk, conduct and compliance-related matters
relevant to remuneration.
No Director is present at Committee meetings when their own remuneration is
discussed.
In addition to the meetings above, the Chair took the opportunity to meet with
the Chair of the Group Risk Committee and Group Audit Committee to consider
the Group's risk and reward alignment framework, which is designed to promote
sound and effective risk management in meeting PRA and FCA remuneration rules
and expectations.
Committee effectiveness
In 2023, the annual review of the effectiveness of the Board committees,
including the Group Remuneration Committee, was conducted externally by Ffion
Hague, Independent Board Evaluation. The review determined that the Committee
continued to operate effectively.
Areas for enhancement were identified, including continued focus on the
relationship between the Group and its subsidiary entities, building on the
efforts taken under the direction of the Committee Chair, which will be kept
under review in 2024.
The outcomes of the evaluation have been reported to the Board, and the
Committee will track the progress in implementing recommendations during 2024.
As highlighted in the Board effectiveness review disclosure on page 261, the
Board considered that further improvement is required to ensure reporting is
succinct and supported by relevant key performance indicators. Further details
of the annual review of the Board effectiveness review can be found on pages
260 to 261.
Additional remuneration disclosures
This section provides further information and disclosure in relation to
executive Director and wider workforce remuneration as required under the
Directors' Remuneration Report Regulations, the UK Corporate Governance Code,
Hong Kong Ordinances, Hong Kong Listing Rules and the Pillar 3 remuneration
disclosures.
For the purpose of the Pillar 3 remuneration disclosures, executive Directors
and non-executive Directors are considered to be members of the management
body. Members of the Group Executive Committee other than the executive
Directors are considered as senior management.
Policy alignment with UK Corporate Governance Code
The table below details how the Group Remuneration Committee addresses the
principles set out in the UK Corporate Governance Code in respect of the
Directors' remuneration policy:
Clarity - The Committee regularly engages and consults with major shareholders to
take into account shareholder feedback and to ensure there is transparency on
our policy and its implementation.
- Details of our remuneration practices and our remuneration policy for
Directors are published and available to all our employees.
Remuneration arrangements should be transparent and promote effective
engagement with shareholders and the workforce.
Simplicity - Our Directors' remuneration policy has been designed so that it is easy
to understand and transparent, while complying with the provisions set out in
the UK Corporate Governance Code and the remuneration rules of the UK's PRA
and FCA, as well as meeting the expectations of our shareholders. The
objective of each remuneration element is explained and the amount paid in
respect of each element is clearly set out.
Remuneration structures should avoid complexity and their rationale and
operation should be easy to understand.
Risk - In line with regulatory requirements, our remuneration practices promote
sound and effective risk management while supporting our business objectives.
- The Group Chief Risk and Compliance Officer attends Committee meetings
and updates the Committee on the overall risk profile of the Group. The
Committee also seeks inputs from the Group Risk Committee when making
remuneration decisions.
- Risk and conduct considerations are taken into account in setting the
variable pay pool, from which any executive Director variable pay is funded.
- Executive Directors' annual incentive and LTI scorecards include a mix
of financial and non-financial measures. Financial measures are subject to a
CET1 underpin to ensure CET1 remains within risk tolerance levels while
achieving financial targets. In addition, the overall scorecard outcome is
subject to a risk and compliance modifier.
- The deferred portion of any awards granted to executive Directors is
subject to a seven-year deferral period during which our malus policy can be
applied. All variable pay awards that have vested are subject to our clawback
policy for a period of up to seven years from the award date (extending to 10
years where an investigation is ongoing).
Remuneration structures should identify and mitigate against reputational and
other risks from excessive rewards, as well as behavioural risks that can
arise from target-based incentive plans.
Predictability - The charts set out in our shareholder approved policy report (available
in our Annual Report and Accounts 2021) show how the total value of
remuneration and its composition vary under different performance scenarios
for executive Directors.
The range of possible values of rewards to individual Directors and any other
limits or discretions should be identified and explained at the time of
approving the policy.
Proportionality - The annual incentive and LTI scorecards reward achievement of our
financial and resource plan targets, as well as long-term financial and
shareholder value creation targets.
- The Committee retains the discretion to adjust the annual incentive and
LTI payout based on the outcome of the relevant scorecards, if it considers
that the payout determined does not appropriately reflect the overall position
and performance of the Group during the performance period.
The link between individual awards, the delivery of strategy and the long-term
performance of the Group should be clear and outcomes should not reward poor
performance.
Alignment with culture - In order for any annual incentive award to be made, each executive
Director must achieve a required behaviour rating, which is assessed by
reference to the HSBC Values.
- Annual incentive and LTI scorecards contain non-financial measures
linked to our wider social strategy. These include measures related to
reducing the environmental impact of our operations, improving customer
satisfaction, diversity and inclusion.
- Each year senior employees participate in a 360 survey, which gathers
feedback on values-aligned behaviours from peers, direct reports, skip level
reports and managers.
Incentive schemes should drive behaviours consistent with the Group's purpose,
values and strategy.
Link between risk, performance and reward
Our remuneration practices promote sound and effective risk management to
support our business objectives and the delivery of our strategy.
We set out below the key features of our framework, which enable us to align
between risk, performance and reward, subject to compliance with local laws
and regulations:
Variable pay pool - The Group variable pay pool is expected to reflect Group performance,
based on a range of financial and non-financial factors. We use a
countercyclical funding methodology, with both a floor and a ceiling, with the
payout ratio generally reducing as performance increases to avoid
pro-cyclicality. The floor recognises that even in challenging times,
remaining competitive is important. The ceiling recognises that at higher
levels of performance it is not always necessary to continue to increase the
variable pay pool, thereby limiting the risk of inappropriate behaviour to
drive financial performance.
- The main quantitative and qualitative performance and risk metrics used
for assessment of performance include:
- Group and business unit financial performance,
considering contextual factors driving performance, and capital requirements;
- current and future risks, taking into consideration
performance against the risk appetite, financial and resourcing plan and
global conduct outcomes; and
- fines, penalties and provisions for customer
redress, which are automatically included in the Committee's definition of
profit for determining the pool.
- In the event that the Group was unable to distribute dividends to
shareholders for reasons such as capital adequacy, then the Group may
determine that as a year of weak performance. In such a year, the Group may
withhold some, or all, variable pay for employees including unvested share
awards, using the metrics outlined above as a basis for that determination.
Individual performance - Assessment of individual performance is made with reference to clear and
relevant financial and non-financial objectives. Objectives for senior
management take into account appropriate measures linked to sustainability
risks, such as: reduction in carbon footprint; facilitating financing to help
clients with their transition to net zero; employee diversity; and risk and
compliance measures.
- A mandatory global risk and compliance objective is included for all
other employees. Employees receive a behaviour rating as well as a performance
rating, which ensures performance is assessed not only on what is achieved but
also on how it is achieved.
Control function staff - Group policy is for control functions staff to report into their
respective function. Remuneration decisions for senior functional roles are
made by the global function head.
- The performance and reward of individuals in control functions,
including risk and compliance colleagues, are assessed according to a balanced
scorecard of objectives specific to the functional role they undertake.
- Their remuneration is determined independent of the performance of the
business areas they oversee.
- Remuneration is carefully benchmarked with the market and internally to
ensure it is set at an appropriate level.
- The Committee is responsible for approving the remuneration for the
Group Chief Risk and Compliance Officer and Group Head of Internal Audit.
Variable pay adjustments and conduct recognition - Variable pay awards may be adjusted downwards in circumstances including:
- detrimental conduct, including conduct that brings
HSBC into disrepute;
- involvement in events resulting in significant
operational losses, or events that have caused or have the potential to cause
significant harm to HSBC; and
- non-compliance with the values-aligned behaviours
and other mandatory requirements or policies.
- Rewarding positive conduct may take the form of use of our global
recognition programme, At Our Best, or positive adjustments to variable pay
awards.
Malus - Malus can be applied to unvested deferred awards (up to 100% of awards)
granted in prior years in circumstances including:
- detrimental conduct, including conduct that brings
the business into disrepute;
- past performance being materially worse than
originally reported;
- restatement, correction or amendment of any
financial statements; and
- improper or inadequate risk management.
Clawback - Clawback can be applied to vested or paid awards granted to MRTs on
or after 1 January 2015 (and awards granted to non-MRTs on or after 1 January
2022) for a period of seven years, extended to 10 years for employees in PRA
and FCA designated senior management functions in the event of ongoing
internal/regulatory investigation at the end of the seven-year period.
Clawback may be applied in circumstances including:
- participation in, or responsibility for, conduct
that results in significant losses;
- failing to meet appropriate standards and propriety;
- reasonable evidence of misconduct or material error
that would justify, or would have justified, summary termination of a contract
of employment; and
- a material failure of risk management suffered by
HSBC or a business unit in the context of Group risk-management standards,
policies and procedures.
- Clawback can also be applied to vested or paid awards granted to
designated Executive Officers as defined by the US Securities and Exchange
Commission ('SEC') for a period of three years in the event of an accounting
restatement due to material non-compliance with any financial reporting
requirement under the US securities laws.
Sales incentives - We generally do not operate commission-based sales plans, unless aligned
with local market practice and with appropriate safeguards to avoid
incentivising inappropriate sales behaviours.
Identification of MRTs - We identify individuals as MRTs based on qualitative and quantitative
criteria set out in the PRA's and FCA's Remuneration Rules. Our identification
process is underpinned by the following key principles:
- MRTs are identified at Group, HSBC Bank
(consolidated) and HSBC UK Bank level.
- MRTs are also identified at other solo regulated
entity level as required by the regulations.
- When identifying an MRT, HSBC considers a
colleague's role within its matrix management structure. The global business
and function that an individual works within takes precedence, followed by the
geographical location in which they work.
- We also identify additional MRTs based on our own internal criteria,
which include compensation thresholds and individuals in certain roles and
grades who otherwise would not be identified as MRTs under the Remuneration
Rules.
Summary of shareholder return and Group Chief Executive remuneration
The graph shows HSBC TSR performance (based on the daily spot Return Index in
sterling) against the FTSE 100 Total Return Index for the 10-year period ended
31 December 2023.
The FTSE 100 Total Return Index has been chosen as a recognised broad equity
market index of which HSBC Holdings is a member.
The single figure remuneration for the Group Chief Executive over the past
10 years, together with the outcomes of the respective annual incentive and
LTI awards, are presented in the following table.
HSBC TSR and FTSE 100 Total Return Index
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Group Chief Executive Stuart Gulliver Stuart Gulliver Stuart Gulliver Stuart Gulliver Stuart Gulliver John Flint John Flint Noel Quinn Noel Quinn Noel Quinn Noel Quinn Noel Quinn
Total single figure £000 7,619 7,340 5,675 6,086 2,387 4,582 2,922 1,977 4,154 4,895 5,562 10,641
Annual incentive(1) (% of maximum) 54% 45% 64% 80% 76% 76% 61% 66% 32% 57% 75% 70%
Long-term incentive(1,2,3) (% of maximum) 44% 41% -% -% 100% -% -% -% -% -% -% 75%
1 The 2012 annual incentive figure for Stuart Gulliver included 60% of
the annual incentive disclosed in the 2012 Directors' remuneration report,
which was deferred for five years and subject to service conditions and
satisfactory completion of the five-year deferred prosecution agreement with
the US Department of Justice, entered into in December 2012 ('AML DPA') as
determined by the Committee. The AML DPA performance condition was met and the
award vested in 2018. The value of the award at vesting was in the 2018 single
figure of remuneration and included as long-term incentive for 2018.
2 Long-term incentive awards are included in the single figure of
remuneration for the year in which the performance period is deemed to be
substantially completed. For Group Performance Share Plan ('GPSP') awards,
this is the end of the financial year preceding the date of grant. GPSP awards
shown in 2014 to 2015 are therefore related to awards granted in 2015 to 2016.
3 The GPSP was replaced by the LTI in 2016 and the value for GPSP is
nil for 2016 as no GPSP award was made. LTI awards have a three-year
performance period and the first LTI award was made in February 2017. The
value of the LTI awards expected to vest will be included in the total single
figure of remuneration of the year in which the performance period ends. Noel
Quinn received the 2021-2023 LTI award that had a performance period which
ended on 31 December 2023. This was the first LTI award granted to him as
Group Chief Executive.
Voting results from Annual General Meeting
2023 Annual General Meeting voting results
For Against Withheld
Remuneration report (votes cast) 79.75% 20.25% --
8,251,001,243 2,094,952,768 32,990,533
Remuneration policy (votes cast from 2022 Annual General Meeting) 95.73 % 4.27 % --
7,666,488,029 342,320,697 7,773,468
As set out in the Committee Chair's letter, the Committee reflected on
feedback from investors following the vote on the implementation of our
current policy at last year's AGM. We explained in our statements of 5 May
2023 and 3 November 2023 that our largest shareholder voted against the
Board's recommendations on a number of resolutions including the Directors'
remuneration report, which impacted the results of these resolutions.
The Board was pleased that a large majority of shareholders voting at the AGM
supported HSBC's strategy. The Committee Chair has met with several of our
large institutional investors and proxy advisory firms since the AGM, and
there remains strong support for the current remuneration policy.
Pay ratio
The following table shows the ratio between the total pay of the Group Chief
Executive and the lower quartile, median and upper quartile pay of our UK
employees.
