Annual Financial Report - Part 8 - HSBC Holdings PLC | RNS

RNS Number : 5852Q

HSBC Holdings PLC

21 February 2023

Group Remuneration Committee

The Group Remuneration Committee is responsible for setting the overarching principles, parameters and governance of the Group's remuneration framework for our colleagues, and the remuneration of executive Directors, the Group Chairman and other senior Group colleagues. The Committee regularly reviews the framework to ensure it supports the Group's purpose, values, culture and strategy, as well as promoting sound risk management. The Committee also reviews the framework to satisfy itself that it complies with the regulatory requirements of multiple jurisdictions.

All members of the Committee are independent non-executive Directors of HSBC Holdings plc. No Directors are involved in deciding their own remuneration. 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.

The Committee met six times during 2022. Pauline van der Meer Mohr stepped down from the Committee and the Board after the 2022 AGM, and was succeeded as Group Remuneration Committee Chair by Dame Carolyn Fairbairn. Geraldine Buckingham was appointed as a member of the Committee in June 2022. The following is a summary of the Committee's key activities during 2022.

Matters considered during 2022
	Jan	Feb	May	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
Directors' remuneration policy design	l	ô	ô	ô	ô	ô
Executive Director remuneration policy implementation, scorecards and pay proposals	l	l	l	l	l	l
Remuneration for other senior executives of the Group	l	l	l	l	l	l
Directors' remuneration report	l	l	ô	ô	ô	l
Regulatory, risk and governance
Information on material risk and audit events, and performance and remuneration impacts for individuals involved	l	l	l	l	l	l
Regulatory updates, including approach and outcomes for the identification of Material Risk Takers	l	l	l	l	l	l
Governance matters	l	l	l	l	l	l
Principal subsidiaries
Matters from subsidiary committees	l	ô	l	l	l	l

Matter considered

Matter not considered

Advisers

The Committee received input and advice from different advisers on specific topics during 2022. Deloitte provided independent advice to the Committee. Deloitte also provided tax compliance and other advisory services to the Group in 2022. 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 provides actuarial support to Global Finance and benchmarking data 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 2022.

For 2022, total fees of £203,800 and £79,803 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.

During the year, the Committee conducted a tender process for its independent remuneration adviser. This involved participating firms submitting proposals and meeting with the Committee Chair and management. Following this process, Deloitte was reappointed as the Committee's independent advisers.

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;

• Ewen Stevenson, who was Group Chief Financial Officer until 31 December 2022;

• Jenny Craik, Group Head of Performance, Reward and Employee Relations;

• Pam Kaur, Group Chief Risk and Compliance Officer;

• Bob Hoyt, Group Chief Legal Officer;

• Shawn Chen, former Global General Counsel for Litigation and Regulatory Enforcement;

• Maureen Lewis, Interim Global General Counsel for Litigation and Investigation; 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 Group Remuneration Committee meetings when their own remuneration is discussed.

In addition to the meetings above, the Group Risk Committee convened two joint meetings with the Group Remuneration Committee in September 2022 and December 2022. They reviewed 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

The annual review of the effectiveness of the Board committees, including the Group Remuneration Committee, was conducted internally in 2022, led by the Group Company Secretary and Chief Governance Officer. Overall, the review concluded that the Committee continued to operate effectively and in line with regulatory requirements.

Areas for continued enhancement were identified, including the need to focus on: a differentiated, fair and transparent reward framework; ESG performance metrics; and in particular, sustainability; the development of climate performance measures aligned to strategic net zero goals; and greater coordination with the Group Risk Committee. Given the anticipated changes to remuneration regulations and evolving shareholder views on remuneration, a structured training programme will be developed and delivered by the Committee's independent remuneration advisers. The outcomes of the 2022 annual review have been reported to the Board, and the Group Remuneration Committee will track the progress in implementing recommendations during 2023.

Non-executive Directors

(Audited)

The following table shows the total fees and benefits of non-executive Directors for 2022, together with comparative figures for 2021.

