Annual Financial Report - Part 8

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 Carolyn Fairbairn Chair Group Remuneration Committee
	Membership1				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 Forese2	May 2020	3/3
	Ann Godbehere3	Sep 2023	2/2
	José Antonio Meade Kuribreña	May 2021	7/7
	Eileen Murray4	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 $30.3bn (2022: $17.1bn)	Net new invested assets $84bn (2022: $80bn)	Operating expenses $32.1bn (2022: $32.7bn)	Return on average tangible equity 14.6% (2022: 10.0%)
Employee engagement index1 77% (2022: 74%)	Inclusion index 78% (2022: 76%)	Percentage of colleagues of Asian heritage in senior leadership roles 37.8% (2022: 34.0%)	Percentage of women in senior leadership roles2 34.1% (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. -   Other than in exceptional circumstances, the base salary for the current 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.	Base salary will increase by 3% for 2024 and will be: -   Noel Quinn: £1,376,000 -   Georges Elhedery: £803,000
Fixed pay allowance ('FPA')	-   The FPA is granted in instalments of immediately vested shares. -   On vesting, the net number of shares delivered (after those withheld to 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 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.	FPA will not be increased for 2024 and will remain: -   Noel Quinn: £1,700,000 -   Georges Elhedery: £1,085,000
Cash in lieu of pension	-   10% of base salary is paid on a monthly basis. -   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.	-   No change to percentage of base salary.
Annual incentive	-   The maximum opportunity is up to 215% of base salary. -   Performance is measured against an individual scorecard. -   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.	-   No change to opportunity. -   See page 288 for 2024 measures.
Long-term incentive ('LTI')	-   The maximum opportunity is up to 320% of base salary. -   The LTI award is granted if the Committee considers that there has been 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.	-   No change to opportunity. -   See page 287 for details of the 2024-2026 LTI awards.
Benefits	-   Benefits include the provision of medical insurance, accommodation, car, club membership, independent legal advice in relation to a matter arising out 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.	-   Benefits to be provided as per policy and details disclosed in the Annual Report and Accounts 2024 single figure of remuneration table.
Shareholding guidelines	Executive Directors are expected to satisfy the following shareholding 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%	-   No change to percentage of base salary.
All-employee share plans	Executive Directors are eligible to participate in all-employee share plans, such as HSBC Sharesave, on the same basis as all other employees.	-   Participation will be disclosed in the respective Annual Report and 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
				Performance2	Weighting (%)	Assessment (%)	Outcome (%)	Weighting (%)	Assessment (%)	Outcome (%)
Profit before tax1 ($bn)		25.8	30.3	31.6	15.0	100.00	15.00	15.0	100.00	15.00
Target basis operating expenses ($bn)		31.0	30.5	31.6	15.0	-	-	15.0	-	-
Group RoTE1		12.0%	14.5%	15.6%	15.0	100.00	15.00	15.0	100.00	15.00
Asia RoTE1		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 key growth markets	15.0%	-   NPS is sourced from our strategic NPS surveys with results gathered 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.	91.67%	13.75%
Employee experience	Improve diversity and inclusion	15.0%	-   The Inclusion index in our employee Snapshot survey increased by two 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%.	93.75%	14.06%