Total pay and benefits for the Group Chief Executive is the single figure of
remuneration for Noel Quinn. The increase in median ratio is primarily driven
by the vesting of the 2021-2023 long-term incentive ('LTI'), which is the
first he has received as Group Chief Executive. Excluding the LTI vesting in
respect of the year, the ratio remained broadly in line with prior years at
86:1 at median.
Total pay ratio
2023 A 291:1 169:1 88:1
2022 A 167:1 95:1 49:1
2021 A 154:1 90:1 46:1
2020 A 139:1 85:1 43:1
2019 A 169:1 105:1 52:1
Total pay and benefits amounts used to calculate the ratio
2023 A 36,528 27,680 63,000 45,536 121,223 89,506
2022 A 33,284 24,615 58,257 41,000 113,778 95,000
2021 A 31,727 27,666 54,678 41,500 106,951 84,000
2020 A 29,833 23,264 48,703 36,972 96,386 75,000
2019 A 28,920 24,235 46,593 41,905 93,365 72,840
The total pay and benefits for the median employee for 2023 was £63,000, an
8.1% increase compared with 2022.
Our UK workforce comprises a diverse mix of colleagues across different
businesses and levels of seniority, from junior cashiers in our retail
branches to senior executives managing our global business units. We aim to
deliver market-competitive pay for each role, taking into consideration the
skills and experience required for the business.
Pay structure varies across roles in order to deliver an appropriate mix of
fixed and variable pay. Junior colleagues have a greater portion of their pay
delivered in a fixed component, which does not vary with performance and
allows them to predictably meet their day-to-day needs. Our senior management,
including executive Directors, generally have a higher portion of their total
remuneration opportunity structured as variable pay and linked to the
performance of the Group, given their role and ability to influence the
strategy and performance of the Group. Executive Directors also have a higher
proportion of their variable pay delivered in shares, which vest over a period
of seven years with a post-vesting retention period of one year. During this
deferral and retention period, the awards are linked to the share price so the
value of award realised by them after the vesting and retention period will be
aligned to the performance of the Group.
We are satisfied that the median pay ratio is consistent with the pay and
progression policies for our UK workforce, taking into account the diverse mix
of our UK employees, the pay mix applicable to each role and our objective of
delivering market competitive pay for each role subject to Group, business and
individual performance.
Our ratios have been calculated using the option 'A' methodology prescribed
under the UK Companies (Miscellaneous Reporting) Regulations 2018. Under this
option, the ratios are calculated using full-time equivalent pay and benefits
of all employees providing services in the UK at 31 December 2023. We believe
this approach provides accurate information and representation of the ratios.
The
ratio has been computed taking into account the pay and benefits of nearly
33,000 UK employees, other than the Group Chief Executive. We calculated our
pay quartiles and benefits information for our UK employees using:
- full-time equivalent annualised fixed pay, which includes base
salary and allowances, at 31 December 2023;
- variable pay awards for 2023;
- return on deferred cash awards granted in prior years. The deferred
cash portion of the annual incentive granted in prior years includes a right
to receive notional returns for the period between the grant date and vesting
date, which is determined by reference to a rate of return specified at the
time of grant. A payment of notional return is made annually and the amount is
disclosed on a paid basis in the year in which the payment is made;
- gains realised from exercising awards from taxable employee share
plans; and
- full-time equivalent value of taxable benefits and pension
contributions.
Full-time equivalent fixed pay and benefits for each employee have been
calculated by using each employee's data as at 31 December 2023. Where an
employee works part-time, fixed pay and benefits are grossed up, where
appropriate, to full-time equivalent. One-off benefits have not been included
in calculating the ratios as these are not permanent in nature and in some
cases, depending on individual circumstances, may not truly reflect a benefit
to the employee.
The reported ratios may not be comparable to our international and listed
peers on the FTSE 100, given differences in business mix and size; employment
and compensation practices; methodologies for computing pay ratios; and
assumptions used by companies.
Relative importance of spend on pay
The following chart shows the change in:
- total employee pay between 2022 and 2023; and
- dividends and share buy-backs in respect of 2022 and 2023.
In 2023, total spend on pay was slightly higher than in 2022. The total return
to shareholders increased by 156% compared with 2022, reflecting a higher
dividend and $7bn of capital return to shareholders through share buy-backs,
which included the up to $3bn buy-back announced at our third quarter of 2023
results. In addition, the Group has announced the intention to initiate a
further up to $2bn buy-back. Dividends include an approximation of the amount
payable in April 2024 in relation to the fourth interim dividend of $0.31 per
ordinary share.
Relative importance of spend on pay
Total return to shareholder 2023 - $7,000m $18,816m ↑
156%
2022 - $1,000m $7,343m(1)
Employee pay 2023 - ↑
1%
2022 -
Employee pay Dividends Share buy-back
1 In our Annual Report and Accounts 2022, we disclosed that the total
return to shareholders was $9,144m, of which $8,144m related to dividends in
2022. This was an error and has been corrected in the chart above.
Comparison of Directors' and employees' pay
The following table compares the changes in each Director's base salary,
taxable benefits and annual incentive between 2020 and 2023 with the
percentage change in each of those elements of pay for UK-based employees of
HSBC Group Management Services Limited, the employing entity of the executive
Directors.
There were no changes to the fees or benefits of the non-executive Directors
between 2020 and 2023. The year-on-year percentage change in fees noted in the
table below is primarily driven by any pro-rated fees received by the
non-executive Director for 2020, 2021, 2022 and 2023 based on time served by
them on the Board and the relevant Board committees and any additional
responsibilities taken on by the non-executive Director during each year. The
value of benefits received by the non-executive Directors reflect the taxable
expense reimbursements claimed, and the associated gross-up tax, in relation
to attending the Board meetings in each year. Page 307 provides the underlying
single figure of remuneration for non-executive Directors used to calculate
the figures above.
Non-executive Directors who joined after 1 January 2023 are not included,
which includes Ann Godbehere, Kalpana Morparia, Brendan Nelson and Swee Lian
Teo.
Annual percentage change in remuneration
Executive Directors
Noel Quinn(1,2) 0.5 3.2 1.7 151.7 6.7 25.3 (48.9) 353.7 (6.7) 36.1 99.0 20.2
Georges Elhedery(3) - - - - - - - - - - - -
Non-executive Directors
Geraldine Buckingham(4) 57.4 - - - - - - - - - - -
Rachel Duan(5,6) 8.4 235.8 - - (100.0) - - - - - - -
Dame Carolyn Fairbairn(6,7) 5.3 231.1 - - (100.0) - - - - - - -
James Forese(8) 10.2 20.5 257.5 - - - - - - - - -
Steven Guggenheimer(9) 0.8 4.8 86.6 - (90.0) - - - - - - -
José Antonio Meade Kuribreña(10) 0.8 8.5 10.4 28.7 (71.4) - (100.0) 100.0 - - - -
Eileen Murray(5) 10.7 (1.5) 121.7 - - - - - - - - -
David Nish 0.4 (1.0) 0.4 108.7 (13.6) 120.0 25.0 (50.0) - - - -
Jackson Tai(10,11) (65.0) 7.7 (1.4) (10.8) (24.0) - (100.0) (78.9) - - - -
Mark Tucker - - - - (54.9) 242.4 (36.5) (77.5) - - - -
Employee group(12) 5.0 3.1 1.0 2.0 5.7 7.0 1.3 2.3 11.7 3.7 25.2 (20.0)
1 Noel Quinn succeeded John Flint as interim Group Chief Executive
with effect from 5 August 2019 and was appointed permanently into the role on
17 March 2020. The annual percentage change in 2020 for Noel Quinn is based
on remuneration reported in his 2019 single figure of remuneration (for the
period 5 August 2019 to 31 December 2019) and his 2020 single figure of
remuneration (for the period 1 January 2020 to 31 December 2020). Based on his
annualised 2019 compensation as an executive Director, his percentage change
in salary, benefits and annual incentive was 2.1%, 85.2% and -50.9%,
respectively for 2020.
2 Noel Quinn voluntarily waived the cash portion of his 2020 annual
incentive. The year-on-year percentage change between 2020 and 2021 would be
-1% without this cash waiver.
3 Georges Elhedery succeeded Ewen Stevenson as Group Chief Financial
Officer with effect from 1 January 2023. Year-on-year comparison for Georges
Elhedery will be available from 2024 onwards.
4 Geraldine Buckingham joined the Board on 1 May 2022.
5 Rachel Duan and Eileen Murray were appointed members of the Group
Audit Committee on 1 June 2022.
6 Rachel Duan and Dame Carolyn Fairbairn did not receive taxable
benefits in 2023, resulting in a 100% reduction in benefits from the prior
year.
7 Dame Carolyn Fairbairn was appointed as Chair of the Group
Remuneration Committee effective 29 April 2022.
8 James Forese was appointed as non-executive Chair of HSBC North
America Holdings, Inc in 2021. Fees for 2021 included fees in relation to this
role.
9 Steven Guggenheimer joined the Board on 1 May 2020 and therefore
received fees for only part of 2020.
10 José Antonio Meade Kuribreña and Jackson Tai did not receive taxable
benefits in 2021, resulting in a 100% reduction in benefits from the prior
year.
11 Jackson Tai retired from the Board on 5 May 2023.
12 Employee group consists of individuals employed by HSBC Group
Management Services Ltd, the employing entity of the executive Directors, as
no individuals are employed directly by HSBC Holdings.
Scheme interests awarded during 2023
(Audited)
The table below sets out the scheme interests granted to executive Directors
during 2023 in respect of the 2022 performance year, as disclosed in the 2022
Directors' remuneration report. No non-executive Directors received scheme
interests during the financial year. The below table includes details of
immediate shares and fixed pay allowances in compliance with Chapter 17 of the
Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong
Limited.
Scheme awards in 2023
(Audited)
Type of interest awarded Basis on which Date of award Face value Percentage Number of End of
award made
awarded receivable for minimum shares performance period
£000 performance awarded
Noel Quinn LTI deferred shares(1) % of base salary 27 February 2023 5,476 25 861,422 31 December 2025
Immediate shares(2) % of base salary 27 February 2023 1,082 N/A 170,206 31 December 2022
Fixed pay allowance(3) N/A 15 May 2023 300 N/A 50,080 N/A
21 August 2023 300 N/A 51,435 N/A
7 November 2023 300 N/A 49,291 N/A
Georges Elhedery LTI deferred shares(1) % of base salary 27 February 2023 1,599 25 251,474 31 December 2025
Immediate shares(2) % of base salary 27 February 2023 716 N/A 112,568 31 December 2022
Fixed pay allowance(3) N/A 15 May 2023 192 N/A 31,962 N/A
21 August 2023 192 N/A 32,827 N/A
7 November 2023 192 N/A 31,459 N/A
1 In accordance with the
remuneration policy approved by shareholders at the 2022 AGM, the LTI award
was determined at 320% of base salary for Noel Quinn and 160% of base salary
for Georges Elhedery. The number of shares to be granted was determined by
taking HSBC's closing share price of £6.357 taken on 24 February 2023, and
applying a discount based on HSBC's expected dividend yield of 5% per annum
for the vesting period (£4.963). LTI awards are conditional share awards
subject to a three-year forward-looking performance period and vest in five
equal annual instalments, between the third and seventh anniversary of the
award date, subject to performance achieved. Awards are subject to malus and
clawback for a maximum period of 10 years from the date of the award and are
not eligible for dividend equivalents.
2 Immediate share awards are granted
based on the previous years' performance as part of the annual incentive and
are not subject to forward-looking performance conditions. On vesting, awards
will be subject to a one-year retention period. The face value of the
immediate share awards have been computed using HSBC's closing share price of
£6.357 taken on 24 February 2023. Awards are subject to clawback for a
maximum period of 10 years from the date of the award.
3 Fixed pay allowance awards are
granted in instalments in accordance with the remuneration policy approved by
shareholders at the 2022 AGM, and are not subject to forward-looking
performance conditions. Individual tax liabilities were satisfied in cash,
therefore the face value awarded represents the net of tax value of the shares
and the number of shares awarded reflects the net of tax number of shares. The
fixed pay allowance awards have been computed using HSBC's closing share price
of £5.997 taken on 12 May 2023, £5.839 taken on 18 August 2023 and £6.093
taken on 6 November 2023. These awards vest immediately and are subject to a
retention period and released annually on pro-rata basis over five years,
starting in March 2024.
Performance conditions for the 2023-2025 LTI awards
(Audited)
RoTE (with CET1 capital ratio underpin)(2) (25.0%) 13.0% 14.3% 15.5%
Capital reallocation to Asia (with CET1 capital ratio underpin)(3) (25.0%) 49.0% 50.5% 52.0%
Environment and sustainability(4) (25.0%) Carbon reduction 64.0% 68.0% 72.0%
Sustainable finance and investment $588.0bn $700.0bn $756.0bn
Relative TSR(5) (25.0%) At median of the Straight-line vesting between minimum and maximum At upper quartile of
peer group
peer group
1 Awards will vest on a
straight-line basis for performance between the minimum, target and maximum
levels of performance set in this table.
2 To be assessed based on RoTE at the end of the performance period.
3 To be assessed based on share of Group tangible equity (on a
constant currency basis and excluding associates) allocated to Asia by 31
December 2025.