Fees and benefits
(Audited)	Fees¹		Benefits²		Total
(£000)	2022	2021	2022	2021	2022	2021
Geraldine Buckingham³	155	-	-	-	155	-
Rachel Duan⁴	225	67	5	-	230	67
Dame Carolyn Fairbairn⁵	265	80	1	-	266	80
James Forese⁶	689	572	-	-	689	572
Steven Guggenheimer	262	250	10	-	272	250
Irene Lee⁷	488	556	-	-	488	556
José Antonio Meade Kuribreña⁸	242	223	14	-	256	223
Pauline van der Meer Mohr⁹	92	291	18	-	110	291
Eileen Murray¹⁰	262	266	-	-	262	266
David Nish	477	482	22	10	499	492
Jackson Tai	377	350	25	-	402	350
Mark Tucker	1,500	1,500	113	33	1,613	1,533
Total (£000)	5,034	4,637	208	43	5,242	4,680
Total ($000)	6,199	5,710	256	53	6,455	5,763

1 Fees are in line with the Directors' remuneration policy that was approved at the 2022 AGM. No travel allowance was paid to non-executive Directors during 2021 due to travel restrictions. The payment of the travel allowance of £4,000 per annum (pro-rata) was paid following the resumption of travel by the Board in 2022.

2 Benefits include taxable expenses such as accommodation, travel and subsistence relating to attendance at Board and other meetings at HSBC Holdings' registered offices. Amounts disclosed have been grossed up using a tax rate of 45%, where relevant.

3 Appointed to the Board and the Group Nomination & Corporate Governance Committee on 1 May 2022, and appointed as a member of the Group Remuneration Committee and Group Risk Committee on 1 June 2022.

4 Appointed as a member of the Group Audit Committee on 1 June 2022.

5 Appointed as Chair of the Group Remuneration Committee effective 29 April 2022.

6 Stepped down as a member of the Group Audit Committee on 1 June 2022 and joined the Group Risk Committee on 1 June 2022. Includes fees of £447,000 (2021: £332,000) in relation to his role as Chair of HSBC North America Holdings, Inc. This fee was deferred for 2022.

7 Retired from the Board effective 29 April 2022. Includes fees of £434,000 (2021: £380,000) in relation to her roles as non-executive Director and Remuneration Committee Chair, Audit Committee member and Risk Committee member of The Hongkong and Shanghai Banking Corporation Limited and non-executive Chair, Nomination Committee Chair and member of the Audit, Risk and Remuneration Committees of Hang Seng Bank Limited.

8 Retired from the Group Risk Committee on 1 June 2022. Appointed as the designated workforce engagement non-executive Director on 1 June 2022.

9 Retired from the Board effective 29 April 2022.

10 Retired from the Group Risk Committee on 1 June 2022, and appointed as a member of Group Audit Committee on 1 June 2022.

Non-executive Directors' interests in shares

(Audited)

The shareholdings of persons who were non-executive Directors in 2022, including the shareholdings of their connected persons, at 31 December 2022, or date of cessation as a Director if earlier, are set out below.

Non-executive Directors are expected to meet the shareholding guidelines 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 2022 met the guidelines.

Shares
	Shareholding guidelines (number of shares)	Share interests (number of shares)
Geraldine Buckingham (appointed to the Board on 1 May 2022)	15,000	15,000
Rachel Duan	15,000	15,000
Dame Carolyn Fairbairn	15,000	15,000
James Forese	15,000	115,000
Steven Guggenheimer	15,000	15,000
Irene Lee (retired on 29 Apr 2022)	15,000	15,000
José Antonio Meade Kuribreña	15,000	15,000
Eileen Murray	15,000	75,000
David Nish	15,000	50,000
Jackson Tai	15,000	66,515
Mark Tucker	15,000	307,352
Pauline van der Meer Mohr (retired on 29 Apr 2022)	15,000	15,000

2023 fees for non-executive Directors

The table below sets out the 2023 fees for non-executive Directors.

		2023 fees
Position		£
Non-executive Group Chairman¹		1,500,000
Non-executive Director (base fee)		127,000
Senior Independent Director		200,000
Group Risk Committee	Chair	150,000
	Member	40,000
Group Audit Committee and Group Remuneration Committee	Chair	75,000
	Member	40,000
Nomination & Corporate Governance Committee	Chair	--
	Member	33,000
Technology Governance Working Group	Co-Chair	60,000
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.

Service contracts

Non-executive Directors 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 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' letters of appointment that could give rise to remuneration payments or payments for loss of office.

