Annual Financial Report - 30 of 44

RNS Number : 1500A

HSBC Holdings PLC

27 March 2012

 



Remuneration policy

The quality and commitment of our human capital is deemed fundamental to our success and accordingly the Board aims to attract, retain and motivate the very best people. As trust and relationships are vital in our business our broad policy is to recruit those who are committed to making a long-term career with the organisation.

HSBC's reward strategy supports this objective through focusing on both short and sustainable performance over the long term. It aims to reward success, not failure, and be properly aligned with risk. In order to ensure alignment between remuneration and our strategy, individual remuneration is determined through assessment of performance delivered against both annual and long‑term objectives summarised in performance scorecards and adherence to the HSBC Values of being 'open, connected and dependable' and acting with 'courageous integrity'. Altogether, performance is judged, not only on what is achieved over the short and medium term, but also on how it is achieved as the latter contributes to the sustainability of the organisation.

The financial and non-financial measures that comprise the annual and long-term scorecards are carefully considered to ensure alignment with the long-term strategy of the Group.

Further information on the Group's approach to remuneration is given on page 256.

Employee share plans

To help align the interests of employees with those of shareholders, share options are granted under all-employee share plans and discretionary awards of shares are granted under HSBC's share plans. The following are particulars of outstanding employee share options, including those held by employees working under employment contracts that are regarded as 'continuous contracts' for the purposes of the Hong Kong Employment Ordinance. The options were granted at nil consideration. No options have been granted to substantial shareholders, suppliers of goods or services, or in excess of the individual limit for each share plan. No options were cancelled by HSBC during the period.

Share options may also be granted under the HSBC Share Plan 2011, which replaced the HSBC Share Plan on 27 May 2011, following shareholder approval at the Annual General Meeting. No share options have been granted under this plan.

A summary for each plan of the total number of the options which were awarded, exercised or lapsed during 2011 is shown in the following tables. Further 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 are available on our website at www.hsbc.com by selecting 'Investor Relations', then 'Governance', then 'Share Plans', 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, 8 Canada Square, London E14 5HQ. Particulars of options held by Directors of HSBC Holdings are set out on page 272.

Note 9 on the Financial Statements gives details on share-based payments, including discretionary awards of shares granted under HSBC's share plans.

All-employee share option plans

All employees employed within the Group on the first working day of the year may be granted options to acquire HSBC Holdings ordinary shares under shareholder-approved all-employee share option plans. Options under the plans are usually exercisable after one, three or five years.

The exercise of the options may be advanced to an earlier date in certain circumstances, for example on retirement, and may be extended in certain circumstances, for example on the death of a participant, the executors may exercise the option up to six months beyond the normal exercise period. The middle market closing price for HSBC Holdings ordinary share quoted on the London Stock Exchange, as derived from the Daily Official List on 19 April 2011, the day before options were granted in 2011, was £6.41.

 

HSBC Holdings All-employee Share Option Plans

												HSBC Holdings ordinary shares of US$0.50
Dates of award				Exercise price				Exercisable				At		Awarded		Exercised		Lapsed		At
from		to		from		to		from		to		1 Jan 2011		during year		during year		during year		31 Dec 2011
Savings-Related Share Option Plan1
24 May      2005		20 Apr      2011		(£) 3.3116		(£) 6.6870		1 Aug     2010		31 Jan     2017		67,737,865		7,742,930		1,387,867		5,593,819		68,499,109
Savings-Related Share Option Plan: International2
24 May      2005		20 Apr      2011		(£) 3.3116		(£) 6.6870		1 Aug     2010		31 Jan     2017		28,660,942		7,557,671		2,733,297		6,870,063		26,615,253
26 Apr      2006		20 Apr      2011		(US$) 4.8876	(US$) 12.0958			1 Aug     2010		31 Jan     2017		10,899,415		2,189,050		840,284		2,496,115		9,752,066
26 Apr      2006		20 Apr      2011		(€) 3.6361		(€) 9.5912		1 Aug     2010		31 Jan     2017		3,128,508		581,297		127,587		405,953		3,176,265
26 Apr      2006		20 Apr      2011	(HK$) 37.8797		(HK$) 94.5057			1 Aug     2010		31 Jan     2017		47,428,892		5,127,912		2,350,010		4,784,283		45,422,511

1  The weighted average closing price of the shares immediately before the dates on which options were exercised was £6.07.