4 Carbon reduction will be measured based on percentage reduction in
total energy and travel emissions achieved by 31 December 2025 using 2019 as
the baseline. The sustainable finance and investment metric will assess the
cumulative amount provided and facilitated over the period ending 31 December
2025.
5 The peer group for the 2022 award is: Bank of China (Hong Kong),
Barclays, BNP Paribas, China Merchants Bank, Citigroup, DBS Group Holdings,
J.P. Morgan Chase & Co., Lloyds Banking Group, OCBC Bank, Standard
Chartered and UBS Group.
Executive Directors' interests in shares
(Audited)
The shareholdings of executive Directors in 2023, including the shareholdings
of their connected persons, at 31 December 2023 (or the date they stepped down
from the Board, if earlier) are set out below. The following table shows the
comparison of shareholdings with the company shareholding guidelines. There
have been no changes in the shareholdings of the executive Directors from
31 December 2023 to the date of this report.
Individuals have five years from their appointment date to build up the
recommended levels of shareholding. In line with investor guidance, for
executive Directors, unvested shares that are not subject to forward-looking
performance conditions (on a net of tax basis) can count towards their
shareholding requirement under the shareholder-approved policy.
The Committee reviews compliance with the shareholding requirement, taking
into account shareholder expectations and guidelines. The Committee also has
full discretion in determining any penalties for non-compliance.
With regard to post-employment shareholding arrangements, we believe that our
remuneration structure achieves the objective of ensuring there is ongoing
alignment of executive Directors' interests with shareholder experience
post-cessation of their employment due to the following features of the
policy:
- Shares delivered to executive Directors as part of the fixed pay
allowance have a five-year retention period, which continues to apply
following a departure of an executive Director.
- Shares delivered as part of an annual incentive award are subject to
a one-year retention period, which continues to apply following a departure of
an executive Director.
- LTI awards have a seven-year vesting period with a one-year
post-vesting retention period, which is not accelerated on departure.
The weighted average holding period of an LTI award within HSBC is therefore
six years, in excess of the five-year holding period typically implemented by
FTSE-listed companies.
HSBC operates a policy under which individuals are not permitted to enter into
any personal hedging strategies in relation to HSBC shares subject to a
vesting and/or retention period.
Shares
(Audited)
Shareholding guidelines Shareholding at At 31 December 2023
(% of salary) 31 Dec 2023(2)
(% of salary)
Sch
eme
int
ere
sts
Share interests Share options(3) Shares awarded
(number subject to deferral(1)
of shares)
without with
performance conditions performance
conditions(4)
Executive Directors
Noel Quinn(5) 400% 797% 1,721,465 - 308,610 2,963,315
Georges Elhedery(5) 300% 598% 753,467 - 714,008 475,463
1 The gross number of shares is
disclosed. A portion will be sold at vesting to cover any income tax and
social security that falls due at the time of vesting.
2 The value of the shareholding is calculated using an average of the
daily closing share prices in the three months to 31 December 2023 (£6.192),
and does not include any unvested interests.
3 At 31 December 2023, Noel Quinn and Georges Elhedery did not hold
any options under the HSBC Holdings Savings-Related Share Option Plan (UK).
4 LTI awards granted in February 2022 and 2023 are subject to the
performance conditions as set out in the preceding sections.
5 Executive Directors are expected to meet their shareholding
guidelines within five years of the date of their appointment. Noel Quinn and
Georges Elhedery were appointed on 5 August 2019 and 1 January 2023,
respectively.
Service contracts
The service contracts of executive Directors do not have a fixed term. The
notice periods of executive Directors are set at the discretion of the
Committee, taking into account market practice, governance considerations, and
the skills and experience of the particular candidate at that time.
Service agreements for each executive Director are available for inspection at
HSBC Holdings' registered office. Consistent with the best interests of the
Group, the Committee will seek to minimise termination payments. Directors may
be eligible for a payment in relation to statutory rights.
Contract date (rolling) Notice period
(Director and HSBC)
Noel Quinn 18 March 2020 12 months
Georges Elhedery 1 January 2023 12 months
Total pension entitlements
(Audited)
No employees who served as executive Directors during the year have a right to
amounts under any HSBC final salary pension scheme for their services as
executive Directors or are entitled to additional benefits in the event of
early retirement. There is no retirement age set for Directors, but the normal
retirement age for colleagues is 65.
Payments to past Directors
(Audited)
HSBC has received a formal request from the former employer of Ewen Stevenson
to reduce the buy-out award granted to him in 2019 by £82,980, which will be
offset against the next available vesting for this award. The reduction will
be made in line with PRA regulations, acting on the decision made by Ewen
Stevenson's former employer. We understand the reduction was part of a
collective adjustment and there are no concerns over Ewen Stevenson's conduct
or the discharge of his individual accountabilities.
Payments Ewen Stevenson received after he stepped down as an executive
Director are set out in the following section.
In line with the terms of his departure disclosed in our Annual Report and
Accounts 2022, Ewen Stevenson was granted good leaver status and is therefore
eligible to receive vesting of the 2021-2023 LTI award, which was pro-rated
for time in employment. Ewen's good leaver status is conditional upon
satisfaction of non-compete provisions under which he cannot undertake a role
with a defined list of competitor financial services firms for 12 months after
his employment ceases with HSBC. Details of the 2021-2023 LTI outcome are
outlined on page 289.
No other payments were made to, or in respect of, former Directors in the
year in excess of the minimum threshold of £50,000 set for this purpose.
Payments for loss of office
(Audited)
Departure terms for Ewen Stevenson
Ewen Stevenson left the Group on 30 April 2023.
In accordance with the approved Directors' remuneration policy and contractual
terms agreed for the period between 1 January 2023 and 25 October 2023, Ewen
received payments totalling £703,519 in lieu of his base salary and pension
allowance. Ewen also received his
fixed pay allowance in respect of the same period, which totalled £885,836
and was awarded in immediately vested shares, which are subject to a retention
period. In accordance with the approved Directors' remuneration policy, Ewen
received cash in lieu of unused holiday totalling £73,621 on expiry of his
notice period.
External appointments
During 2023, executive Directors did not receive any fees from external
appointments.
Directors' emoluments
The details of compensation paid to executive and non-executive Directors for
the year ended 31 December 2023 are set out below:
Emoluments
Noel Quinn Georges Elhedery Non-executive Directors(1)
2023 2022 2023 2022 2023 2022
£000 £000 £000 £000 £000 £000
Directors' base salary, allowances and benefits in kind 3,386 3,367 1,999 -
Non-executive Directors' fees and benefits in kind 4,920 4,644
Pension contributions - - - - - -
Performance-related pay paid or receivable(2) 6,293 6,439 3,783 - - -
Inducements to join paid or receivable - - - - - -
Compensation for loss of office - - - - - -
Notional return on deferred cash 43 31 6 - - -
Total 9,722 9,837 5,788 - 4,920 4,644
Total ($000) 12,083 12,226 7,194 - 6,115 5,772
1 Fees and benefits in kind for 2022
reflects the population as per the single figure table for non-executive
Directors, which excludes individuals who have stepped down from the Board
during 2022.
2 Includes the value of the deferred
and LTI awards at grant.
2
The aggregate amount of Directors' emoluments (including both executive
Directors and non-executive Directors) for the year ended 31 December 2023 was
$25,391,977. As per our policy, benefits in kind may include, but are not
limited to, the provision of medical insurance, income protection insurance,
health assessment, life assurance, club membership, tax assistance, car
benefit, travel assistance, provision of company owned-accommodation and
relocation costs (including any tax due, where applicable).
Total benefits in kind of £25,304 ($31,450) were provided to Ewen Stevenson
until he left the Group. This included income protection benefits valued at
£16,414 ($20,401), life assurance benefits of £935 ($1,162) and other
non-taxable expenses of £7,955 ($9,887).
Post-employment medical insurance benefits were provided to former Directors,
including Douglas Flint valued at £6,721 ($8,354), Stuart Gulliver valued at
£6,721 ($8,354), John Flint valued at £9,706 ($12,064), Marc Moses valued at
£15,886 ($19,745) and Ewen Stevenson valued at £377 ($469). Tax return
support was also provided to John Flint valued at £5,441 ($6,763), Marc Moses
valued at £2,500 ($3,107) and Ewen Stevenson valued at £1,320 ($1,641).
The total aggregate value of benefits provided to former executive Directors
was £73,976 ($91,945). The aggregate value of Director retirement benefits
for current Directors is nil. Amounts are converted into US dollars based on
the average exchange rates for the year.
There were payments under retirement benefit arrangements with three former
Directors of £1,381,674. The provision at 31 December 2023 in respect of
unfunded pension obligations to two former Directors amounted to £340,208.
This relates to unfunded unapproved retirement benefits schemes.
Emoluments of senior management and five highest paid employees
The following tables set out the emoluments paid to senior management, which
in this case comprises executive Directors and members of the Group Executive
Committee, for the year ended 31 December 2023, or for the period of
appointment in 2023 as a Director or member of the Group Executive Committee.
Details of the remuneration paid and share awards granted to the five highest
paid employees, comprising one executive Director and four Group Executives
for the year ended 31 December 2023, are also presented.
Five highest paid employees - share awards (HSBC Share Plan 2011)
Dates of award Purchase HSBC Holdings ordinary share awards
price (£)
Usually vesting At 1 Jan 2023 Granted in period Vested in period(1) Lapsed Cancelled in period At 31 Dec 2023
in period
from to
2013 to 2022 0 1 Mar 2023 30 Mar 2029 5,603,050 - 445,705 - - 5,157,345
27 Feb 2023(2) 0 27 Feb 2023 30 Mar 2030 - 2,533,801 687,935 - - 1,845,866
15 May 2023(3) 0 15 May 2023 15 May 2023 - 50,080 50,080 - - -
21 Aug 2023(4) 0 21 Aug 2023 21 Aug 2023 - 51,435 51,435 - - -
7 Nov 2023(5) 0 7 Nov 2023 7 Nov 2023 - 49,291 49,291 - - -
1 Jan to 31 Dec 2023(6) 0 1 Mar 2023 30 Mar 2024 - 3,345 982 - - 2,363
5,603,050 2,687,952 1,285,428 - - 7,005,574
1 The weighted average closing price of the shares immediately before the
dates on which the awards were vested was £5.9681.
2 The closing price on the day before the grant date was £6.3570. The
fair values of the awards were calculated according to the IFRS 2 accounting
standard. The fair values, which vary based on the length of the vesting
period, range between £2.8390 and £6.3180. These awards include LTI awards
and other awards which are subject to satisfaction of performance conditions.
LTI awards are subject to a combination of financial and non-financial metrics
that are detailed in the Directors' remuneration report in the Annual Report
and Accounts.
3 The closing price on the day before the grant date was £5.9970. The
fair values of the awards were calculated according to the IFRS 2 accounting
standard. The fair value of the award was £6.1100.
4 The closing price on the day before the grant date was £5.8390. The
fair values of the awards were calculated according to the IFRS 2 accounting
standard. The fair value of the award was £5.8330.
5 The closing price on the day before the grant date was £6.093. The fair
values of the awards were calculated according to the IFRS 2 accounting
standard. The fair value of the award was £6.0830.
6 Relates to the allocation of dividend equivalent shares in relation to
eligible awards.
Emoluments
£000s Five highest paid employees Senior management
Basic salaries, allowances and benefits in kind
13,357 38,960
Pension contributions
100 640
Performance-related pay paid or receivable(1)
24,259 59,286
Inducements to join paid or receivable
- -
Compensation for loss of office
- -
Total
37,716 98,886
Total ($000)
46,877 122,906
1 Includes the value of deferred share awards at grant.
Emoluments by bands
Hong Kong dollars US dollars Number of highest paid employees Number of senior management
$19,000,001 - $19,500,000 $2,426,967 - $2,490,834
- 1
$22,500,001 - $23,000,000 $2,874,040 - $2,937,907
- 1
$25,000,001 - $25,500,000 $3,193,377 - $3,257,245
- 1
$38,000,001 - $38,500,000 $4,853,933 - $4,917,801
- 1
$41,000,001 - $41,500,000 $5,237,139 - $5,301,006
- 1
$42,000,001 - $42,500,000 $5,364,874 - $5,428,741
- 1
$42,500,001 - $43,000,000 $5,428,741 - $5,492,609
- 2
$48,000,001 - $48,500,000 $6,131,284 - $6,195,152
- 1
$49,000,001 - $49,500,000 $6,259,019 - $6,322,887
- 1
$51,500,001 - $52,000,000 $6,578,357 - $6,642,224
- 1
$56,000,001 - $56,500,000 $7,153,165 - $7,217,032
- 2
$59,000,001 - $59,500,000 $7,536,370 - $7,600,238
- 1
$61,000,001 - $61,500,000 $7,791,840 - $7,855,708
1 1
$63,500,001 - $64,000,000 $8,111,178 - $8,175,046
1 1
$72,500,001 - $73,000,000 $9,260,794 - $9,324,661
1 1
$75,000,001 - $75,500,000 $9,580,132 - $9,643,999
1 1
$94,000,001 - $94,500,000 $12,007,098 - $12,070,966
1 1
Non-executive Directors
(Audited)
The following table shows the total fees and benefits of non-executive
Directors for 2023, together with comparative figures for 2022.