2023 AGM	2024 AGM	2025 AGM
Geraldine Buckingham¹	James Forese	Rachel Duan
Kalpana Morparia¹	Steven Guggenheimer	Dame Carolyn Fairbairn
David Nish	Eileen Murray	José Antonio Meade Kuribreña
	Mark Tucker

1 Geraldine Bucking and Kalpana Morparia were appointed following the 2022 AGM and therefore their initial three-year appointment terms are subject to approval of their election by shareholders at the 2023 AGM. Their initial three-year term of appointment will end at the conclusion of the 2026 AGM, subject to annual re-election by shareholders' at the relevant AGMs.

Our approach to workforce remuneration

Remuneration alignment with executive Directors

Total compensation, which comprises fixed and variable pay, is the key focus of our remuneration framework, with variable pay differentiated by performance and demonstration of value-aligned behaviours. We set out below the key features and design characteristics of our remuneration framework, which will apply on a Group-wide basis, subject to compliance with local laws:

Overview of remuneration structure for employees (continued)
Fixed pay Attract and retain employees with market competitive pay for the role, skills and experience required.	• Fixed pay may include 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 employees. • 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. • Annual incentives represent a higher proportion of total compensation for more senior employees 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.
Target variable remuneration Support recruitment of key individuals.	• Target variable pay is an indicative value, which is awarded in exceptional circumstances for new hires, and is limited to the 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 would also depend on the factors such as the seniority of the individual, where 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 in such cases 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, 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

Overview of remuneration structure for employees (continued)

Fixed pay

Attract and retain employees with market competitive pay for the role, skills and experience required.

• Fixed pay may include 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 employees.

• 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.

• Annual incentives represent a higher proportion of total compensation for more senior employees 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.

Target variable remuneration

Support recruitment of key individuals.

• Target variable pay is an indicative value, which is awarded in exceptional circumstances for new hires, and is limited to the 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 would also depend on the factors such as the seniority of the individual, where 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 in such cases 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, 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

Link between risk, performance and reward

Our remuneration practices promote sound and effective risk management while supporting our business objectives and the delivery of our strategy.

We set out below the key features of our framework, which help enable us to achieve alignment 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, non-financial and contextual 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, taking into account 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 scorecard	• 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 targets; and risk and compliance measures. A mandatory global risk objective is included in the scorecard of all other employees. All 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	• The performance and reward of individuals in control functions, including risk and compliance employees, 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. • The Committee is responsible for approving the remuneration for the Group Chief Risk and Compliance Officer and Group Head of Internal Audit. • 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. • Remuneration is carefully benchmarked with the market and internally to ensure it is set at an appropriate level.
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.
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 the qualitative and quantitative criteria set out in the RTS and using the following key principles that underpin HSBC's identification process: - 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 an employee'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 criteria prescribed in the RTS.

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 ratio

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


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 increase in median ratio is primarily driven by a higher annual incentive payout than in 2021 to the Group Chief Executive, reflecting the improvement in the financial performance of the Group. This is described further in the Committee Chair's letter.

The total pay and benefits for the median employee for 2022 was £58,257, a 6.5% increase compared with 2021.

Our UK workforce comprises a diverse mix of employees 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 employees 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 compensation 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, reward and progression policies for our UK workforce, taking into account the diverse mix of our UK employees, the compensation structure 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 2022. 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 35,000 UK employees, other than the individual performing the role of Group Chief Executive. We calculated our pay quartiles and benefits information for our UK employees using:

• full-time equivalent annualised fixed pay, which includes salary and allowances, at 31 December 2022;

• variable pay awards for 2022;

• 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 2022. 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.

Total pay and benefits for the Group Chief Executive is the single figure of remuneration table for Noel Quinn. Total remuneration does not include an LTI as he has not received an LTI award with a performance period that ended during 2022. In a year in which the value of an LTI is included in the single figure table of remuneration, the ratios could be higher.

Given differences in business mix and size; employment and compensation practices; methodologies for computing pay ratios; and assumptions used by companies, the reported ratios may not be comparable to our international and listed peers on the FTSE 100.

Relative importance of spend on pay

The following chart shows the change in:

• total staff pay between 2021 and 2022; and

• dividends and share buy-backs in respect of 2021 and 2022.