2  The weighted average closing price of the shares immediately before the dates on which options were exercised was £5.90.

Discretionary Share Option Plans

HSBC Holdings ordinary shares of US$0.50

Dates of award

Exercise price

Exercisable

At

Exercised

Lapsed

At

from

to

from

to

from

to

1 Jan 2011

during year2

during year

31 Dec 2011

HSBC Holdings Group Share Option Plan1

23 Apr     2001

20 Apr      2005

(£) 6.0216

(£)   7.9606

23 Apr    2004

20 Apr     2015

153,189,587

645,987

31,751,804

120,791,796

HSBC Share Plan

30 Sep     2005

(£) 7.9911

30 Sep     2008

30 Sep      2015

86,046

-

-

86,046

1  The HSBC Holdings Group Share Option Plan expired on 26 May 2005. No options have been granted under the Plan since that date.

2  The weighted average closing price of the shares immediately before the dates on which options were exercised was £6.90.

There have been no grants of discretionary share options under employee share plans since 30 September 2005.

Subsidiary company share plans

HSBC France and subsidiary company

When it was acquired in 2000, HSBC France and certain of its subsidiary companies, including HSBC Private Bank France, operated employee share option plans under which options could be granted over their respective shares.

On 31 October 2011, HSBC Private Bank France merged with HSBC France. Options held over shares of HSBC Private Bank France were converted into options held over shares of HSBC France, at an exchange ratio of 7 HSBC France shares for 45 HSBC Private Bank France shares. The exercise price payable for each option was adjusted using the same exchange ratio.

Details of outstanding options to acquire shares in HSBC Private Bank France before the merger with HSBC France are set out in the following table headed 'HSBC Private Bank France'. Details of outstanding options to acquire shares in HSBC France after the merger are set out in the following table headed 'HSBC France'. All holders of options to acquire shares of HSBC France are obliged to exchange the HSBC France shares they receive on exercise of these options for HSBC Holding shares. No further options will be granted under the share plans of HSBC Private Bank France or HSBC France.

 

HSBC Private Bank France

HSBC Private Bank shares of €2

Dates of award

Exercise price

Exercisable

At

Exercised

Lapsed

At

from

to

from

to

from

to

1 Jan 2011

during year

during year1

31 Oct 20112

15 May       2001

1 Oct       2002

(€) 20.80

(€) 22.22

15 May      2002

1 Oct      2012

287,100

-

141,525

145,575

1  These options lapsed prior to the merger with HSBC France. Following the lapse of these options, the only options left outstanding on 31 October 2011 were those awarded on 1 October 2002.

2  These options were converted into options over HSBC France shares on completion of the merger. There were no options outstanding on 31 December 2011.

HSBC France

HSBC France shares of €5

Date of award

Exercise price                      (€)

Exercisable

At

Exercised    during year

Lapsed    during year

At

from

to

31 Oct 20111

31 Dec 20112

1 Oct 2002 ...........

142.84

2 Oct       2005

1 Oct       2012

22,645

-

-

22,645

1  These options replaced the options over shares in HSBC Private Bank France which were outstanding on 31 October 2011 prior to the completion of the merger.

2  When exercised, options over HSBC France Shares will be exchanged for HSBC Holdings ordinary shares in the ratio of 13.499897 HSBC Holdings ordinary shares for each HSBC France share. At 31 December 2011, The CCF Employee Benefit Trust 2001 (Private Banking France) held 989,502 HSBC Holdings ordinary shares which may be exchanged for HSBC France shares issued following the exercise of these options.

HSBC Finance

Upon the acquisition of HSBC Finance in 2003, all outstanding options over, and rights to receive, HSBC Finance common shares were converted into options over, and rights to receive, HSBC Holdings ordinary shares in the same ratio as the share exchange offer for the acquisition of HSBC Finance (2.675 HSBC Holdings ordinary shares for each

HSBC Finance common share). The exercise price payable for each option was adjusted using the same exchange ratio.

Details of options to acquire shares in HSBC Holdings under share plans of HSBC Finance are set out in the following table. No further options will be granted under share plans of HSBC Finance.