Fees and benefits
(Audited) Fees(1) Benefits(2) Total
(£000) 2023 2022 2023 2022 2023 2022
Geraldine Buckingham 244 155 5 - 249 155
Rachel Duan 244 225 - 5 244 230
Dame Carolyn Fairbairn 279 265 - 1 279 266
James Forese(3) 759 689 1 - 760 689
Ann Godbehere(4) 68 - - - 68 -
Steven Guggenheimer 264 262 1 10 265 272
José Antonio Meade Kuribreña 244 242 4 14 248 256
Kalpana Morparia(5) 170 - - - 170 -
Eileen Murray(6) 290 262 3 - 293 262
Brendan Nelson(7) 81 - 12 - 93 -
David Nish 479 477 19 22 498 499
Jackson Tai(8) 132 377 19 25 151 402
Swee Lian Teo(9) 51 - - - 51 -
Mark Tucker 1,500 1,500 51 113 1,551 1,613
Total (£000) 4,805 4,454 115 190 4,920 4,644
Total ($000) 5,972 5,536 143 236 6,115 5,772
1 Fees are in line with the Directors' remuneration policy that was
approved at the 2022 AGM. Non-executive Directors receive a pro-rata payment
of £4,000 travel allowance per annum.
2 Benefits include taxable expenses such as accommodation, travel and
subsistence relating to attendance at Board and other meetings at HSBC
Holdings' registered offices. Tax for non-executive Director benefits is met
by HSBC, therefore amounts disclosed have been grossed up using a tax rate of
47%, where relevant.
3 Appointed as Chair of the Group Risk Committee on 5 May 2023.
Stepped down as a member of the Group Remuneration Committee and joined the
Group Audit Committee as a member on 5 May 2023. Includes fee of £443,000
(2022: £447,000) in relation to his role as Chair of HSBC North America
Holdings, Inc.
4 Appointed to the Board, Nomination & Corporate Governance
Committee and Group Remuneration Committee on 1 September 2023.
5 Appointed to the Board, Nomination & Corporate Governance
Committee and Group Risk Committee on 1 March 2023.
6 Appointed as a member of the Group Remuneration Committee on 5 May
2023.
7 Appointed to the Board, Nomination & Corporate Governance
Committee, Group Audit Committee and Group Risk Committee on 1 September 2023.
8 Retired from the Board and retired as Chair of the Group Risk
Committee and member of the Group Audit Committee and member of the Nomination
& Corporate Governance Committee on 5 May 2023.
9 Appointed to the Board, Nomination & Corporate Governance
Committee and Group Risk Committee on 1 October 2023.
9
Non-executive Directors' interests in shares
(Audited)
The shareholdings of persons who were non-executive Directors in 2023,
including the shareholdings of their connected persons, at 31 December 2023,
or date of cessation as a Director if earlier, are set out below. There have
been no changes in the shareholdings of the non-executive Directors from
31 December 2023 to the date of this report.
Non-executive Directors are expected to meet the shareholding guidelines of
15,000 shares within five years of the date of their appointment. All
non-executive Directors who had been appointed for five years or more at 31
December 2023 met the guidelines.
Shares
Shareholding guidelines (number of shares) Share interests (number of shares)
Geraldine Buckingham 15,000 15,000
Rachel Duan 15,000 15,000
Dame Carolyn Fairbairn 15,000 15,000
James Forese 15,000 115,000
Ann Godbehere (appointed to the Board on 1 September 2023) 15,000 15,000
Steven Guggenheimer 15,000 15,000
José Antonio Meade Kuribreña 15,000 15,000
Kalpana Morparia (appointed to the Board on 1 March 2023) 15,000 15,000
Eileen Murray 15,000 75,000
Brendan Nelson (appointed to the Board on 1 September 2023) 15,000
-
David Nish 15,000 50,000
Jackson Tai (retired on 5 May 2023) 15,000 66,515
Swee Lian Teo (appointed to the Board on 1 October 2023) 15,000 15,200
Mark Tucker 15,000 307,352
2024 fees for non-executive Directors
Following a review of fees during 2023, and in accordance with the shareholder
approved Directors' Remuneration Policy at the Company's 2022 Annual General
Meeting, the Board approved increases to certain of the fees payable to the
non-executive Directors and for roles on the Board Committees with effect from
1 January 2024. As a result, each non-executive Director receives a fee of
£136,500 per annum. The separate travel allowance of £4,000 per annum has
been incorporated within this fee - a separate travel allowance is no longer
paid. The fees paid to non-executive Directors who are standing for election
or re-election as members of Board Committees are set out in the table below
(these Board Committees' fees and Board fees are pro-rated for part year
service where relevant).
2024 fees
Position £
Non-executive Group Chairman(1) 1,500,000
Non-executive Director (base fee) 136,500
Senior Independent Director 200,000
Group Risk Committee Chair 150,000
Member 42,000
Group Audit Committee, Group Remuneration Committee and Group Technology Chair 78,750
Committee
Member 42,000
Nomination & Corporate Governance Committee Chair --
Member 34,650
Designated workforce engagement non-executive Director 40,000
1 The Group Chairman does not receive a base fee or any other fee in
respect of chairing of the Nomination & Corporate Governance Committee.
Non-executive Director appointment and re-election
Non-executive Directors and the Chair are appointed for fixed terms not
exceeding three years, which may be renewed subject to their re-election by
shareholders at AGMs. Non-executive Directors and the Chair do not have
service contracts, but are bound by letters of appointment issued for and on
behalf of HSBC Holdings, which are available for inspection at HSBC Holdings'
registered office. There are no obligations in the non-executive Directors' or
Chair's letters of appointment that could give rise to remuneration payments
or payments for loss of office.
2024 AGM 2025 AGM 2026 AGM
James Forese Rachel Duan Geraldine Buckingham
Ann Godbehere(1) Dame Carolyn Fairbairn Kalpana Morparia
Steven Guggenheimer José Antonio Meade Kuribreña
Eileen Murray
Brendan Nelson(1)
Swee Lian Teo(1)
1 Ann Godbehere, Brendan Nelson and Swee Lian Teo were appointed
following the 2023 AGM and therefore their initial three-year appointment
terms are subject to approval of their election by shareholders at the 2024
AGM. Their initial three-year term of appointment will end at the conclusion
of the 2027 AGM, subject to annual re-election by shareholders at the relevant
AGMs.
MRT remuneration disclosures
The following tables set out the remuneration disclosures for individuals
identified as MRTs for HSBC Holdings.
Remuneration information for individuals who are only identified as MRTs at
HSBC Bank plc, HSBC UK Bank plc or other solo-regulated entity levels is
included, where relevant, in those entities' disclosures.
The 2023 variable pay information included in the following tables is based on
the market value of awards. For share awards, the market value is based on
HSBC Holdings' share price at the date of grant (unless indicated otherwise).
For cash awards, it is the value of awards expected to be paid to the
individual over the deferral period.
Remuneration awarded for the financial year (REM1)
Supervisory function Management function Other senior management Other identified staff
Fixed remuneration Number of identified staff 13.0 2.0 16.9 1,238.0
Total fixed pay ($m) 5.9 6.7 39.8 690.3
- of which: cash-based ($m)(1) 5.9 3.2 39.8 690.3
- of which: shares or equivalent ownership interests ($m)(2) - 3.5 - -
- of which: share-linked instruments or equivalent non-cash instruments ($m) - - - -
- of which: other instruments ($m) - - - -
- of which: other forms ($m) - - - -
Variable remuneration(3) Number of identified staff 13.0 2.0 16.9 1,238.0
Total variable remuneration ($m)(4) - 15.6 67.4 740.2
- of which: cash-based ($m) - 2.1 30.5 371.2
- of which: deferred ($m) - - 18.3 174.5
- of which: shares or equivalent ownership interests ($m)(2) - 13.5 36.9 354.6
- of which: deferred ($m) - 11.5 24.7 201.6
- of which: share-linked instruments or equivalent non-cash instruments ($m) - - - 10.1
- of which: deferred ($m) - - - 5.6
- of which: other instruments ($m) - - - -
- of which: deferred ($m) - - - -
- of which: other forms ($m) - - - 4.3
- of which: deferred ($m) - - - 2.7
Total remuneration ($m) 5.9 22.3 107.2 1,430.5
1 Cash-based fixed remuneration is paid immediately.
2 Paid in HSBC shares. Vested shares are subject to a retention period
of up to one year.
3 Variable pay awarded in respect of 2023. In accordance with
shareholder approval received on 23 May 2014 (98% in favour), for each MRT the
variable component of remuneration for any one year is limited to 200% of
fixed component of the total remuneration. HSBC has continued to use the
discount rate previously published as PRA remuneration rule 15.13 for 17
individuals for the purpose of calculating the ratio between fixed and
variable components of 2023 total remuneration.
4 26 identified staff members were exempt from the application of the
remuneration structure requirements for MRTs under the PRA and FCA
remuneration rules. Their total remuneration is $6.2m, of which $5.1m is fixed
pay and $1.1m is variable remuneration.
Special payments to staff whose professional activities have a material impact
on institutions' risk profile (REM2)
Supervisory function Management function Other senior management Other identified staff
Guaranteed variable remuneration awards(1)
Number of identified staff - - - -
Total amount ($m) - - - -
- of which guaranteed variable remuneration awards paid during the financial - - - -
year, that are not taken into account in the bonus cap ($m)
Severance payments awarded in previous periods, that have been paid out during
the financial year(2)
Number of identified staff - - - -
Total amount ($m) - - - -
Severance payments awarded during the financial year(2)
Number of identified staff - - - 59.8
Total amount ($m) - - - 37.0
- of which paid during the financial year ($m) - - - 32.8
- of which deferred ($m) - - - -
- of which severance payments paid during the financial year, that are not - - - 37.0
taken into account in the bonus cap ($m)
- of which highest payment that has been awarded to a single person ($m) - - - 3.4
1 No guaranteed variable remuneration was awarded in 2023. HSBC would
offer a guaranteed variable remuneration award in exceptional circumstances
for new hires, and for the first year of employment only. It would typically
involve a critical new hire, and would also depend on factors such as the
seniority of the individual, whether the new hire candidate has any competing
offers and the timing of the hire during the performance year.
2 Includes payments such as payment in lieu of notice, statutory
severance, outplacement service, legal fees, ex-gratia payments and
settlements (excludes pre-existing benefit entitlements triggered on
terminations).
Deferred remuneration at 31 December(1) (REM3)
$m Total amount of deferred remuneration awarded for previous of which: of which: vesting in subsequent financial years Amount of performance adjustment made in the financial year to Amount of performance adjustment made in the financial year to Total amount of adjustment during the financial year due to ex post Total amount of deferred remuneration awarded before the financial Total amount of deferred remuneration awarded for previous performance
performance periods
deferred deferred implicit year period
due to vest in the financial year remuneration that was due to vest in the financial year remuneration that was due to vest in future performance years adjustments actually paid out in the financial year that has vested but is subject to retention periods
Supervisory function - - - - - - - -
Cash-based - - - - - - - -
Shares - - - - - - - -
Share-linked instruments - - - - - - - -
Other instruments - - - - - - - -
Other forms - - - - - - - -
Management function 52.4 12.0 40.4 -2.3 - 3.7 6.3 4.2
Cash-based 7.5 1.0 6.5 - - - 1.0 -
Shares 44.9 11.0 33.9 -2.3 - 3.7 5.3 4.2
Share-linked instruments - - - - - - - -
Other instruments - - - - - - - -
Other forms - - - - - - - -
Other senior management 149.0 20.1 128.9 - - 12.3 19.7 5.1
Cash-based 51.4 6.6 44.8 - - - 6.5 -
Shares 97.2 13.1 84.1 - - 12.3 12.8 4.9
Share-linked instruments 0.4 0.4 - - - - 0.4 0.2
Other instruments - - - - - - - -
Other forms - - - - - - - -
Other identified staff 1,097.3 301.4 795.9 - - 63.7 290.5 54.9
Cash-based 408.0 89.0 319.0 - - - 87.7 -
Shares 663.6 200.2 463.4 - - 60.7 192.9 50.2
Share-linked instruments 15.3 7.9 7.4 - - 2.0 7.7 3.5
Other instruments - - - - - - - -
Other forms 10.4 4.3 6.1 - - 1.0 2.2 1.2
Total amount 1,298.7 333.5 965.2 -2.3 - 79.7 316.5 64.2
1 This table provides details of balances and movements during
performance year 2023. For details of variable pay awards granted for 2023,
refer to the 'Remuneration awarded for the financial year' table. Deferred
remuneration is made in cash and/or shares. Share-based awards are made in
HSBC shares.
Identified staff - remuneration by band(1) (REM4)
Identified staff that are high earners as set out in Article 450(i) CRR
€1,000,000 - 1,500,000
260
€1,500,000 - 2,000,000
125
€2,000,000 - 2,500,000
54
€2,500,000 - 3,000,000
20
€3,000,000 - 3,500,000
14
€3,500,000 - 4,000,000
6
€4,000,000 - 4,500,000
8
€4,500,000 - 5,000,000
7
€5,000,000 - 6,000,000
8
€6,000,000 - 7,000,000
3
€7,000,000 - 8,000,000
4
€8,000,000 - 9,000,000
-
€9,000,000 - 10,000,000
2
€10,000,000 - 11,000,000
-
€11,000,000 - 12,000,000
-
€12,000,000 - 13,000,000
1
1 Table prepared in euros in accordance with Article 450 of the
European Union Capital Requirements Regulation, using the exchange rates
published by the European Commission for financial programming and budget for
December of the reported year as published on its website.