In 2022, total spend on pay was slightly lower than in 2021, while the distribution to shareholders increased by 29% compared with 2021, reflecting a higher dividend and the capital return to shareholders through the $1bn share buy-back announced in February 2022, which concluded in 2022. Dividends include an approximation of the amount payable in April 2023 in relation to the second interim dividend of $0.23 per ordinary share.

Relative importance of spend on pay

Total return to shareholder

2022 -

$1,000m

$9,144m

↑

29%

2021 -

$2,000m

$7,070m

Employee pay

2022 -

↓

-2%

2021 -

Employee pay

Dividends

Share buy-back

Comparison of Directors' and employees' pay

The following table compares the changes in each Director's salary, taxable benefits and annual incentive between 2020 and 2022 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 2022 and 2020. 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 2022 and/or 2021 and/or 2020 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. Non-executive Directors who joined after 1 January 2022 are not included, which includes Geraldine Buckingham who joined on 1 May 2022.

Annual percentage change in remuneration


Executive Directors
Noel Quinn²	151.7%	353.7%	20.2%	1.7%	-48.9%	99.0%	3.2%	25.3%	36.1%
Ewen Stevenson (retired on 31 December 2022)	2.6%	-25.0%	-58.4%	1.8%	-75.0%	117.3%	3.2%	133.3%	11.6%
Non-executive Directors³
Kathleen Casey (retired on 24 April 2020)	-65.0%	200.0%	-	-	-	-	-	-	-
Laura Cha (retired on 28 May 2021)⁴	97.0%	-	-	-58.8%	-	-	-	-	-
Henri de Castries (retired on 28 May 2021)^4,5	4.1%	-75.0%	-	-59.4%	2,100.0%	-	-	-	-
Rachel Duan⁶	-	-	-	-	-	-	235.8%	-	-
Dame Carolyn Fairbairn⁷	-	-	-	-	-	-	231.1%	-	-
James Forese⁸	-	-	-	257.5%	-	-	20.5%	-	-
Steven Guggenheimer⁹	-	-	-	86.6%	-	-	4.8%	-	-
Irene Lee (retired on 29 April 2022)	20.3%	-100.0%	-	1.8%	-	-	-12.2%	-	-
José Antonio Meade Kuribreña¹⁰	28.7%	100.0%	-	10.4%	-100.0%	-	8.5%	-	-
Pauline van der Meer Mohr (retired on 29 April 2022)¹⁰	17.7%	-75.0%	-	-6.7%	-100.0%	-	-68.4%	-	-
Heidi Miller (retired on 28 May 2021)^4,5	1.1%	-100.0%	-	-60.3%	171.4%	-	-	-	-
Eileen Murray⁷	-	-	-	121.7%	-	-	-1.5%	-	-
David Nish	108.7%	-50.0%	-	0.4%	25.0%	-	-1.0%	120.0%	-
Sir Jonathan Symonds (retired on 18 February 2020)	-86.5%	-4.8%	-	-	-	-	-	-	-
Jackson Tai¹⁰	-10.8%	-78.9%	-	-1.4%	-100.0%	-	7.7%	-	-
Mark Tucker	-	-77.5%	-	-	-36.5%	-	-	242.4%	-
Employee group¹¹	2.0%	2.3%	-20.0%	1.0%	1.3%	25.2%	3.1%	7.0%	3.7%

1 Noel Quinn and Ewen Stevenson both voluntarily waived the cash portion of their 2020 annual incentive. The year-on-year percentage change between 2020 and 2021 would be -1% for Noel Quinn and 9% for Ewen Stevenson without this cash waiver.

2 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.

3 In some instances, non-executive Directors may have served only part of the year resulting in large year-on-year percentage changes in fees and/or benefits. Page 291 provides the underlying single figure of remuneration for non-executive Directors used to calculate the figures above.

4 Retired from the Board during 2021 and therefore fees received during 2021 were lower than the fees received in 2020.

5 There was no change to the benefit provided. The year-on-year change reflected the increase in taxable expense reimbursement claimed in 2021 for attending Board and other meetings at HSBC Holdings' registered offices.

6 Appointed as member of the Group Audit Committee on 1 June 2022.

7 Appointed as Chair of the Group Remuneration Committee effective 29 April 2022.

8 Appointed as non-executive Chair of HSBC North America Holdings, Inc in 2021. Fees for 2021 included fees in relation to this role.