HSBC Finance: 1996 Long-Term Executive Incentive Compensation Plan

HSBC Holdings ordinary shares of US$0.50

Dates of award

Exercise price

Exercisable

At

Exercised

Lapsed

At

from

to

from

to

from

to

1 Jan 2011

during year

during year

31 Dec 20111

12 Nov       2001

20 Nov       2002

(US$)     9.29

(US$)   18.62

12 Nov      2002

20 Nov      2012

11,117,826

-

8,688,288

2,429,538

1  At 31 December 2011, the HSBC (Household) Employee Benefit Trust 2003 held 2,335,315 HSBC Holdings ordinary shares and 1,455 American Depositary Shares, each of which represents five HSBC Holdings ordinary shares which may be used to satisfy the exercise of employee share options.

HSBC Bank Bermuda

Upon the acquisition of HSBC Bank Bermuda in 2004, all outstanding options over HSBC Bank Bermuda shares were converted into options to acquire HSBC Holdings ordinary shares using an exchange ratio calculated by dividing US$40 (being the consideration paid for each HSBC Bank Bermuda share) by the average price of HSBC Holdings ordinary shares over the 5 day period to
the completion of the acquisition. The exercise price payable for each option was adjusted using the same exchange ratio.

Details of options to acquire shares in HSBC Holdings under the share plans of HSBC Bank Bermuda are set out in the following table. No further options will be granted under the share plans of HSBC Bank Bermuda.

HSBC Bank Bermuda

HSBC Holdings ordinary shares of US$0.50

Dates of award

Exercise price

Exercisable

At

Exercised

Lapsed

At

from

to

from

to

from

to

1 Jan 2011

during year

during year

31 Dec 20111

Share Option Plan 1997

11 Jan       2001

(US$)   12.44

-

11 Jan       2002

11 Jan      2011

61,901

-

61,901

-

Share Option Plan 2000

11 Jan       2001

21 Apr       2003

(US$)     9.32

(US$)   15.99

11 Jan      2002

21 Apr      2013

2,250,966

-

1,236,940

1,014,026

Directors' Share Option Plan

28 Mar       2001

3 Apr       2002

(US$)   13.73

(US$)   13.95

28 Mar       2002

3 Apr       2012

26,166

-

9,285

16,881

1 At 31 December 2011, the HSBC (Bank of Bermuda) Employee Benefit Trust 2004 held 2,108,830 HSBC Holdings ordinary shares which may be used to satisfy the exercise of employee share options.

Other required disclosures

Further information about share capital, directors' interests, supplier payment policy, dividends and shareholders is set out in the Appendix to this section on page 249.

Annual General Meeting

All Directors listed on pages 218 to 223 attended the 2011 Annual General Meeting with the exception of N R N Murthy who was unable to attend. V H C Cheng, who ceased to be a Director from the conclusion of the Annual General Meeting, was also unable to attend.

Our Annual General Meeting in 2012 will be held at the Barbican Hall, Barbican Centre, London EC2 on 25 May 2012 at 11.00 am.

An informal meeting of shareholders will be held at 1 Queen's Road Central, Hong Kong on Monday 21 May 2012 at 4.30 pm.

Resolutions to receive the Annual Report and Accounts, approve the Directors' Remuneration Report, re-elect Directors and reappoint KPMG Audit Plc as auditor will be submitted to the Annual General Meeting. KPMG Audit Plc has expressed its willingness to continue in office and the Group Audit Committee and the Board has recommended that KPMG Audit Plc be reappointed. Resolutions will also be submitted to the Annual General Meeting to renew the authorities for the allotment of shares, disapply pre-emption rights, renew the scrip dividend alternative and approve general meetings (other than Annual General Meetings) being called on a minimum of 14 clear days' notice.

A live webcast of the Annual General Meeting will be available on www.hsbc.com. From shortly after the conclusion of the Annual General Meeting until 30 June 2012 a recording of the proceedings will be available on www.hsbc.com.

On behalf of the Board

D J Flint, Group Chairman            27 February 2012

HSBC Holdings plc

Registered number 617987

Appendix to Report of the Directors Other required disclosures

Share capital

Issued share capital

The nominal value of our issued share capital paid up at 31 December 2011 was US$8,934,057,323 divided into 17,868,085,646 ordinary shares of US$0.50 each, 1,450,000 non-cumulative preference shares of US$0.01 each and 1 non-cumulative preference share of £0.01.

The percentage of the nominal value of our total issued share capital paid up at 31 December 2011 represented by the ordinary shares of US$0.50 each, non-cumulative preference shares of US$0.01 each and the non-cumulative preference share of £0.01 was approximately 99.9998%, 0.0002%, and 0%, respectively.