Information on remuneration of staff whose professional activities have a
material impact on institutions' risk profile (REM5)
Management body Business areas Total
Supervisory function Management function Total Investment banking Retail banking Asset management Corporate function Independent internal control function All other
Total number of identified staff 1,269.9
- of which members of the Board 13.0 2.0 15.0
- of which senior management 1.0 2.0 - 5.9 2.0 6.0
- of which other identified staff 506.5 298.0 31.0 153.0 180.9 68.6
Total remuneration of identified staff ($m) 5.9 22.3 28.2 712.7 305.9 40.9 200.7 141.2 136.3
- of which variable remuneration ($m)(1) - 15.6 15.6 392.0 155.6 21.6 100.5 63.8 74.1
- of which fixed remuneration ($m) 5.9 6.7 12.6 320.7 150.3 19.3 100.2 77.4 62.2
1 Variable pay awarded in respect of 2023. In accordance with
shareholder approval received on 23 May 2014 (98% in favour), for each MRT the
variable component of remuneration for any one year is limited to 200% of
fixed component of the total remuneration.
Share plan matters considered by the Group Remuneration Committee
The Group Remuneration Committee and its delegates considered various matters
relating to the HSBC share plans during the financial year.
The HSBC International Employee Share Purchase Plan ('ShareMatch') and The
HSBC Holdings Savings-Related Share Option Plan (UK) ('Sharesave') were
offered in 2023. ShareMatch was offered in the Philippines for the first time.
The HSBC variable pay deferral approach for the 2023 performance year was
approved, for which certain minor updates were made to comply with legal and
regulatory requirements. The structure and quantum of LTI awards for the
executive Directors and members of the Group Executive Committee were approved
for the 2023 performance year. Other awards with performance conditions were
approved for certain strategically important projects during 2023.
Certain awards were granted to executive Directors or senior managers with
vesting periods of less than 12 months:
- Fixed pay allowance awards were granted to executive Directors in
accordance with the approved Directors' remuneration policy, which vest
immediately and are subject to a retention period. These awards are not
subject to clawback on the basis that they form part of the executive
Directors' fixed pay. The awards were granted under the HSBC Share Plan 2011.
- Immediate share awards were granted to executive Directors and
senior managers in compliance with our regulatory requirements to deliver a
portion of non-deferred variable pay in instruments. These awards vest
immediately, and are subject to a retention period and clawback provisions.
-
Share capital and other related governance disclosures
Share buy-back programme
On 10 May 2023, HSBC Holdings commenced a share buy-back programme of its
ordinary shares of $0.50 each up to a maximum consideration of $2.0bn. This
programme concluded on 27 July 2023, with 129,000,963 ordinary shares
repurchased for cancellation on UK trading venues and 128,774,800 ordinary
shares repurchased for cancellation on The Stock Exchange of Hong Kong Limited
('HKEx').
On 3 August 2023, HSBC Holdings commenced a further share buy-back programme
of its ordinary shares of $0.50 each up to a maximum consideration of $2.0bn.
This programme concluded on 26 October 2023, with 129,814,790 ordinary
shares repurchased for cancellation on UK trading venues and 129,109,200
ordinary shares repurchased for cancellation on HKEx.
On 1 November 2023, HSBC Holdings commenced a further share buy-back programme
of its ordinary shares of $0.50 each up to a maximum consideration of $3.0bn.
As at 31 December 2023, 143,374,864 ordinary shares had been repurchased on UK
trading venues and 100,547,200 ordinary shares were repurchased on HKEx.
The purpose of the buy-back programmes was to reduce HSBC's number of
outstanding ordinary shares.
As at 31 December 2023, the total number of ordinary shares repurchased during
the year was 760,621,817, representing a nominal value of $380,310,908.50 and
an aggregate consideration paid by HSBC of £2,470,004,997 on UK trading
venues and HK$21,646,177,512 on HKEx. The shares repurchased represent 3.95%
of the shares in issue. Of the repurchased shares, 44,237,528 were awaiting
cancellation as at 31 December 2023.
The table that follows outlines details of the shares repurchased and
cancelled on a monthly basis during 2023.
Number of shares repurchased and cancelled Highest price Lowest price Average price paid per share Aggregate
paid per share paid per share price paid
First share buy-back on UK trading venues in 2023 £ £ £ £
Month shares cancelled
May 2023 31,169,005 6.2000 5.8710 6.0716 189,244,725
Jun 2023 52,376,598 6.1900 5.8810 6.0754 318,208,161
Jul 2023 45,455,360 6.4570 5.9840 6.2246 282,943,198
Total 129,000,963 790,396,084
Number of shares repurchased Highest price paid per share Lowest price paid per share Average price paid per share Aggregate price paid
First share buy-back on HKEx in 2023 (HK$) (HK$) (HK$) (HK$)
Month shares repurchased
May 2023 37,500,000 59.9500 57.2000 59.0377 2,213,913,666
Jun 2023 50,900,000 61.4500 57.1000 60.0303 3,055,542,282
Jul 2023 40,374,800 65.0000 60.3000 62.6018 2,527,536,243
Total 128,774,800 7,796,992,191
Number of shares repurchased and cancelled Highest price Lowest price Average price paid per share Aggregate
paid per share paid per share price paid
Second share buy-back on UK trading venues in 2023 £ £ £ £
Month shares cancelled
Aug 2023 41,102,164 6.4470 5.7940 6.0941 250,481,897
Sep 2023 48,597,672 6.4950 5.7690 6.1120 297,030,003
Oct 2023 40,114,954 6.5750 5.9550 6.3949 256,532,508
Total 129,814,790 804,044,408
Number of shares repurchased Highest price paid per share Lowest price paid per share Average price paid per share Aggregate price paid
Second share buy-back on HKEx in 2023 (HK$) (HK$) (HK$) (HK$)
Month shares repurchased
Aug 2023 46,350,400 64.6000 57.9500 60.7539 2,815,966,340
Sep 2023 51,388,400 62.2000 56.8500 59.7717 3,071,570,280
Oct 2023 31,370,400 63.6500 56.6500 61.7430 1,936,902,040
Total 129,109,200 7,824,438,660
Number of shares repurchased and cancelled Highest price Lowest price Average price paid per share Aggregate
paid per share paid per share price paid
Third share buy-back on UK trading venues in 2023 £ £ £ £
Month shares repurchased/cancelled
Nov 2023 70,595,556 6.2070 5.8910 6.0717 428,636,659
Dec 2023 72,779,308 6.3640 5.9000 6.1409 446,927,846
Total 143,374,864 875,564,505
Number of shares repurchased Highest price paid per share Lowest price paid per share Average price paid per share Aggregate price paid
Third share buy-back on HKEx in 2023 (HK$) (HK$) (HK$) (HK$)
Month shares repurchased
Nov 2023 51,083,600 60.5500 56.4500 59.0032 3,014,094,399
Dec 2023 49,463,600 63.2500 59.1500 60.8660 3,010,652,262
Total 100,547,200 6,024,746,661
Dividends
Dividends for 2023
First, second and third interim dividends for 2023, each of $0.10 per ordinary
share, were paid on 23 June 2023, 21 September 2023 and 21 December 2023. For
further details of the dividends approved in 2023, see Note 8 on the financial
statements.
On 21 February 2024, the Directors approved a fourth interim dividend for 2023
of $0.31 per ordinary share, making a total of $0.61 for the 2023 full-year.
The fourth interim dividend for 2023 will be payable on 25 April 2024 in cash
in US dollars, or in sterling or Hong Kong dollars at exchange rates to be
determined on 15 April 2024. The fourth interim dividend for 2023 of $1.55
per American Depositary Share, each of which represents five ordinary shares,
will be payable by the depositary in US dollars. As the fourth interim
dividend for 2023 was approved after 31 December 2023, it has not been
included in the balance sheet of HSBC as a liability. The distributable
reserves of HSBC Holdings at 31 December 2023 were $30.9bn.
A quarterly dividend of £0.01 per Series A sterling preference share was paid
on 15 March, 15 June, 15 September and 15 December 2023.
Dividends for 2024
The Group intends to pay quarterly dividends on its ordinary shares during
2024.
A quarterly dividend of £0.01 per Series A sterling preference share is
payable on 15 March, 17 June, 16 September and 16 December 2024 for the
quarter then ended at the sole and absolute discretion of the Board of HSBC
Holdings plc. Accordingly, the Board of HSBC Holdings plc has approved a
quarterly dividend to be payable on 15 March 2024 to holders of record on 29
February 2024.
Share capital
Issued share capital
The nominal value of HSBC Holdings' issued share capital paid up at 31
December 2023 was $9,631,364,096.50 divided into 19,262,728,193 ordinary
shares of $0.50 each and one non-cumulative preference share of £0.01,
representing approximately 100.00% and 0.00% respectively of the nominal value
of HSBC Holdings' total issued share capital paid up at 31 December 2023.
Rights, obligations and restrictions attaching to shares
The rights and obligations attaching to each class of ordinary and
non-cumulative preference shares in our share capital are set out in full in
our Articles of Association. The Articles of Association may be amended by
special resolution of the shareholders and can be found on our website at
www.hsbc.com/who-we-are/leadership-and-governance/board-responsibilities.
Ordinary shares
HSBC Holdings has one class of ordinary share, which carries no right to fixed
income. There are no voting restrictions on the issued ordinary shares, all of
which are fully paid. On a show of hands, each member present has the right to
one vote at general meetings. On a poll, each member present or voting by
proxy is entitled to one vote for every $0.50 nominal value of share capital
held.
There are no specific restrictions on transfers of ordinary shares, which are
governed by the general provisions of the Articles of Association and
prevailing legislation.
Information on the policy adopted by the Board for paying interim dividends on
the ordinary shares may be found in the 'Shareholder information' section on
page 435.
Dividend waivers
The Group's employee benefit trusts, which hold shares in HSBC Holdings in
connection with the operation of its share plans, have lodged standing
instructions to waive dividends on shares held by them that have not been
allocated to employees. Shares held by custodians in connection with the
vesting of employee share awards also lodged instructions to waive dividends.
The total amount of dividends waived during 2023 was $27.16m.
Preference shares
The preference shares, which have preferential rights to income and capital,
do not, in general, confer a right to attend and vote at general meetings.
There are three classes of preference shares in the share capital of HSBC
Holdings: non-cumulative US dollar preference shares of $0.01 each ('dollar
preference shares'); non-cumulative preference shares of £0.01 each
('sterling preference shares'); and non-cumulative preference shares of
€0.01 ('euro preference shares').
The sterling preference share in issue is a Series A sterling preference
share. There are no dollar preference shares or euro preference shares in
issue.
Information on dividends approved for 2022 and 2023 may be found in Note 8 on
the financial statements on page 371.
Further details of the rights and obligations attaching to the HSBC Holdings'
issued share capital may be found in Note 33 on the financial statements.
Compliance with Hong Kong Listing Rule 13.25A(2)
HSBC Holdings has been granted a waiver from strict compliance with Rule
13.25A(2) of the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited.
Under this waiver, HSBC's obligation to file a Next Day Return following the
issue of new shares, pursuant to the vesting of share awards granted under its
share plans to persons who are not Directors, would only be triggered where
it falls within one of the circumstances set out under Rule 13.25A(3). Share
capital changes in 2023
In addition to the share buy-back programme, the following events occurred
during the year in relation to the ordinary share capital of HSBC Holdings:
Scrip dividends
There were no scrip dividends issued during the year.
Treasury shares
On 30 October 2023, HSBC Holdings cancelled 325,273,407 ordinary shares which
were held in treasury, and no longer holds any ordinary shares in treasury.
All-employee share plans(1)
HSBC Holdings Aggregate Market value per share
ordinary shares issued
nominal value
from to
$ £ £
HSBC International Employee Share Purchase Plan 89,838 6.386 6.386
179,676
1 In respect of the HSBC Holdings Savings Related Share Option Plan (UK),
no new shares were issued under this plan. All exercises were satisfied by
market purchased shares. See page 314 for details of options granted,
exercised and lapsed.
HSBC share plans
HSBC Holdings Aggregate Market value per share
ordinary shares issued nominal value
from to
$ £ £
Vesting of awards under the HSBC Share Plan 2011 5,299,401.50 5.421 6.357
10,598,803
Authorities to allot and to purchase shares and pre-emption rights
At the AGM in 2023, shareholders renewed the general authority for the
Directors to allot new shares up to 13,314,186,248 ordinary shares, 15,000,000
non-cumulative preference shares of £0.01 each, 15,000,000 non-cumulative
preference shares of $0.01 each and 15,000,000 non-cumulative preference
shares of €0.01 each. Shareholders also renewed the authority for the
Directors to make market/off-market purchases of up to 1,997,127,937 ordinary
shares. The Directors exercised their market/off-market purchase authority
from the 2023 AGM and repurchased 760,621,817 ordinary shares during the year.
In addition, shareholders gave authority for the Directors to grant rights to
subscribe for, or to convert any security into, no more than 3,994,255,874
ordinary shares in relation to any issue by HSBC Holdings or any member of
the Group of contingent convertible securities that automatically convert
into or are exchanged for ordinary shares in HSBC Holdings in prescribed
circumstances. For further details on the issue of contingent convertible
securities, see Note 33 on the financial statements.