9 Joined the Board during 2020 and therefore received fees for only part of 2020.

10 Received no taxable benefits in 2021, resulting in a 100% reduction from 2021.

11 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.

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 key 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 of pay 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 in the scorecards are subject to a CET1 capital underpin to ensure CET1 capital 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 obligations. These include measures related to reducing the environmental impact of our operations, improving customer satisfaction, diversity and employee engagement. • Each year senior employees participate in a 360 degree 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.

Additional regulatory remuneration disclosures

This section provides disclosures required under the 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.

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 2022 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	12.0	2.0	18.9	1,203.1
	Total fixed pay ($m)	6.4	6.3	43.6	656.8
	of which: cash-based ($m)¹	6.4	2.9	43.6	656.8
	of which: shares or equivalent ownership interests ($m)²	-	3.4	-	-
	of which: share-linked instruments or equivalent non-cash instruments ($m)	-	-	-	-
	of which: other instruments ($m)	-	-	-	-
	of which: other forms ($m)	-	-	-	-
Variable remuneration³	Number of identified staff	12.0	2.0	18.9	1,203.1
	Total variable remuneration ($m)^4,5	-	11.0	65.4	641.0
	of which: cash-based ($m)	-	1.6	30.0	321.0
	- of which: deferred ($m)	-	-	17.9	151.9
	of which: shares or equivalent ownership interests ($m)²	-	9.4	35.4	305.9
	- of which: deferred ($m)	-	7.8	23.3	170.0
	of which: share-linked instruments or equivalent non-cash instruments ($m)	-	-	-	8.7
	- of which: deferred ($m)	-	-	-	4.7
	of which: other instruments ($m)	-	-	-	-
	- of which: deferred ($m)	-	-	-	-
	of which: other forms ($m)	-	-	-	5.4
	- of which: deferred ($m)	-	-	-	3.3
Total remuneration ($m)		6.4	17.3	109.0	1,297.8

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 2022. 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.

4 The Group has used the discount rate under PRA remuneration rule 15.13 for 7 individuals for the purpose of calculating the ratio between fixed and variable components of 2022 total remuneration.

5 27 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)	-	-	-	26.9
- of which paid during the financial year ($m)	-	-	-	21.1
- of which deferred ($m)	-	-	-	-
- of which severance payments paid during the financial year, that are not taken into account in the bonus cap ($m)	-	-	-	26.9
- of which highest payment that has been awarded to a single person ($m)	-	-	-	2.2

1 No guaranteed variable remuneration was awarded in 2022. 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	31.1	2.6	28.5	-2.4	-	1.9	2.7	1.0
Cash-based	2.9	0.5	2.4	-	-	-	0.5	-
Shares	28.2	2.1	26.1	-2.4	-	1.9	2.2	1.0
Share-linked instruments	-	-	-	-	-	-	-	-
Other instruments	-	-	-	-	-	-	-	-
Other forms	-	-	-	-	-	-	-	-
Other senior management	114.3	15.7	98.6	-	-	3.0	16.0	3.0
Cash-based	43.3	6.4	36.9	-	-	-	6.5	-
Shares	70.0	8.5	61.5	-	-	2.9	8.7	2.7
Share-linked instruments	1.0	0.8	0.2	-	-	0.1	0.8	0.3
Other instruments	-	-	-	-	-	-	-	-
Other forms	-	-	-	-	-	-	-	-
Other identified staff	853.1	232.5	620.6	-	-	21.6	235.4	38.1
Cash-based	359.1	85.2	273.9	-	-	-	86.0	-
Shares	474.2	139.0	335.2	-	-	21.6	142.1	34.9
Share-linked instruments	13.9	5.4	8.5	-	-	0.7	5.5	2.4
Other instruments	-	-	-	-	-	-	-	-
Other forms	5.9	2.9	3.0	-	-	-0.7	1.8	0.8
Total amount	998.5	250.8	747.7	-2.4	-	26.5	254.1	42.1

