Company: HBCYF
Filing Date: 2025-02-20
Form Type: 20-F
Source: 0001089113-25-000040
Chunk: 430

Company: HSBC HOLDINGS PLC
Filing Date: 2025-02-20
Form: 20-F
Chunk 430
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 incumbents and scope of the Group CFO role. Over several years, the Committee has expressed concerns that the 2:1 cap was having a material impact on the competitiveness of the executive Director remuneration opportunity at HSBC versus international peers. Now that the 2:1 variable to fixed pay ratio has been removed by UK regulators, the Committee feels it is the right time to return to a remuneration structure with a higher proportion of variable pay linked to performance that is more closely aligned to the experience of our shareholders. This will also help address compression between the total compensation of our executive Directors and some of our Group Operating Committee roles. We have received strong support from shareholders for our existing policy over many years, which we discussed in our recent engagement. In determining the new policy, the Committee considered several different incentive structures, recognising the diversity in approach among our global peers. This included more

| 310 | HSBC Holdings plcAnnual Report on Form 20-F |

Report of the Directors | Corporate governance report | Directors’ remuneration report

complex models such as hybrid structures, the use of restricted stock and retaining part of the FPA. These were ultimately rejected in the interests of simplicity and transparency, and a fundamental desire for pay to be linked to performance and shareholder value creation. The Committee concluded that the current framework of an annual incentive and single performance-based long-term incentive is most appropriate. It is a simple and well understood structure and supports the delivery of our strategy and alignment with performance through the cycle. Evolution of our maximum opportunity over time (£000)

| Group CEO     | Pre-2014 |
| 2014Policy    |          |
| 2023Policy    |          |
| Current(2024) |          |
| Group CFO     | Pre-2014 |
| 2014Policy    |          |
| 2023Policy    |          |
| Current(2024) |          |

We propose to reverse the changes made in 2014 to increase the proportion of pay linked to long-term performance. This means removing FPAs in their entirety and resetting the maximum variable pay opportunity to 900% of salary, split between 300% in annual incentive and 600% in long-term incentive (‘LTI’). At this level, the LTI enables the Committee to target an appropriate maximum opportunity relative to peers with significantly less reliance on fixed pay. Specifically, the proposed structure reduces fixed pay by 49% for the Group CEO and 51% for the Group CFO. The Committee considered