Other than as disclosed in the tables above headed 'Share capital changes in
2023', the Directors did not allot any shares during 2023.
Debt securities
In 2023, HSBC Holdings issued the equivalent of $24.5bn of debt securities in
the public capital markets in a range of currencies and maturities, of which
$17.2bn were in the form of senior securities to ensure it meets the current
and proposed regulatory rules, including those relating to the availability of
adequate total loss-absorbing capacity. For details of capital instruments and
subordinated bail-inable debt, see Notes 29 and 33 on pages 406 and 414.
Treasury shares
In accordance with the terms of a waiver granted by The Stock Exchange of Hong
Kong Limited on 19 December 2005, HSBC Holdings will comply with the
applicable law and regulation in the UK in relation to the holding of any
shares in treasury and with the conditions of the waiver in connection with
any shares it may hold in treasury.
HSBC Holdings does not hold any ordinary shares in treasury.
Notifiable interests in share capital
During 2023, HSBC Holdings did not receive any notification of major holdings
of voting rights pursuant to the requirements of Rule 5 of the Disclosure
Guidance and Transparency Rules ('Rule 5 of the DTRs').
No notifications had been received between 31 December 2023 and 15 February
2024. Previous notifications received are as follows:
- BlackRock, Inc. gave notice on 3 March 2020 that on 2 March 2020 it
had the following: an indirect interest in HSBC Holdings ordinary shares of
1,235,558,490; qualifying financial instruments with 7,294,459 voting rights
that may be acquired if the instruments are exercised or converted; and
financial instruments with a similar economic effect to qualifying financial
instruments, which refer to 2,441,397 voting rights, representing 6.07%, 0.03%
and 0.01%, respectively, of the total voting rights at 2 March 2020.
- Ping An Asset Management Co., Ltd. gave notice on 6 December 2017
that on 4 December 2017 it had an indirect interest in HSBC Holdings ordinary
shares of 1,007,946,172, representing 5.04% of the total voting rights at that
date.
At 31 December 2023, according to the register maintained by HSBC Holdings
pursuant to section 336 of the Securities and Futures Ordinance of Hong Kong:
- BlackRock, Inc. gave notice on 9 March 2022 that on 4 March 2022 it
had the following interests in HSBC Holdings ordinary shares: a long position
of 1,701,656,169 shares and a short position of 19,262,061 shares,
representing 8.27% and 0.09%, respectively, of the ordinary shares in issue at
that date.
- Ping An Asset Management Co., Ltd. gave notice on 25 September 2020
that on 23 September 2020 it had a long position of 1,655,479,531 in HSBC
Holdings ordinary shares, representing 8.00% of the ordinary shares in issue
at that date.
Sufficiency of float
In compliance with the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited, at least 25% of the total issued share capital
has been held by the public at all times during 2023 and up to the date of
this report.
Dealings in HSBC Holdings listed securities
The Group has policies and procedures that, except where permitted by statute
and regulation, prohibit specified transactions in respect of its securities
listed on The Stock Exchange of Hong Kong Limited. Except for dealings as
intermediaries or as trustees by subsidiaries of HSBC Holdings, and purchases
by HSBC Holdings under the share buy-back programme, neither HSBC Holdings nor
any of its subsidiaries has purchased, sold or redeemed any of its securities
listed on The Stock Exchange of Hong Kong Limited during the year ended
31 December 2023.
Directors' interests
Pursuant to the requirements of the UK Listing Rules and according to the
register of Directors' interests maintained by HSBC Holdings pursuant to
section 352 of the Securities and Futures Ordinance of Hong Kong, the
Directors of HSBC Holdings at 31 December 2023 had certain interests, all
beneficial unless otherwise stated, in the shares or debentures of HSBC
Holdings and its associated corporations.
Save as stated in the following table, no further interests were held by
Directors, and no Directors or their connected persons were awarded or
exercised any right to subscribe for any shares or debentures in any HSBC
corporation during the year.
No Directors held any short position as defined in the Securities and Futures
Ordinance of Hong Kong in the shares or debentures of HSBC Holdings and its
associated corporations.
Directors' interests - shares and debentures
At 31 Dec 2023 or date of cessation, if earlier
At 1 Jan 2023, or Beneficial Child Jointly with Trustee Total
date of appointment, owner under 18 another interests
if later or spouse person
HSBC Holdings ordinary shares
Geraldine Buckingham(1) 15,000 15,000 - - - 15,000
Rachel Duan(1) 15,000 15,000 - - - 15,000
Georges Elhedery(2) (appointed to the Board on 1 Jan 2023) 572,575 753,467 - - - 753,467
Dame Carolyn Fairbairn 15,000 15,000 - - - 15,000
James Forese(1) 115,000 115,000 - - - 115,000
Ann Godbehere(1) (appointed to the Board on 1 Sep 2023) 15,000 - 15,000 - - 15,000
Steven Guggenheimer(1) 15,000 - 15,000 - - 15,000
José Antonio Meade Kuribreña(1) 15,000 15,000 - - - 15,000
Kalpana Morparia(1) (appointed to the Board on 1 Mar 2023) 15,000 - - - 15,000
-
Eileen Murray(1) 75,000 75,000 - - - 75,000
Brendan Nelson (appointed to the Board on 1 Sep 2023) - - - - -
-
David Nish 50,000 - 50,000 - - 50,000
Noel Quinn(2) 1,422,650 1,721,465 - - - 1,721,465
Jackson Tai(1,3)(retired on 5 May 2023) 66,515 32,800 11,965 21,750 - 66,515
Swee Lian Teo (appointed to the Board on 1 Oct 2023) 15,200 - - - 15,200
-
Mark Tucker 307,352 307,352 - - - 307,352
1 Geraldine Buckingham has an
interest in 3,000, Rachel Duan has an interest in 3,000, James Forese has an
interest in 23,000, Ann Godbehere has an interest in 3,000, Steven
Guggenheimer has an interest in 3,000, José Antonio Meade Kuribreña has an
interest in 3,000, Kalpana Morparia has an interest in 3,000, Eileen Murray
has an interest in 15,000 and Jackson Tai has an interest in 13,303 listed
American Depositary Shares ('ADS'), which are categorised as equity
derivatives under Part XV of the Securities and Futures Ordinance of Hong
Kong. Each ADS represents five HSBC Holdings ordinary shares.
2 Executive Directors' other interests in HSBC Holdings ordinary
shares arising from the HSBC Holdings Savings-Related Share Option Plan (UK)
and the HSBC Share Plan 2011 are set out in the Scheme interests in the
Directors' remuneration report on page 279. At 31 December 2023, the
aggregate interests under the Securities and Futures Ordinance of Hong Kong in
HSBC Holdings ordinary shares, including interests arising through employee
share plans and the interests above were: Noel Quinn - 4,993,390; and Georges
Elhedery - 1,942,938, representing approximately 0.03% and 0.01% of the shares
in issue respectively.
3 Jackson Tai has a non-beneficial interest in 11,965 shares of which
he is custodian.
There have been no changes in the shares or debentures of the current
Directors from 31 December 2023 to the date of this report.
Listing Rule 9.8.4 and other disclosures
This section of the Annual Report and Accounts 2023 forms part of - and
includes certain disclosures required - in the Report of the Directors
incorporated by cross-reference, including under Listing Rule 9.8.4 and
otherwise as applicable by law.
Long-term incentives 286
Dividend waivers 307
Dividends 307
Share buy-back 306
Emissions 45
Energy efficiency 45, 49, 51
Principal activities of HSBC 11, 30, 110, 395
Business review and future developments 11-40, 42, 137, 145, 426
Board governance
Appointment and re-election of Directors
For details on the processes governing the appointment and re-election of
Directors, see the Nomination & Corporate Governance Committee report from
page 262.
Commitments
For details on the processes governing Director commitments, see the
Nomination & Corporate Governance Committee report from page 262.
Conflicts of interest
The Board has an established policy and set of procedures to ensure that the
Board's management of Directors' conflicts of interest is effective. The Board
has the power to authorise conflicts where they arise, in accordance with the
Companies Act 2006 and HSBC Holdings' Articles of Association. Details of all
Directors' conflicts of interest are recorded in the register of conflicts.
Upon appointment, new Directors are advised of the policy and procedures for
managing conflicts. Directors are required to notify the Board of any actual
or potential conflicts of interest and to update the Board with any changes to
the facts and circumstances surrounding such conflicts. Directors are
requested to review and confirm their own and their respective closely
associated persons' outside interests and appointments twice each year. The
Board has considered, and authorised (with or without conditions) where
appropriate, potential conflicts as they have arisen during the year in
accordance with its conflicts policy and procedures. All non-executive
Directors are subject to re-vetting by the Group's compliance team on a
triennial basis following appointment. As part of this re-vetting process, all
conflicts checks are refreshed.
Joint Company Secretary
Aileen Taylor is the Group Company Secretary and Chief Governance Officer.
Hannah Ashdown (47) was appointed as Deputy Group Secretary in December 2021
and for administrative purposes, in October 2022, was appointed as Joint
Company Secretary. She is a Fellow of the Chartered Governance Institute UK
and Ireland. Hannah has over 20 years' governance and regulatory experience
across multiple sectors including financial services, asset management,
energy, leisure and retail.
Directors' indemnity
The Articles of Association of HSBC Holdings contain a qualifying third-party
indemnity provision, which entitles Directors and other officers to be
indemnified out of the assets of HSBC Holdings against claims from third
parties in respect of certain liabilities.
HSBC Holdings has granted, by way of deed poll, indemnities to the Directors,
including former Directors, against certain liabilities arising in connection
with their position as a Director of HSBC Holdings or of any Group company.
Directors are indemnified to the maximum extent permitted by law.
The indemnities that constitute a 'qualifying third-party indemnity
provision', as defined by section 234 of the Companies Act 2006, remained in
force for the whole of the financial year (or, in the case of Directors
appointed during 2023, from the date of their appointment). The deed poll is
available for inspection at the registered office of HSBC Holdings.
Additionally, Directors and pension trustees have the benefit of both
Directors' and officers' liability insurance and pension trustees' liability
insurance.
Qualifying pension scheme indemnities have also been granted to the trustees
of the Group's pension schemes, which were in force for the whole of the
financial year and remain in force as at the date of this report.
Contracts of significance
During 2023, none of the Directors had a material interest, directly or
indirectly, in any contract of significance with any HSBC company. During the
year, all Directors were reminded of their obligations in respect of
transacting in HSBC securities and following specific enquiry all Directors
have confirmed that they have complied with their obligations.
Shareholder engagement and communication
The Board is directly accountable to, and gives high priority to communicating
with, HSBC's shareholders. Information about HSBC and its activities is
provided to shareholders in its Interim Reports and the Annual Report and
Accounts as well as on www.hsbc.com.
The Board seeks to understand investor needs through ongoing dialogue between
members of the Board and institutional investors throughout the year. For
examples of such engagement, see 'Board engagement with shareholders' on page
256 and the Group Remuneration Committee Chair's letter on page 279. During
2023, approximately 643 meetings were held with institutional investors and
analysts globally.
Our shareholder communications policy summarises how we communicate with our
shareholders, including through financial reporting, general shareholder
meetings, investor and analyst meetings and our website. The policy is
reviewed annually by the Board, and in 2023 the Board confirmed that it was
satisfied with its implementation and effectiveness. The policy can be found
at www.hsbc.com/who-we-are/leadership-and-governance/board-responsibilities.
We also publish our current and past financial results, investor presentations
and shareholder information such as dividend payments and shareholder meeting
details. Stock exchange announcements are also accessible on our website along
with information for fixed income investors. For further details, see
www.hsbc.com/investors.
Directors are encouraged to develop an understanding of the views of
shareholders. Enquiries from individuals on matters relating to their
shareholdings and HSBC's business are welcomed.
Any individual or institutional investor can make an enquiry by contacting the
investor relations team, Group Chairman, Group Chief Executive, Group Chief
Financial Officer and Group Company Secretary and Chief Governance Officer.
Our Senior Independent
Director is also available to shareholders if they have concerns that cannot
be resolved or for which the normal channels would not be appropriate. They
can be contacted via the Group Company Secretary and Chief Governance Officer
at 8 Canada Square, London E14 5HQ.
The results of the poll vote at the 2023 AGM were published on 5 May 2023 and
showed that on resolutions 2, 3(l), 6, 7, 14 and 15 we received votes of
between 20.04% to 23.30% against the Board's recommendations. In our statement
of 5 May 2023, it was noted that our largest shareholder, Ping An, voted
against the Board's recommendations on the above resolutions and a number of
others. Ping An's votes accounted for approximately 18% to 19% of all votes
cast at the 2023 AGM based on a turnout of around 50%. The Board was pleased
that a large majority of shareholders voting at the 2023 AGM supported HSBC's
strategy and since the AGM there have been no concerns expressed by
shareholders regarding the above resolutions. As referenced in the
announcement released on 3 November 2023, we continue to have constructive
dialogue and provide corporate access to all our institutional shareholders,
including Ping An and respect and listen to their views.
Annual General Meeting
The AGM in 2024 is planned to be held in London, UK at 11:00am on Friday, 3
May 2024. Information on how to vote and participate, both in advance and on
the day, can be found in the Notice of the 2024 AGM, which will be sent to
shareholders on 22 March 2024 and be available on www.hsbc.com/agm. A live
webcast will be available on www.hsbc.com. A recording of the proceedings will
be available on www.hsbc.com shortly after the conclusion of the AGM.