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 benefits2	127	119	4	-
Non-taxable benefits	89	86	52	-
Total fixed	3,386	3,367	1,999	-
Annual incentive3	2,018	2,164	1,287	-
Notional returns4	43	31	6	-
Replacement award	-	-	-	-
Long-term incentive5	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 underpin2 (25.0%)		8.0%	9.0%	10.0%	14.6%	100.0%	25.00%
Capital reallocation to Asia with CET1 capital ratio underpin3 (25.0%)		45.0%	47.0%	50.0%	43.4%	0.0%	0.00%
Transition to net zero4 (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 TSR5 (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 underpin2 (37.5%)		14.0%	16.0%	17.0%
Environment3 (25.0%)	Carbon reduction (own emissions)	66.0%	70.0%	74.0%
	Sustainable finance and investment	$539.0bn	$641.0bn	$693.0bn
Relative TSR4 (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 notable items)	60.0%
Profit before tax	15.0%
Operating expenses	15.0%
Group RoTE	25.0%
Asia RoTE	5.0%
Stakeholders	30.0%
Customer satisfaction Improvement in NPS scores/rank	15.0%
Employee experience Gender and ethnicity representation and Inclusion index score	10.0%
Execution of our sustainability commitments against Board approved plans	5.0%
Personal measures -  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	10.0%
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 of colleagues say pay recommendations determined regardless of personal characteristics		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 markets, which has resulted in continued pressures on the cost of living. 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 of colleagues say they receive feedback helping them improve performance		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 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 of colleagues work flexibly and split their time between home and the workplace		Our approach to benefits and well-being balances local market practice with global minimum standards. More than 95% of colleagues have private medical insurance, a retirement plan and life insurance. 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 Attract and retain employees with market competitive pay for the role, skills and experience required.	-   Fixed pay may include base salary, fixed pay allowance, cash in lieu of pension and other cash allowances in accordance with local market practice. -   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.	-   Consistent with approach for Group colleagues except fixed pay allowance paid in shares.
Benefits Support the physical, mental and financial health of a diverse workforce in accordance with local market practice.	-   Benefits may include, but are not limited to, the provision of a pension, medical insurance, life insurance, health assessment and relocation support.	-   Provision of medical insurance, life insurance, car and tax return assistance. Group Chief Executive is eligible to receive accommodation and a car benefit in Hong Kong.
Annual incentive Incentivise and reward performance based on annual financial and non-financial measures consistent with the medium- to long-term strategy, stakeholder interests and values-aligned behaviours.	-   All employees are eligible to be considered for a discretionary variable pay award. Individual awards are determined against objectives for performance set at the start of the year.    -   Variable pay represent a higher proportion of total compensation for more senior colleagues and will be more closely aligned to Group and business 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.	-   Annual incentive is determined based on the outcomes of annual scorecard of financial and non-financial measures. -   Executive Directors and Group Executives are also eligible to be considered for a long-term incentive award, which is subject to three-year forward-looking performance measures.
Buy-out awards Support recruitment of key individuals.	-   Buy-out awards may be offered if an individual holds any outstanding unvested awards that are forfeited on resignation from the previous employer. -   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.	-   For new hires, the approach is consistent with the approach taken for employees and policy approved by shareholders.
New hire indicative variable pay Support recruitment of key individuals.	-   New hire indicative variable pay is awarded in exceptional circumstances, and is limited to an individual's first year of employment 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.	-   For new hires, the approach is consistent with the approach taken for employees and policy approved by shareholders.
Deferral Align employee interests with the medium- to long-term strategy, stakeholder interests and values-aligned behaviours.	-   A Group-wide deferral approach is applicable to all employees. A portion of annual incentive awards above a specified threshold is deferred in shares vesting annually over a three-year period (33% vesting on the first and second anniversaries of grant and 34% on the third). -   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. -   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.	-   All of the LTI award, or at least 60% of the total variable award (including LTI), is deferred. The deferred awards will vest in five equal annual 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. -   All deferred awards are in HSBC shares and subject to a post-vesting retention period of one year.
Severance payments Adhere to contractual agreements with involuntary leavers.	-   Where an individual's employment is terminated involuntarily for gross misconduct then, subject to compliance with local laws, the Group's policy is 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.	-   Any payments will be in line with the policy on loss of office.

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 report, and employee insights	l	l	l	l	l	l	l
Directors' remuneration policy design	ô	ô	ô	l	l	l	l
Executive Director remuneration policy implementation, scorecards and pay proposals	l	l	l	ô	l	l	l
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 individuals involved	l	l	l	ô	l	l	l
Regulatory updates, including approach and outcomes for the identification of Material Risk Takers	l	l	l	l	l	l	l
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 incentive1 (% of maximum)	54%	45%	64%	80%	76%	76%	61%	66%	32%	57%	75%	70%
Long-term incentive1,2,3 (% 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

$7,343m1

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 Quinn1,2	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 Elhedery3	-	-	-	-	-	-	-	-	-	-	-	-
Non-executive Directors
Geraldine Buckingham4	57.4	-	-	-	-	-	-	-	-	-	-	-
Rachel Duan5,6	8.4	235.8	-	-	(100.0)	-	-	-	-	-	-	-
Dame Carolyn Fairbairn6,7	5.3	231.1	-	-	(100.0)	-	-	-	-	-	-	-
James Forese8	10.2	20.5	257.5	-	-	-	-	-	-	-	-	-
Steven Guggenheimer9	0.8	4.8	86.6	-	(90.0)	-	-	-	-	-	-	-
José Antonio Meade Kuribreña10	0.8	8.5	10.4	28.7	(71.4)	-	(100.0)	100.0	-	-	-	-
Eileen Murray5	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 Tai10,11	(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 group12	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 award made	Date of award	Face value awarded £000	Percentage  receivable for minimum performance	Number of shares awarded	End of performance period
Noel Quinn	LTI deferred shares1	% of base salary	27 February 2023	5,476	25	861,422	31 December 2025
	Immediate shares2	% of base salary	27 February 2023	1,082	N/A	170,206	31 December 2022
	Fixed pay allowance3	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 shares1	% of base salary	27 February 2023	1,599	25	251,474	31 December 2025
	Immediate shares2	% of base salary	27 February 2023	716	N/A	112,568	31 December 2022
	Fixed pay allowance3	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 sustainability4 (25.0%)	Carbon reduction	64.0%	68.0%	72.0%
	Sustainable finance and investment	$588.0bn	$700.0bn	$756.0bn
Relative TSR5 (25.0%)		At median of the peer group	Straight-line vesting between minimum and maximum	At upper quartile of 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 (% of salary)	Shareholding at 31 Dec 20232 (% of salary)	At 31 December 2023
				Scheme interests
			Share interests (number of shares)	Share options3	Shares awarded subject to deferral1
					without  performance conditions	with performance conditions4
Executive Directors
Noel Quinn5	400%	797%	1,721,465	-	308,610	2,963,315
Georges Elhedery5	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 Directors1
	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 receivable2	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 price (£)			HSBC Holdings ordinary share awards
		Usually vesting		At 1 Jan 2023	Granted in period	Vested in period1	Lapsed in period	Cancelled in period	At 31 Dec 2023
		from	to
2013 to 2022	0	1 Mar 2023	30 Mar 2029	5,603,050	-	445,705	-	-	5,157,345
27 Feb 20232	0	27 Feb 2023	30 Mar 2030	-	2,533,801	687,935	-	-	1,845,866
15 May 20233	0	15 May 2023	15 May 2023	-	50,080	50,080	-	-	-
21 Aug 20234	0	21 Aug 2023	21 Aug 2023	-	51,435	51,435	-	-	-
7 Nov 20235	0	7 Nov 2023	7 Nov 2023	-	49,291	49,291	-	-	-
1 Jan to 31 Dec 20236	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 receivable1	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)	Fees1		Benefits2		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 Forese3	759	689	1	-	760	689
Ann Godbehere4	68	-	-	-	68	-
Steven Guggenheimer	264	262	1	10	265	272
José Antonio Meade Kuribreña	244	242	4	14	248	256
Kalpana Morparia5	170	-	-	-	170	-
Eileen Murray6	290	262	3	-	293	262
Brendan Nelson7	81	-	12	-	93	-
David Nish	479	477	19	22	498	499
Jackson Tai8	132	377	19	25	151	402
Swee Lian Teo9	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 Chairman1		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 Committee	Chair	78,750
	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 Godbehere1	Dame Carolyn Fairbairn	Kalpana Morparia
Steven Guggenheimer	José Antonio Meade Kuribreña
Eileen Murray
Brendan Nelson1
Swee Lian Teo1

