The remuneration paid to NEDs and EDs is subject to annual review in accordance with the remuneration framework of the Bank.
The level of fees paid to NEDs is determined with reference to the Directors’ responsibilities and commitment, and fees paid by comparable institutions. No equity-based remuneration with performance-related elements is granted to INEDs by the Bank to ensure their objectivity and independence.
As regards Executive Directors (“EDs”), the following factors are considered when determining their remuneration packages:
 |
balanced scorecard of relevant financial and non-financial objectives including appropriate risk and compliance objectives, differentiated by performance |
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general business and economic conditions |
|
changes in appropriate markets such as supply/demand fluctuations and changes in competitive conditions |
|
individual contributions to the Bank |
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right behaviours aligned with the Group values, culture and conduct expectation |
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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 |
340,000 |
| Non-executive Directors | 660,000 |
Members |
200,000 |
| Audit Committee / Risk Committee |
Nomination Committee |
||
| Chairman | 610,000 |
Chairman | 450,000 |
| Members | 290,000 |
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. |
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 20 Senior Management members Note 2 and 8 Key Personnel Note 3 in 2022. 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 |
2022 |
2021 |
|---|---|---|---|
|
Fixed remuneration |
|
|
1 |
Number of employees |
28 |
25 |
2 |
Total fixed remuneration (HK$ ’000) |
78,366 |
74,861 |
3 |
Of which: cash-based |
78,366 |
74,861 |
|
Variable remuneration |
|
|
4 |
Number of employees Note 5 |
28 |
25 |
5 |
Total variable remuneration (HK$ ’000) Note 6 |
51,989 |
48,806 |
6 |
Of which: cash-based |
28,469 |
27,456 |
7 |
Of which: deferred |
9,178 |
8,283 |
8 |
Of which: shares or other share-linked instruments |
23,520 |
21,350 |
9 |
Of which: deferred |
12,529 |
11,252 |
10 |
Total remuneration (HK$ ’000) |
130,555 |
123,667 |
| 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 2022 and 2021. |
The aggregate amount of special payments of the Senior Management and Key Personnel during the year is set out below:
|
Special payments |
2022 |
2021 |
||
|---|---|---|---|---|---|
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:
|
|
2022 |
2021 |
||
|---|---|---|---|---|---|
|
Deferred and retained remuneration (HK$ ’000) |
Cash |
Shares |
Cash |
Shares |
1 |
Total amount of outstanding deferred remuneration Note 7 & 9 |
20,527 |
27,615 |
22,449 |
27,134 |
2 |
Of which: Total amount of outstanding deferred and retained remuneration exposed to ex post explicit and/or implicit adjustment |
20,527 |
27,615 |
22,449 |
27,134 |
3 |
Total amount of amendment during the year due to ex post implicit adjustments Note 10 |
- |
2,033 |
- |
3,389 |
4 |
Total amount of deferred remuneration paid out in the financial year Note 8, 9 & 11 |
9,826 |
18,898 |
2,635 |
754 |
| 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 2022 and 2021 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 14.94% higher as at 31 December 2022 when compared to that of 31 December 2021.
|
| Note 11 |
The total amount of deferred remuneration paid out in the financial year reported for 2021 was under reported. Correct numbers are outlined in the table.
|