Shareholders should monitor our website and announcements for any changes to
these arrangements. Shareholders may send enquiries to the Board in writing
via the Group Company Secretary and Chief Governance Officer, HSBC Holdings
plc, 8 Canada Square, London E14 5HQ or by sending an email to
shareholderquestions@hsbc.com.
General meetings and resolutions
Shareholders may require the Directors to call a general meeting other than an
AGM, as provided by the UK Companies Act 2006. A valid request to call a
general meeting may be made by members representing at least 5% of the paid-up
capital of HSBC Holdings as carries the right of voting at its general
meetings (excluding any paid-up capital held as treasury shares). A request
must state the general nature of the business to be dealt with at the meeting
and may include the text of a resolution that may properly be moved and is
intended to be moved at the meeting. At any general meeting convened on such
request, no business may be transacted except that stated by the requisition
or proposed by the Board.
Shareholders may request the Directors to send a resolution to shareholders
for consideration at an AGM, as provided by the UK Companies Act 2006. A valid
request must be made by (i) members representing at least 5% of the paid-up
capital of HSBC Holdings as carries the right of voting at its general
meetings (excluding any paid-up capital held as treasury shares), or (ii) at
least 100 members who have a right to vote on the resolution at the AGM in
question and hold shares in HSBC Holdings on which there has been paid up an
average sum, per member, of at least £100.
The request must be received by HSBC Holdings not later than (i) six weeks
before the AGM in question; or (ii) if later, the time at which the notice of
AGM is published.
A request may be in hard copy form or in electronic form, and must be
authenticated by the person or persons making it. A request may be made in
writing to HSBC Holdings at its UK address, referred to in the paragraph above
or by sending an email to shareholderquestions@hsbc.com.
Articles of Association
The Articles of Association were last approved at the 2022 AGM. The Articles
of Association can be found at
www.hsbc.com/who-we-are/leadership-and-governance/board-responsibilities.
Events after the balance sheet date
For details of events after the balance sheet date, see Note 39 on the
financial statements.
Change of control
The Group is not party to any significant agreements that take effect, alter
or terminate following a change of control of the Group. The Group does not
have agreements with any Director or employee that would provide compensation
for loss of office or employment resulting from a takeover bid.
Branches
The Group provides a wide range of banking and financial services through
branches and offices in the UK and overseas.
Research and development activities
During the ordinary course of business, the Group develops new products and
services within the global businesses.
Political donations
HSBC does not make any political donations or incur political expenditure
within the ordinary meaning of those words. We have no intention of altering
this policy. However, the definitions of political donations, political
parties, political organisations and political expenditure used in the UK
Companies Act 2006 are very wide. As a result, they may cover routine
activities that form part of the normal business activities of the Group and
are an accepted part of engaging with stakeholders. To ensure that neither the
Group nor any of its subsidiaries inadvertently breaches the UK Companies Act
2006, authority is sought from shareholders at the AGM to make political
donations.
HSBC provides administrative support to two political action committees
('PACs') in the US funded by voluntary political contributions by eligible
employees. We do not control the PACs, and all decisions regarding the amounts
and recipients of contributions are directed by a voluntary Board Finance
Committee, which consists of contributing eligible employees. The PACs
recorded combined political donations of $110,004 during 2023 (2022:
$100,250).
Charitable contributions
For details of charitable contributions, see page 86.
Internal control
The Board is responsible for maintaining and reviewing the effectiveness of
the Group's risk management and internal control systems, and for determining
the level and type of risks the Group is willing to take in achieving its
strategic objectives.
To meet this requirement and to discharge its obligations under the FCA
Handbook and the PRA Rulebook, procedures have been designed: for safeguarding
assets against unauthorised use or disposal; for maintaining proper accounting
records; and for ensuring the reliability and usefulness of financial
information used within the business or for publication.
These procedures provide reasonable assurance against material misstatement,
errors, losses or fraud. They are designed to provide effective internal
control within the Group and accord with the Financial Reporting Council's
guidance for Directors, issued in 2014, on risk management, internal control
and related financial and business reporting. The procedures have been in
place throughout the year and up to 21 February 2024, the date of publication
of the Annual Report and Accounts 2023.
The Board, the GRC and the GAC monitored the effectiveness of the Group's
system of risk management and internal control throughout the year. In
particular, this focused on the Group's regulatory remediation and change
programmes, and involved working closely with management to better prioritise
and understand where there are key interdependencies. In 2024, continued focus
will be placed on overseeing emerging risks and potential risks arising from
new products and offerings.
To support the work of the Board, the GRC and the GAC in discharging their
responsibilities in this regard, assurance was also provided by executive
management confirming that a risk assessment had been undertaken and controls
were in place to mitigate the risks arising from the Group's key activities.
Necessary actions will be taken to remedy any failings or weaknesses
identified from these activities and included the implementation of additional
assurance procedures including in relation to the Group's externally driven
ESG and climate-related disclosures, change programmes and regulatory
reporting.
The key risk management and internal control procedures include the following:
Global Principles
The Group's Global Principles set an overarching standard for all policies and
procedures and are fundamental to the Group's risk management structure. They
inform and connect our purpose, values, strategy and risk management
principles, guiding us to do the right thing and treat our customers and our
colleagues fairly at all times. In 2024, the Global Principles will be
replaced by a more concise and targeted version of the document, known as the
HSBC Book.
Risk management framework
The risk management framework supports our Global Principles, and going
forward, our HSBC Book. It outlines the key principles and practices that we
employ in managing material risks. It applies to all categories of risk and
supports a consistent approach in identifying, assessing, managing and
reporting the risks we accept and incur in our activities.
Delegation of authority within limits set by the Board
Subject to certain matters reserved for the Board, the Group Chief Executive
has been delegated authority limits and powers within which to manage the
day-to-day affairs of the Group. A new delegation of authorities framework was
implemented in April 2023 with the aim of providing a simpler Group structure
within which the Board and its subsidiaries can manage their delegated powers.
These delegated authorities can be used for the approval, signing and
execution of specific written agreements and documents such as procurement
contracts.
The delegation of authorities framework is either granted via a separate board
resolution or power of attorney or is set out in the relevant Group policy
with clear systems of control that are appropriate to the business or
function. Authorities to enter into credit and market risk exposures are
delegated with limits to line management of Group companies in line with Group
policy. Credit and market risks are measured and reported at subsidiary
company level and aggregated for risk concentration analysis on a Group-wide
basis.
Risk identification and monitoring
Systems and procedures are in place to identify, assess, control and monitor
the material risk types facing HSBC as set out in the risk management
framework. The Group's risk measurement and reporting systems are designed to
help ensure that material risks are captured with all the attributes necessary
to support well-founded decisions, that those attributes are accurately
assessed and that information is delivered in a timely manner for those risks
to be successfully managed and mitigated.
Changes in market conditions/practices
Processes are in place to identify new risks arising from changes in market
conditions/practices or customer behaviours, which could expose the Group to
heightened risk of loss or reputational damage.
The Group employs both a top and emerging risks process to provide
forward-looking views of issues with the potential to threaten the execution
of our strategy or operations over the medium to long term.
We remain committed to investing in the reliability and resilience of our IT
systems and critical services, including those provided by third parties, that
support all parts of our business. We do so to help protect our customers,
affiliates and counterparties, and to help ensure that we minimise any
disruption to services that could result in reputational and regulatory
consequences. In our approach to defend against these threats, we invest in
business and technical controls to help us detect, manage and recover from
issues, including data loss, in a timely manner.
We continue our focus on the quality and timeliness of the data used to inform
management decisions, through measures such as early warning indicators,
prudent active risk management of our risk appetite, and ensuring regular
communication with our Board and other key stakeholders.
Responsibility for risk management
All employees are responsible for identifying and managing risk within the
scope of their role as part of the three lines of defence model. This is an
activity-based model to delineate management accountabilities and
responsibilities for risk management and the control environment. The second
line of defence sets the policy and guidelines for managing specific risk
areas, provides advice and guidance in relation to the risk, and challenges
the first line of defence (the risk owners) on effective risk management.
The Board delegated authority to the GAC to annually review the independence,
autonomy and effectiveness of the Group's policies and procedures on
whistleblowing, including the procedures for the protection of staff who raise
concerns of detrimental treatment.
Strategic plans
Strategic plans are prepared for global businesses, global functions and
geographical regions within the framework of the Group's overall strategy.
Financial resource plans, informed by detailed analysis of risk appetite
describing the types and quantum of risk that the Group is prepared to take in
executing its strategy, are prepared and adopted by all major Group operating
companies and set out the key business initiatives and the likely financial
effects of those initiatives.
Internal control over financial reporting
HSBC is required to comply with section 404 of the US Sarbanes-Oxley Act of
2002 and assess its effectiveness of internal control over financial reporting
at 31 December 2023. In 2014, the GAC endorsed the adoption of the principles
of the Committee of Sponsoring Organizations of the Treadway Commission
('COSO') 2013 framework for the monitoring of risk management and internal
control systems to satisfy the requirements of section 404 of the
Sarbanes-Oxley Act.
The primary mechanism through which comfort over risk management and internal
control systems is achieved is through annual assessments of the effectiveness
of controls to manage risk, and the reporting of issues on a regular basis
through the various risk management and risk governance forums.
The key risk management and internal control procedures over financial
reporting include the following:
Entity level controls
Entity level controls are a defined suite of internal controls that have a
pervasive influence over the entity as a whole and meet the principles of the
COSO framework. They include controls related to the control environment, such
as the Group's values and ethics, the promotion of effective risk management
and the overarching governance exercised by the Board and its non-executive
committees. The design and operational effectiveness of entity level controls
are assessed on an ongoing basis. If issues are significant to the Group, they
are escalated to the GRC and also to the GAC, if concerning financial
reporting matters.
Process level transactional controls
Key process level controls that mitigate the risk of financial misstatement
are identified, recorded and monitored in accordance with the risk framework.
This includes the identification and assessment of relevant control issues
against which action plans are tracked through to remediation. Further details
of HSBC's approach to risk management can be found on page 136. The GAC has
continued to receive regular updates on HSBC's ongoing activities for
improving
the effective oversight of end-to-end business processes, and management
continued to identify opportunities for enhancing key controls, such as
through the use of automation technologies.
Financial reporting controls
The Group's financial reporting process is controlled using documented
accounting policies and reporting formats, supported by detailed instructions
and guidance on reporting requirements, issued to all reporting entities
within the Group in advance of each reporting period end. The submission of
financial information from each reporting entity is supported by a
certification by the responsible financial officer and analytical review
procedures at reporting entity and Group levels.
Group Disclosure and Controls Committee
Chaired by the Group Chief Financial Officer, the Group Disclosure and
Controls Committee supports the discharge of the Group's obligations under
relevant legislation and regulation including the UK and Hong Kong listing
rules, the UK Market Abuse Regulation and US Securities and Exchange
Commission rules. In so doing, the Group Disclosure and Controls Committee is
empowered to determine whether a new event or circumstance should be
disclosed, including the form and timing of such disclosure, and review
certain material disclosures made or to be made by the Group. The membership
of the Group Disclosure and Controls Committee consists of senior management,
including the Group Chief Financial Officer, Group Chief Risk and Compliance
Officer, Group Chief Legal Officer, and Group Company Secretary and Chief
Governance Officer. The Group's brokers, external auditors and its external
legal counsel also attend as required. The integrity of disclosures is
underpinned by structures and processes within the Global Finance and Group
Risk and Compliance functions that support rigorous analytical review of
financial reporting and the maintenance of proper accounting records. As
required by the Sarbanes-Oxley Act, the Group Chief Executive and the Group
Chief Financial Officer have certified that the Group's disclosure controls
and procedures were effective as at the end of the period covered by the
Annual Report and Accounts 2023.
The annual review of the effectiveness of the Group's system of risk
management and internal control over financial reporting was conducted with
reference to the COSO 2013 framework. Based on the assessment performed, the
Directors concluded that for the year ended 31 December 2023, the Group's
internal control over financial reporting was effective.
PwC has audited the effectiveness of HSBC's internal control over financial
reporting and has given an unqualified opinion.
Other information included in the Annual Report and Accounts 2023
We include other non-statutory information in the Annual Report and Accounts
to enable a broader perspective of our performance for the period, including
ESG and regulatory capital and liquidity information. We highlight on pages 43
and 267 that we are seeking to enhance our governance, process, systems and
controls capabilities in both areas, although the scale and nature of the
challenges differ between reporting areas. Our improvements in regulatory
reporting are intended to strengthen our global processes, improve consistency
and enhance controls in order to meet regulatory expectations. ESG reporting
continues to evolve, with a lack of globally consistent metrics, taxonomies
and best practices and a high reliance on external data. The GAC provides
oversight to our reporting improvements in both areas, and is also focused on
increasing the level of internal and external assurance in these areas, in
line with wider market developments (set out on page 267).
Going concern
The Board, having made appropriate enquiries, is satisfied that the Group as a
whole has adequate resources to continue operations for a period of at least
12 months from the date of this report, and it therefore continues to adopt
the going concern basis in preparing the financial statements.
For further details, see page 40.