Rights and obligations attaching to shares

The rights and obligations attaching to each class of shares in our share capital are set out in our Articles of Association subject to certain rights and obligations that attach to each class of preference share as determined by the Board prior to allotment of the relevant preference shares. Set out below is a summary of the rights and obligations attaching to each class of shares with respect to voting, dividends, capital and, in the case of the preference shares, redemption.

To be registered, a transfer of shares must be in relation to shares which are fully paid up and on which we have no lien and to one class of shares denominated in the same currency. The transfer must be in favour of a single transferee or no more than four joint transferees and it must be duly stamped (if required). The transfer must be delivered to our registered office or our Registrars accompanied by the certificate to which it relates or such other evidence that proves the title of the transferor.

If a shareholder or any person appearing to be interested in our shares has been sent a notice under section 793 of the Companies Act 2006 (which confers upon public companies the power to require information from any person whom we know or have reasonable cause to believe to be interested in the shares) and has failed in relation to any shares (the 'default shares') to supply the information requested within the period set out in the notice, then the member, unless the Board otherwise determines, is not entitled to be present at or to vote the default shares at any general meeting or to exercise any other right conferred by being a shareholder. If the default shares represent at least 0.25% in nominal value of the issued shares of that class, unless the Board otherwise determines, any dividend shall be withheld by the Company without interest, no election may be made for any scrip dividend alternative, and no transfer of any shares held by the member will be registered except in limited circumstances.

Ordinary shares

Subject to the Companies Act 2006 and the Articles of Association, the shareholders may, by ordinary resolution, declare dividends to be paid to the holders of ordinary shares, though no dividend shall exceed the amount recommended by the Board. The Board may pay interim dividends as appears to the Board to be justified by the profits available for distribution. All dividends shall be apportioned and paid proportionately to the percentage of the nominal amount paid up on the shares during any portion or portions of the period in respect of which the dividend is paid, but if any share is issued on terms providing that it shall rank for dividend as from a particular date, it shall rank for dividend accordingly. Subject to the Articles of Association, the Board may, with the prior authority of an ordinary resolution passed by the shareholders and subject to such terms and conditions as the Board may determine, offer to any holders of ordinary shares the right to elect to receive ordinary shares of the same or a different currency, credited as fully paid, instead of cash in any currency in respect of the whole (or some part, to be determined by the Board) of any dividend specified by the ordinary resolution. At the 2007 Annual General Meeting shareholders gave authority to the Directors to offer a scrip dividend alternative until the conclusion of the Annual General Meeting in 2012. A resolution to renew Directors' authority to offer a scrip dividend alternative will be proposed at the Annual General Meeting in 2012.

Preference shares

There are three classes of preference shares in the share capital of HSBC Holdings, non-cumulative preference shares of US$0.01 each (the 'Dollar Preference Shares'), non-cumulative preference shares of £0.01 each (the 'Sterling Preference Shares') and non-cumulative preference shares of €0.01 (the 'Euro Preference Shares'). The Dollar Preference Shares in issue are Series A Dollar Preference Shares and the Sterling Preference Share in issue is a Series A Sterling Preference Share. There are no Euro Preference Shares in issue.

Dollar Preference Shares

Holders of the Dollar Preference Shares are only entitled to attend and vote at general meetings if any dividend payable on the relevant preference shares in respect of such period as the Board shall determine prior to allotment thereof is not paid in full or in such other circumstances, and upon and subject to such terms, as the Board may determine prior to allotment of the relevant preference shares. In the case of the Dollar Preference Shares in issue at 27 February 2012 the relevant period determined by the Board is four consecutive dividend payment dates. Whenever holders of the Dollar Preference Shares are entitled to vote on a resolution at a general meeting, on a show of hands every such holder who is present in person or by proxy shall have one vote and on a poll every such holder who is present in person or by proxy shall have one vote per preference share held by him or her or such number of votes per share as the Board shall determine prior to allotment of such share.

