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
 
Chairman 860,000
Chairman
290,000
Non-executive Directors 660,000
Members
200,000
Audit Committee / Risk Committee
  Nomination Committee
 
Chairman 500,000
Chairman 400,000
Members 280,000
Members 200,000

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 eight Key Personnel Note 3 in 2021. 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

2021

2020

 

 Fixed remuneration

 

 

1

 Number of employees

25

25

2

 Total fixed remuneration (HK$ ’000)

74,861

77,061

3

       Of which: cash-based

74,861

77,061

 

 Variable remuneration

 

 

4

 Number of employees Note 5

25

25

5

 Total variable remuneration (HK$ ’000) Note 6

48,806

51,689

6

       Of which: cash-based

27,456

31,190

7

        Of which: deferred

8,283

8,532

8

     Of which: shares or other share-linked instruments

21,350

20,500

9

        Of which: deferred

11,252

11,993

10

 Total remuneration (HK$ ’000)

123,667

128,750

 

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 2021 and 2020.

 

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

 

 

 Special payments

2021

2020

Number of employees

Total amount

(HK$ ’000)

Number of employees

Total amount

(HK$ ’000)

1

 Guaranteed bonuses

-

-

1

900

2

 Severance payments

-

-

1

2,646

 

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

 

 

 

2021

2020

 

 Deferred and retained remuneration

(HK$ ’000)

Cash

Shares

Cash

Shares

1

Total amount of outstanding deferred remuneration Note 7 & 9

22,449

27,134

25,404

27,811

2

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

22,449

27,134

25,404

27,811

3

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

-

3,389

-

(13,649)

4

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

2,635

754

6,484

22,116

 

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 2021 and 2020 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 18.4% higher as at 31 December 2021 when compared to that of 31 December 2020.