Employees
At 31 December 2023, HSBC had a total workforce equivalent to 221,000
full-time employees compared with 219,000 at the end of 2022. Our main
centres of employment were India with approximately 42,000 employees, the UK
with 33,000, mainland China with 33,000, Hong Kong with 26,000, Mexico with
17,000 and France with 6,000.
Our business spans many cultures, communities and continents. We aspire to
provide a high-performing environment where our colleagues can fulfil their
potential by building their skills and capabilities while focusing on the
development of a diverse and inclusive culture. We use employee surveys to
assess progress and make changes. We want to provide an open culture, where
our colleagues feel connected and supported to speak up, and where our leaders
encourage and use feedback. Where we make organisational changes, we support
our colleagues, in particular where there are job impacts.
Employee relations
We consult with and, where appropriate, negotiate with employee representative
bodies where we have them. It is our policy to maintain well-developed
communications and consultation programmes with all employee representative
bodies. There have been no material disruptions to our operations from labour
disputes during the past five years.
We are committed to complying with the applicable employment laws and
regulations in the jurisdictions in which we operate, including in relation to
working hours and rest periods. HSBC's global employment practices and
relations policy provides the framework and controls through which we seek to
uphold that commitment.
Diversity and inclusion
Our customers, colleagues and communities span many cultures and continents.
We value difference and believe that diversity makes us stronger. We are
dedicated to building a diverse and connected workforce where everyone feels a
sense of belonging.
Our Group People Committee, which is made up of Group Executive Committee
members, governs our diversity and inclusion agenda. It meets regularly to
agree actions to improve diverse representation and build a more inclusive
culture. Members of our Group Executive Committee are held to account for the
actions they take on diversity via aspirational goals contained within their
performance scorecards.
We expect all colleagues at HSBC to treat each other with dignity and respect
to ensure an inclusive environment. Our policies make it clear that we do not
tolerate unlawful discrimination, bullying or harassment on any grounds.
To align our approach to inclusion best practices, we participate in global
diversity benchmarks that help us to identify improvement opportunities. We
also track a large number of diversity and inclusion metrics, including those
included in the Group executive scorecards, which enable us to identify
inclusion barriers and take action where required. Our approach to diversity
and inclusion is set out on page 76 alongside our goals and progress.
Further details of our diversity and inclusion activity, alongside our Gender
and Ethnicity Pay Gap Reports 2023, can be found at
www.hsbc.com/diversitycommitments.
Employment of people with a disability
We strongly believe in providing equal opportunities for our employees. The
employment of people with a disability is included in this commitment. We are
committed to retaining disabled employees in the workplace and to providing
reasonable adjustments to enable this.
Employee development
We aim to build a dynamic, inclusive culture where the best want to develop
the skills and experiences that help them fulfil their potential. This
determines how we develop our people and recruit, identify and nurture talent.
A range of resources bring this to life including:
- HSBC University, our platform for learning and development with
specific business and technical academies;
- our My HSBC Career portal, which offers career development
information and resources; and
- HSBC Talent Marketplace, our online platform that uses AI to provide
opportunities to learn as we work.
Everyone at HSBC annually completes global mandatory training. It plays a
critical role in shaping our culture by ensuring everyone is focused on issues
that are fundamental to working at HSBC, from sustainability, to financial
crime risk, to our intolerance of bullying and harassment.
As the opportunities we face change, we provide development to key groups of
colleagues through business and technical academies. This includes our risk
academy, which helps us to develop broad capabilities in traditional areas of
risk like financial crime but also in emerging risk issues like climate risk
and the ethics of AI and data.
Our approach to learning is skills based. Our academies work with our
businesses to identify the key skills and capabilities we need in the future.
Alongside this, we help colleagues identify, assess and develop the skills
that match their ambition and aspirations.
Our platform for learning content is Degreed. This helps colleagues identify,
assess and develop key skills through internal and external training materials
in a way that suits them. Content can range from quick videos, articles or
podcasts to packaged programmes or learning pathways.
Effective people management and impactful leadership remain critical to our
ability to energise for growth. In 2023 we have continued to focus on
equipping our management population with the skills they need to lead the
organisation and energise our colleagues. We have continued to run our
Enterprise Leadership Programme for our most senior leaders and developed the
Managing Director Leadership Programme further following the launch in 2022.
We have also refreshed our People Management Excellence programme which is
available to leaders at all levels of the organisation to help them manage
colleagues and nurture a productive team.
Health and safety
We are committed to providing a safe and healthy working environment for
everyone. We have adopted global policies, mandatory procedures, and incident
and information reporting systems across the organisation that reflect our
core values and are aligned to international standards. Our global health and
safety performance is subject to ongoing monitoring and assurance to ensure we
are compliant with relevant laws and regulations.
Our chief operating officers have overall responsibility for engendering a
positive health and safety culture and ensuring that global policies,
procedures and systems are put into practice locally. They also have
responsibility for ensuring all local legal requirements are met.
We delivered a range of programmes in 2023 to help us understand and manage
our health and safety risks:
- We reinforced our advice and risk assessment and control methodology
on working from home for employees adopting a hybrid work style, providing
more awareness and best practices on good ergonomics and well-being.
- We delivered health and safety training and awareness to 235,000 of
our employees and contractors globally, ensuring roles and responsibilities
were clear and understood.
- We completed the annual safety inspection on all of our buildings
globally, to ensure we were meeting our standards and continuously improving
our safety performance.
- We maintained measures in our workplaces globally to minimise the
risks from the spread of respiratory disease, including through the provision
of hand sanitiser, improved ventilation, and guidance on good hygiene
practices.
- We continued to focus on enhancing the safety culture in our supply
chain through our SAFER Together programme, covering the five key elements of
best practice safety culture, including speaking up about safety, and
recognising excellence.
- We continued to provide our guidance and training programme for our
construction partners, focusing on our key markets globally to reduce the
likelihood of accidents occurring by helping them understand and deliver
industry-leading health and safety performance. More than 7,500 construction
workers received safety passport training across 20 countries.
- In 2023, our Eat Well Live Well programme continued to promote
healthier and more sustainable diets among our colleagues with 30% of global
food sales from HSBC catering outlets comprising healthy options. We also
extended the reach of our programme through the launch of increased
plant-based offers, monthly events dedicated to Eat Well Live Well, and
virtual teaching kitchens accessible to all our employees.
-
Protection of our colleagues and operations is of critical importance, and we
have effective controls in place to protect our people from natural disasters
(such as storms and earthquakes). In 2023, there were 27 named storms that
passed over 2,010 of our buildings, resulting in no injuries. Only five
buildings in Mexico were affected with minor business impact following Storm
Otis.
Employee health and safety
2023 2022 2021
Rate of workplace fatalities per 100,000 employees - - -
Number of major injuries to employees(1) 12 7 14
All injury rate per 100,000 employees 110 70 64
Lost days due to work injury 594 485 358
1 Fractures, dislocation, concussion, loss of consciousness, overnight
admission to hospital.
Remuneration
HSBC's pay and performance strategy is designed to reward competitively the
achievement of long-term sustainable performance and attract and motivate the
very best people, regardless of gender, ethnicity, age, disability or any
other factor unrelated to performance or experience with the Group, while
performing their role in the long-term interests of our stakeholders.
For further details of the Group's approach to remuneration, see page 290.
Employee share plans
Summaries of the share options and share awards granted, exercised/vested or
lapsed during the year and other details required to be disclosed pursuant to
Chapter 17 of the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited, including detailed summaries of the HSBC share
plans, are available on our website at
www.hsbc.com/who-we-are/leadership-and-governance/remuneration and on the
website of The Stock Exchange of Hong Kong Limited at www.hkex.com.hk, or can
be obtained upon request from the Group Company Secretary and Chief Governance
Officer, 8 Canada Square, London E14 5HQ.
Particulars of options held by Directors of HSBC Holdings are set out on page
299.
Note 5 on the financial statements gives details of share-based payments,
including discretionary awards of shares granted under HSBC share plans.
Statement of compliance
The statement of corporate governance practices set out on pages 238 to 316
and the information referred to therein constitutes the 'Corporate governance
report' and 'Report of the Directors' of HSBC Holdings. The websites referred
to do not form part of this report.
Relevant corporate governance codes, role profiles and policies
UK Corporate Governance Code www.frc.org.uk
Hong Kong Corporate Governance Code (set out in Appendix 14 to the Rules www.hkex.com.hk
Governing the Listing of Securities on the Stock Exchange of Hong Kong
Limited ('HKEx'))
Descriptions of the roles and responsibilities of the: www.hsbc.com/who-we-are/leadership-and-governance/board-responsibilities
- Group Chairman
- Group Chief Executive
- Senior Independent Director
- Board
Board and senior management www.hsbc.com/who-we-are/leadership-and-governance
Roles and responsibilities of the Board's committees www.hsbc.com/who-we-are/leadership-and-governance/board-committees
Board's policies on: www.hsbc.com/who-we-are/leadership-and-governance/board-responsibilities
- diversity and inclusion
- shareholder communication
- human rights
- remuneration practices and governance
Global Internal Audit Charter www.hsbc.com/who-we-are/leadership-and-governance/corporate-governance-codes/internal-control
HSBC is subject to corporate governance requirements in both the UK and Hong
Kong. During 2023, HSBC complied with the provisions and requirements of both
the UK and Hong Kong Corporate Governance Codes.
Under the Hong Kong Code, the audit committee should be responsible for the
oversight of all risk management and internal control systems. HSBC's Group
Risk Committee is responsible for oversight of internal control, other than
internal control over financial reporting, and risk management systems. This
is permitted under the UK Corporate Governance Code.
HSBC Holdings has codified obligations for transactions in Group securities in
accordance with the requirements of the UK Market Abuse Regulation and the
rules governing the listing of securities on HKEx. The Group has been granted
certain waivers by HKEx from strict compliance with the rules that take into
account accepted practices in the UK, particularly in respect of employee
share plans. During the year, all Directors were reminded of their obligations
in respect of transacting in HSBC Group securities. Following specific enquiry
all Directors have confirmed that they have complied with their obligations.
The Group Audit Committee has reviewed and provided assurance to the HSBC
Holdings Board on the publication of the Annual Report and Accounts 2023.
On behalf of the Board
Mark E Tucker
Group Chairman
HSBC Holdings plc
Registered number 617987
21 February 2024
Directors' responsibility statement
The Directors are responsible for preparing the Annual Report and Accounts
2023, the Directors' remuneration report and the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law, the Directors have prepared the parent company
('Company') and the Group financial statements in accordance with UK-adopted
international accounting standards. The company has also prepared financial
statements in accordance with international financial reporting standards
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European
Union. In preparing these financial statements, the Directors have also
elected to comply with International Financial Reporting Standards issued by
the International Accounting Standards Board (IFRS Accounting Standards).
Under company law, the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Company and Group, and of the profit or loss of the Company and
the Group for that period. In preparing these financial statements, the
Directors are required to:
- select suitable accounting policies and then apply them
consistently;
- make judgements and accounting estimates that are reasonable and
prudent;
- state whether applicable UK-adopted international accounting
standards, international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union and IFRS
Accounting Standards have been followed, subject to any material departures
disclosed and explained in the financial statements; and
- prepare the financial statements on a going concern basis unless it
is inappropriate to presume that the Company and Group will continue in
business.
The Directors are also responsible for safeguarding the assets of the Company
and the Group and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions, and disclose with
reasonable accuracy at any time the financial position of the Company and the
Group and enable them to ensure that the financial statements and the
Directors' remuneration report comply with the Companies Act 2006 and, as
regards the Group financial statements, Article 4 of the IAS Regulation.
The Directors are responsible for the maintenance and integrity of the Annual
Report and Accounts 2023 as they appear on the Company's website. Legislation
in the United Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
The Directors consider that the Annual Report and Accounts 2023, taken as a
whole, is fair, balanced and understandable, and provides the information
necessary for shareholders to assess the Company's position and performance,
business model and strategy.
Each of the Directors, whose names and functions are listed in the 'Report of
the Directors: Corporate governance report' on pages 239 to 243 of the Annual
Report and Accounts 2023, confirms that, to the best of their knowledge:
- the Group financial statements, which have been prepared in
accordance with UK-adopted international accounting standards, international
financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002
as it applies in the European Union and IFRS Accounting Standards, give a true
and fair view of the assets, liabilities, financial position, and profit or
loss of the Group; and
- the management report represented by the Report of the Directors
includes a fair review of the development and performance of the business and
the position of the Group, together with a description of the principal risks
and uncertainties that it faces.
The Group Audit Committee has responsibility, delegated to it from the Board,
for overseeing all matters relating to external financial reporting. The Group
Audit Committee report on page 266 sets out how the Group Audit Committee
discharges its responsibilities.
Disclosure of information to auditors
In accordance with section 418 of the Companies Act 2006, the Directors'
report includes a statement, in the case of each Director in office as at the
date the Report of the Directors is approved, that:
- so far as the Director is aware, there is no relevant audit
information of which the Company's auditors are unaware; and
- they have taken all the steps they ought to have taken as a Director
in order to make themselves aware of any relevant audit information and to
establish that the Company's auditors are aware of that information.
On behalf of the Board
Mark E Tucker
Group Chairman
HSBC Holdings plc
Registered number 617987
21 February 2024
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AnnouncementREG - iShares Physical - Publication of Final Terms
AnnouncementREG - iShares Physical - Publication of Final Terms
AnnouncementREG - iShares Physical - Publication of Final Terms
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