Remuneration of Directors, Senior Management and Key Personnel

 

The Bank’s remuneration policy is 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 Bank. The Bank also recognises the right behaviours that are aligned to Group values and the long-term interests of the stakeholders of the Bank.

 

Remuneration of Directors

 

The level of fees paid to NEDs is determined by reference to factors including Directors’ responsibilities and commitment, and fees paid by comparable institutions.


As regards Executive Directors (“EDs”), the following factors are considered when determining their remuneration packages:


business objectives
general business and economic conditions
changes in appropriate markets such as supply/demand fluctuations and changes in competitive conditions
individual contributions to results as confirmed in the performance appraisal process
retention consideration and individual potential

 

No individual Director will be involved in decisions relating to his/her own remuneration.


The current scale of Director’s fees, and fees for chairmen and members of the Non-executive Board Committees, namely, Audit Committee, Risk Committee, Remuneration Committee and Nomination Committee, are set out below:


 

 

Non-deferred

  Deferred
  (HK$)   (HK$)
Board of Directors Note 1   Remuneration Committee/ Nomination Committee
 
Chairman 650,000
Chairman
90,000
Non-executive Directors 500,000
Members
60,000
Audit Committee / Risk Committee
     
Chairman 290,000
   
Members 180,000
   

Note 1
In line with the remuneration policy of HSBC Group, no Director’s fee is payable to those Directors who are full time employees of the Bank and its subsidiaries.

 

Remuneration of Senior Management and Key Personnel

 

According to HKMA’s Supervisory Policy Manual CG-5 “Guideline on a Sound Remuneration System”, authorised institutions are required to make disclosures in relation to their remuneration systems as appropriate. The Bank has fully complied with HKMA’s disclosure requirements set out in Part 3 of the said Guideline.

 

There are 17 Senior Management members Note 2 and five Key Personnel Note 3 in 2019. The aggregate amount of remuneration Note 4 of the Senior Management and Key Personnel during the year, split into fixed and variable remuneration, is set out below:

 

 

 Remuneration amount and quantitative information

2019

2018

 

 Fixed remuneration

 

 

1

 Number of employees

22

21

2

 Total fixed remuneration (HK$ ’000)

63,245

58,080

3

       Of which: cash-based

63,245

58,080

 

 Variable remuneration

 

 

4

 Number of employees Note 5

22

21

5

 Total variable remuneration (HK$ ’000) Note 6

54,221

56,169

6

       Of which: cash-based

31,055

31,943

7

        Of which: deferred

10,256

10,447

8

     Of which: shares or other share-linked instruments

23,166

24,226

9

        Of which: deferred

13,404

13,884

10

 Total remuneration (HK$ ’000)

117,466

114,249

 

Note 2

Senior Management refers to those executives who are (a) EDs of the Bank; (b) Alternate Chief Executives of the Bank; (c) Members of the Executive Committee of the Bank; and (d) Head(s) of the Bank’s principal subsidiary/subsidiaries with offshore operations and with total assets representing more than 5% of the Bank’s total assets.

 

Note 3

Key Personnel refers to employees classified as “Identified Staff and Material Risk Takers” (collectively referred as “Material Risk Takers” or “MRTs”) under the UK Prudential Regulation Authority Remuneration Rules.

 

Note 4

Remuneration refers to all remuneration payable to employees during the year with reference to their tenure as Senior Management and Key Personnel. The forms of variable remuneration and the proportion deferred are based on the seniority, role and responsibilities of employees and their level of total variable compensation. As the total number of Senior Management and Key Personnel involved is relatively small, to avoid individual figures being deduced from the disclosure, aggregate figures are disclosed in this section.

 

Note 5
Number of employees disclosed above includes leavers who may have zero variable pay.
Note 6
No deferred variable remuneration had been reduced through performance adjustments in 2019 and 2018.

 

The aggregate amount of special payments of the Senior Management and Key Personnel during the year is set out below:

 

 

 Special payments

2019

2018

Number of employees

Total amount

(HK$ ’000)

Number of employees

Total amount

(HK$ ’000)

1

 Guaranteed bonuses

-

-

-

-

2

 Severance payments

-

-

-

-

 

The aggregate amount of deferred and retained variable remuneration of Senior Management and Key Personnel is set out below:

 

 

 

2019

2018

 

 Deferred and retained remuneration

(HK$ ’000)

Cash

Shares

Cash

Shares

1

Total amount of outstanding deferred remuneration Note 7 & 9

19,423

34,359

17,452

37,929

2

Of which: Total amount of outstanding deferred and retained remuneration exposed to ex post explicit and/or implicit adjustment

19,423

34,359

17,452

37,929

3

Total amount of amendment during the year due to ex post implicit adjustments Note 10

-

(2,397)

-

(5,986)

4

Total amount of deferred remuneration paid out in the financial year Note 8 & 9

6,376

20,070

9,148

25,173

 

Note 7

Outstanding, unvested, deferred remuneration is exposed to ex post explicit adjustments via malus.

 

Note 8

Paid and vested variable pay made to Material Risk Takers is subject to clawback.

 

Note 9

There is no reduction of deferred remuneration and retained remuneration due to ex post explicit adjustments during 2019 and 2018 via the application of malus and/or clawback.

 

Note 10
Outstanding, unvested, deferred shares are exposed to ex post implicit adjustments. The total value of these shares was calculated based on the closing market share price of HSBC Holding plc (London) as at 31 December of the respective financial years. HSBC’s share price was 8.5% lower as at 31 December 2019 when compared to that of 31 December 2018.