Subject to the Articles of Association, holders of the Dollar Preference Shares have the right to a non-cumulative preferential dividend at such rate, on such dates and on such other terms and conditions as may be determined by the Board prior to allotment thereof in priority to the payment of any dividend to the holders of ordinary shares and any other class of shares of HSBC Holdings in issue (other than (i) the other preference shares in issue and any other shares expressed to rank pari passu therewith as regards income; and (ii) any shares which by their terms rank in priority to the relevant preference shares as regards income). A dividend of US$62 per annum is payable on each Dollar Preference Share in issue at 27 February 2012. The dividend is paid at the rate of US$15.50 per quarter at the sole and absolute discretion of the Board.

A dividend will not be declared or paid on the Dollar Preference Shares if payment of the dividend would cause HSBC Holdings not to meet the applicable capital adequacy requirements of the FSA or the profit of HSBC Holdings available for distribution as dividends is not sufficient to enable HSBC Holdings to pay in full both dividends on the relevant preference shares and dividends on any other shares that are scheduled to be paid on the same date and that have an equal right to dividends. Dividends will not be declared or paid on any class of shares of HSBC Holdings ranking lower in the right to dividends than the Dollar Preference Shares nor redeem nor purchase in any manner any of its other shares ranking equal with or lower than the Dollar Preference Shares unless it has paid in full, or set aside an amount to provide for payment in full, the dividends on the Dollar Preference Shares for the then-current dividend period.

The Dollar Preference Shares carry no rights to participate in the profits or assets of HSBC Holdings other than as set out in the Articles of Association and subject to the Companies Act 2006, do not confer any right to participate in any offer or invitation by way of rights or otherwise to subscribe for additional shares in HSBC Holdings, do not confer any right of conversion and do not confer any right to participate in any issue of bonus shares or shares issued by way of capitalisation of reserves.

Subject to the relevant insolvency laws and the Articles of Association of HSBC Holdings, holders of the Dollar Preference Shares have the right in a winding up of HSBC Holdings to receive out of the assets of HSBC Holdings available for distribution to its shareholders, in priority to any payment to the holders of the ordinary shares and any other class of shares of HSBC Holdings in issue (other than (i) the other relevant preference shares and any other shares expressed to rank pari passu therewith as regards repayment of capital; and (ii) any shares which by their terms rank in priority to the relevant preference shares as regards repayment of capital), a sum equal to any unpaid dividend on the Dollar Preference Shares which is payable as a dividend in accordance with or pursuant to the Articles of Association and the amount paid up or credited as paid up on the Dollar Preference Shares together with such premium (if any) as may be determined by the Board prior to allotment thereof. In the case of the Dollar Preference Shares in issue at 27 February 2012, the premium is US$999.99 per Dollar Preference Share.

The Dollar Preference Shares may be redeemed in accordance with the Articles of Association and the terms on which Dollar Preference Shares were issued and allotted. In the case of the Dollar Preference Shares in issue at 27 February 2012, HSBC Holdings may redeem such shares in whole at any time on or after 16 December 2010, subject to prior notification to the FSA.

Sterling Preference Shares

The Sterling Preference Shares carry the same rights and obligations under the Articles of Association as the Dollar Preference Shares, save in respect of certain rights and obligations that attach to Sterling Preference Shares to be determined by the Board prior to allotment of the relevant preference shares and the timing and payment of proceeds from the redemption of each class of share. The one Sterling Preference Share in issue at 27 February 2012 carries the same rights and obligations as the Dollar Preference Shares in issue at 27 February 2012 to the extent described in the section above save as follows:

1.     the holder of the Sterling Preference Share is not entitled to attend or vote at general meetings;

2.     the Sterling Preference Share may be redeemed in whole on any date as may be determined by the Board; and

3.     the exceptions to the circumstances in which a dividend will not be declared or paid do not apply.

A dividend of £0.04 per annum is payable on the Sterling Preference Share in issue at 27 February 2012. The dividend is paid at the rate of £0.01 per quarter at the sole and absolute discretion of the Board.

Euro Preference Shares

The Euro Preference Shares carry the same rights and obligations under the Articles of Association as the Dollar Preference Shares, save in respect of certain rights and obligations that attach to Euro Preference Shares which are to be determined by the Board prior to allotment of the relevant preference shares and the timing and payment of proceeds from the redemption of each class of share.