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 remuneration3	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 awards1
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 year2
Number of identified staff	-	-	-	-
Total amount ($m)	-	-	-	-
Severance payments awarded during the financial year2
Number of identified staff	-	-	-	59.8
Total amount ($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 taken into account in the bonus cap ($m)	-	-	-	37.0
-  of which highest payment that has been awarded to a single person ($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 December1 (REM3)
$m	Total amount of deferred remuneration awarded for previous performance periods	of which: due to vest in the financial year	of which: vesting in subsequent financial years	Amount of performance adjustment made in the financial year to deferred remuneration that was due to vest in the financial year	Amount of performance adjustment made in the financial year to deferred remuneration that was due to vest in future performance years	Total amount of adjustment during the financial year due to ex post implicit adjustments	Total amount of deferred remuneration awarded before the financial year actually paid out in the financial year	Total amount of deferred remuneration awarded for previous performance period 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 band1 (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 paid per share	Lowest price paid per share	Average price paid per share	Aggregate 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 paid per share	Lowest price paid per share	Average price paid per share	Aggregate 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 paid per share	Lowest price paid per share	Average price paid per share	Aggregate 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 plans1
	HSBC Holdings ordinary shares issued	Aggregate nominal value	Market value per share
			from	to
		$	£	£
HSBC International Employee Share Purchase Plan	179,676	89,838	6.386	6.386

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 ordinary shares issued	Aggregate nominal value	Market value per share
			from	to
		$	£	£
Vesting of awards under the HSBC Share Plan 2011	10,598,803	5,299,401.50	5.421	6.357

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 date of appointment, if later	Beneficial owner	Child under 18 or spouse	Jointly with another person	Trustee	Total interests
HSBC Holdings ordinary shares
Geraldine Buckingham1	15,000	15,000	-	-	-	15,000
Rachel Duan1	15,000	15,000	-	-	-	15,000
Georges Elhedery2 (appointed to the Board on 1 Jan 2023)	572,575	753,467	-	-	-	753,467
Dame Carolyn Fairbairn	15,000	15,000	-	-	-	15,000
James Forese1	115,000	115,000	-	-	-	115,000
Ann Godbehere1 (appointed to the Board on 1 Sep 2023)	15,000	-	15,000	-	-	15,000
Steven Guggenheimer1	15,000	-	15,000	-	-	15,000
José Antonio Meade Kuribreña1	15,000	15,000	-	-	-	15,000
Kalpana Morparia1 (appointed to the Board on 1 Mar 2023)	-	15,000	-	-	-	15,000
Eileen Murray1	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 Quinn2	1,422,650	1,721,465	-	-	-	1,721,465
Jackson Tai1,3(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 [e-mail].

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 [e-mail].

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 employees1	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 Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited ('HKEx'))	www.hkex.com.hk
Descriptions of the roles and responsibilities of the: -  Group Chairman -  Group Chief Executive -  Senior Independent Director -  Board	www.hsbc.com/who-we-are/leadership-and-governance/board-responsibilities
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: -  diversity and inclusion -  shareholder communication -  human rights -  remuneration practices and governance	www.hsbc.com/who-we-are/leadership-and-governance/board-responsibilities
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

 

END