Share capital during 2011

The following events occurred during the year in relation to the ordinary share capital of HSBC Holdings:

Scrip dividends

	HSBC Holdings ordinary shares of US$0.50				Market value
Issued in lieu of	In		Number		US$		£
Third interim dividend for 2010 ............................	January 2011		19,637,010		10.4577		6.5644
Fourth interim dividend for 2010 ..........................	May 2011		110,222,824		10.2564		6.2642
First interim dividend for 2011 ..............................	July 2011		19,973,377		10.2077		6.3268
Second interim dividend for 2011 ..........................	October 2011		20,741,956		8.5685		5.1714

All-Employee share plans

	Number				Exercise price
					from		to
HSBC Holdings savings-related share option plans
HSBC ordinary shares issued in £ ...........................................	4,121,164		£		3.3116		6.6870
HSBC ordinary shares issued in HK$ .....................................	2,350,010		HK$		37.8797		94.5057
HSBC ordinary shares issued in US$ ......................................	840,284		US$		4.8876		12.0958
HSBC ordinary shares issued in € ...........................................	127,587		€		3.6361		9.0818
Options over HSBC ordinary shares lapsed ...............................	20,150,233
Options over HSBC ordinary shares granted in response to 45,000 applications from HSBC employees in 70 countries and territories on 20 April 2011 .................................................	23,198,860				-
Plan d'Epargne Entreprise
HSBC ordinary shares issued for the benefit of non-UK resident employees of HSBC France and its subsidiaries ......................	3,269,545		€		5.9310

Discretionary share incentive plans

	HSBC ordinary      shares issued		Exercise price (£)				Options             lapsed
			from		to
Options exercised under:
The HSBC Holdings Group Share Option Plan ..........	645,987		6.0216		7.9606		31,751,804
The HSBC Share Plan ..............................................	-		-		-		-

Authority to allot shares

At the Annual General Meeting in 2011, shareholders renewed the general authority for the Directors to allot new shares. The general authority is to allot up to 3,541,390,000 ordinary shares, 10,000,000 non-cumulative preference shares of £0.01 each, 10,000,000 non-cumulative preference shares of US$0.01 each and 10,000,000 non-cumulative preference shares of €0.01 each. Within this, the Directors have authority to allot up to a maximum of 885,347,500 ordinary shares wholly for cash to persons other than existing shareholders.

Other than as described above, the Directors did not allot any shares during 2011.

Treasury shares

In accordance with the terms of a waiver granted by the Hong Kong Stock Exchange 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. No shares are currently held in treasury.

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 2011 had the following interests, all beneficial unless otherwise stated, in the shares and loan capital of HSBC Holdings and its associated corporations:

Directors' interests - shares and loan capital
			At 31 December 2011
	At    1 January              2011		Beneficial           owner		Child      under 18     or spouse		Jointly              with        another          person		Trustee		Total      interests1
HSBC Holdings ordinary shares of US$0.50
J D Coombe .................................	20,341		21,139		-		-		-		21,139
R A Fairhead ...............................	21,300		-		-		21,300		-		21,300
D J Flint ......................................	178,681		237,771		-		-		35,0902		272,861
A A Flockhart .............................	230,112		63,819		-		-		344,010		407,829
S T Gulliver .................................	2,731,077		2,553,592		177,508		-		-		2,731,100
J W J Hughes-Hallett ...................	39,577		-		-		-		46,9522		46,952
W S H Laidlaw .............................	30,948		30,456		-		-		1,4162		31,872
I J Mackay ...................................	34,217		133,648		-		-		-		133,648
G Morgan ....................................	81,166		84,347		-		-		-		84,347
Sir Simon Robertson ....................	176,373		8,959		-		-		167,7502		176,709
J L Thornton ..............................	10,250		-		10,2503		-		-		10,250
Sir Brian Williamson ...................	37,607		39,083		-		-		-		39,083
	US$		US$		US$		US$		US$		US$
Loan Capital - 6.5% Subordinated Notes 2036
L M L Cha ..................................	300,000		300,000		-		-		-		300,000

1  Details of executive Directors' other interests in HSBC Holdings ordinary shares of US$0.50 arising from the HSBC Holdings savings-related share option plans, the HSBC Share Plan and the HSBC Share Plan 2011 are set out in the Directors' Remuneration Report on pages 272 and 274. At 31 December 2011, the aggregate interests under the Securities and Futures Ordinance of Hong Kong in HSBC Holdings ordinary shares of US$0.50, including interests arising through employee share plans were: D J Flint - 628,992; A A Flockhart - 1,424,882; S T Gulliver - 4,892,014 and I J Mackay - 426,266. Each Director's total interests represents less than 0.03% of the shares in issue.

2  Non-beneficial.

3  Interest of spouse in 2,050 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 of US$0.50.

As a director of HSBC France during 2011, S T Gulliver has an interest as beneficial owner in one share of €5 in that company (representing less than 0.01% of the shares in issue). He has waived his rights to receive dividends on this share and has undertaken to transfer it to HSBC on ceasing to be a director of HSBC France.

No Directors held any short position as defined in the Securities and Futures Ordinance of Hong Kong in the shares and loan capital of HSBC Holdings and its associated corporations. Save as stated above, none of the Directors had an interest in any shares or debentures of HSBC Holdings or any associated corporation at the beginning or at the end of the year, and none of the Directors or members of their immediate families were awarded or exercised any right to subscribe for any shares or debentures in any HSBC corporation during the year. Since the end of the year, the aggregate interests of the following Directors have increased by the number of HSBC Holdings ordinary shares shown against their names: 

Increase in Directors' interests since 31 December 2011

HSBC Holdings ordinary shares of US$0.50

	Beneficial              owner		Child under   18 or spouse		Trustee
J D Coombe ...............................................................................................	2571		-		-
D J Flint .....................................................................................................	4,4052		-		4263
A A Flockhart ............................................................................................	13,0491		-		4,1711
S T Gulliver ................................................................................................	26,2021		81		-
W S H Laidlaw ...........................................................................................	369		-		-
I J Mackay .................................................................................................	3,5291		-		-
Sir Simon Robertson ...................................................................................	1081		-		-
Sir Brian Williamson ..................................................................................	4741		-		-

1  Scrip dividend.

2  Comprises scrip dividend, the automatic reinvestment of dividend income by an Individual Savings Account manager (65 shares), the acquisition of shares in the HSBC Holdings UK Share Incentive Plan through regular monthly contributions (24 shares) and the automatic reinvestment of dividend income on shares held in the plan (30 shares).

3  Non-beneficial.

There have been no other changes in the share and loan capital interests of the Directors from 31 December 2011 to the date of this Report. Any subsequent changes up to the last practicable date before the publication of the Notice of Annual General Meeting will be set out in the notes to that Notice.

At 31 December 2011, non-executive Directors and Senior Management (being executive Directors and Group Managing Directors of HSBC Holdings) held, in aggregate, beneficial interests in 15,132,496 HSBC Holdings ordinary shares (0.08% of the issued ordinary shares).

At 31 December 2011, executive Directors and Senior Management held, in aggregate, options to subscribe for 544,992 of HSBC Holdings ordinary shares under the HSBC Holdings savings-related share option plans and HSBC Holdings Group Share Option Plan. These options are exercisable between 2011 and 2015 at prices ranging from £3.3116 to £7.2181 and US$11.8824 per ordinary share.

Supplier payment policy

HSBC has signed up to the Government's Prompt Payment Code (further information on, and copies of, the Code can be obtained by visiting www.promptpaymentcode.org.uk).

Our policy is to settle terms of payment with our suppliers when agreeing the terms of each transaction, to ensure that those suppliers are made aware of the terms of payment and to abide by the terms of payment.

The amount due to trade creditors at 31 December 2011 represented 28 days' average daily purchases of goods and services received from such creditors, calculated in accordance with the Companies Act 2006, as amended by Statutory Instrument 2008 No. 410.

Dividends and shareholders

Dividends for 2011

First, second and third interim dividends for 2011, each of US$0.09 per ordinary share, were paid on 6 July 2011, 6 October 2011 and 18 January 2012 respectively. Note 11 on the Financial Statements gives more information on the dividends declared in 2011. On 27 February 2012, the Directors declared a fourth interim dividend for 2011 of US$0.14 per ordinary share in lieu of a final dividend, which will be payable on 2 May 2012 in cash in US dollars, or in sterling or Hong Kong dollars at exchange rates to be determined on 23 April 2012, with a scrip dividend alternative. As the fourth interim dividend for 2011 was declared after 31 December 2011 it has not been included in the balance sheet of HSBC as a debt. The reserves available for distribution at 31 December 2011 were US$34,621m.

A quarterly dividend of US$15.50 per 6.20% non-cumulative US Dollar Preference Share, Series A ('Series A Dollar Preference Share'), (equivalent to a dividend of US$0.3875 per Series A American Depositary Share, each of which represents one-fortieth of a Series A Dollar Preference Share), was paid on 15 March, 15 June, 15 September and 15 December 2011.

Dividends for 2012

The proposed timetable for interim dividends in respect of 2012 on the ordinary shares of US$0.50 is set out in the Shareholder Information section on page 414.

Quarterly dividends of US$15.50 per Series A Dollar Preference Share (equivalent to a dividend of US$0.3875 per Series A American Depositary Share, each of which represents one-fortieth of a Series A Dollar Preference Share) and £0.01 per Series A Sterling Preference Share were declared on 13 February 2012 for payment on 15 March 2012.

Communication with shareholders

Communication with shareholders is given high priority. Extensive information about our activities is provided to shareholders in the Annual Report and Accounts, Annual Review and the Interim Report which are available on www.hsbc.com. There is regular dialogue with institutional investors and enquiries from individuals on matters relating to their shareholdings and our business are welcomed and are dealt with in an informative and timely manner. All shareholders are encouraged to attend the Annual General Meeting or the informal meeting of shareholders held in Hong Kong to discuss our progress. Shareholders may send enquiries to the Board in writing to the Group Company Secretary, HSBC Holdings plc, 8 Canada Square, London E14 5HQ  or by sending an email to [e-mail].

Shareholders may require the Directors to call a general meeting, other than an annual general meeting as provided by the UK Companies Act 2006. Requests to call a general meeting may be made by members representing at least 5% of the paid-up capital of the Company as carries the right of voting at general meetings of the Company (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. A resolution may properly be moved at a meeting unless it would, if passed, be ineffective (whether by reason of inconsistency with any enactment or the Company's constitution or otherwise); it is defamatory of any person; or it is frivolous or vexatious. 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 the postal address referred to in the paragraph above or by sending an email to [e-mail]. At any meeting convened on such request no business shall be transacted except that stated by the requisition or proposed by the Board.

Notifiable interests in share capital

At 31 December 2011, we had received the following disclosures (which have not been subsequently changed) of major holdings of voting rights pursuant to the requirements of rule 5 of the FSA Disclosure and Transparency Rules:

·     Legal & General Group Plc gave notice on 9 March 2010 that it had a direct interest on 8 March 2010 in 696,851,431 HSBC Holdings ordinary shares, representing 3.99% of the total voting rights at that date; and

·     BlackRock, Inc. gave notice on 9 December 2009 that on 7 December 2009 it had the following: an indirect interest in HSBC Holdings ordinary shares of 1,142,439,457; qualifying financial instruments with 705,100 voting rights that may be acquired if the instruments are exercised or converted; and financial instruments with similar economic effect to qualifying financial instruments which refer to 234,880 voting rights, each representing 6.56%, 0.0041% and 0.0013% respectively of the total voting rights at that date.

As at 31 December 2011, according to the register maintained by HSBC Holdings pursuant to section 336 of the Securities and Futures Ordinance of Hong Kong:

·     JPMorgan Chase & Co. gave notice on 2 December 2011 that on 29 November 2011 it had the following interests in HSBC Holdings ordinary shares: a long position of 1,134,407,150 ordinary shares, a short position of 55,216,336 ordinary shares and a lending pool of 921,730,747 ordinary shares, each representing 6.35%, 0.31% and 5.16% respectively of the ordinary shares in issue at that date; and

·     BlackRock, Inc. gave notice on 29 December 2011 that on 21 December 2011 it had the following interests in HSBC Holdings ordinary shares: a long position of 1,081,735,339 ordinary shares and a short position of 16,049,140 ordinary shares, each representing 6.05% and 0.09% respectively of the ordinary shares in issue at that date. Since 31 December 2011 and following interim notifications on 2, 6, 8, 21 and 22 February 2012, Blackrock, Inc. gave notice, on 23 February 2012 that on 20 February 2012 it had a long position of 1,076,743,830 ordinary shares and a short position of 16,006,002 ordinary shares, representing 5.99% and 0.08% respectively of the ordinary shares in issue at that date.

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 2011 and up to the date of this Report.

Dealings in HSBC Holdings shares

Except for dealings as intermediaries by HSBC Bank and The Hongkong and Shanghai Banking Corporation, which are members of a European Economic Area exchange, neither we nor any of our subsidiaries has purchased, sold or redeemed any of our listed securities during the year ended 31 December 2011.

 

END

 

 

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