1 This table provides details of balances and movements during performance year 2022. For details of variable pay awards granted for 2022, 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	246
€1,500,000 - 2,000,000	107
€2,000,000 - 2,500,000	48
€2,500,000 - 3,000,000	26
€3,000,000 - 3,500,000	12
€3,500,000 - 4,000,000	8
€4,000,000 - 4,500,000	7
€4,500,000 - 5,000,000	5
€5,000,000 - 6,000,000	6
€6,000,000 - 7,000,000	2
€7,000,000 - 8,000,000	3
€8,000,000 - 9,000,000	1
€9,000,000 - 10,000,000	1
€10,000,000 - 11,000,000	-
€11,000,000 - 12,000,000	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
Total number of identified staff										1,236.0
- of which members of the Board	12.0	2.0	14.0
- of which senior management				2.0	2.0	-	6.9	2.0	6.0
- of which other identified staff				548.5	228.0	32.0	151.0	172.0	71.6
Total remuneration of identified staff ($m)	6.4	17.3	23.7	704.8	225.2	40.5	189.0	123.8	123.5
- of which variable remuneration ($m)¹	-	11.0	11.0	368.6	107.6	21.0	92.4	53.9	62.9
- of which fixed remuneration ($m)	6.4	6.3	12.7	336.2	117.6	19.5	96.6	69.9	60.6

1 Variable pay awarded in respect of 2022. 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.

Directors' emoluments

The details of compensation paid to executive and non-executive Directors for the year ended 31 December 2022 are set out below:

Emoluments
	Noel Quinn		Ewen Stevenson		Non-executive Directors¹
	2022	2021	2022	2021	2022	2021
	£000	£000	£000	£000	£000	£000
Directors' base salary, allowances and benefits in kind	3,367	3,283	1,994	1,933
Non-executive Directors' fees and benefits in kind					5,242	4,680
Pension contributions	-	-	-	-	-	-
Performance-related pay paid or receivable²	6,439	5,721	1,091	3,388	-	-
Inducements to join paid or receivable	-	-	1,180	754	-	-
Compensation for loss of office	-	-	-	-	-	-
Notional return on deferred cash	31	22	-	-	-	-
Total	9,837	9,026	4,265	6,075	5,242	4,680
Total ($000)	12,113	12,414	5,252	8,356	6,455	5,763

1 Fees and benefits in kind for 2021 reflects the population as per the single figure table for non-executive Directors, which excludes individuals who have stepped down from the Board during 2021.

2 Includes the value of the deferred and LTI awards at grant.

The aggregate amount of Directors' emoluments (including both executive Directors and non-executive Directors) for the year ended 31 December 2022 was $23,820,419. 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 on these benefits, where applicable). Post-employment medical insurance benefit was provided to former Directors, including Douglas Flint valued at £6,706 ($8,258), Stuart Gulliver valued at £6,706 ($8,258), John Flint valued at £9,996 ($12,309), and Marc Moses valued at £15,851 ($19,519). Tax return support was also provided to John Flint valued at £5,441 ($6,700), and Marc Moses valued at £2,500 ($3,079). The total aggregate value of benefits provided to former executive Directors was £47,200 ($58,123). The aggregate value of Director retirement benefits for current Directors is nil. Amounts are converted into US dollars based on the average year-to-date exchange rates for the respective year.

There were payments under retirement benefit arrangements with two former Directors of $405,660. The provision at 31 December 2022 in respect of unfunded pension obligations to former Directors amounted to $5,387,659. This relates to unfunded unapproved retirement benefits schemes.

Emoluments of senior management and five highest paid employees

The following tables set out the details of 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 2022, or for the period of appointment in 2022 as a Director or member of the Group Executive Committee. Details of the remuneration paid to the five highest paid employees, comprising one executive Director and four Group Executives, for the year ended 31 December 2021, are also presented.

Emoluments
£000s	Five highest paid employees	Senior management
Basic salaries, allowances and benefits in kind	13,404	41,639
Pension contributions	99	611
Performance-related pay paid or receivable¹	23,237	56,616
Inducements to join paid or receivable	-	-
Compensation for loss of office	-	-
Total	36,740	98,866
Total ($000)	45,242	121,745

1 Includes the value of deferred shares awards at grant.

Emoluments by bands
Hong Kong dollars	US dollars	Number of highest paid employees	Number of senior management
$10,500,001 - $11,000,000	$1,340,909 - $1,404,762	-	1
$19,500,001 - $20,000,000	$2,490,259 - $2,554,112	-	1
$24,000,001 - $24,500,000	$3,064,935 - $3,128,787	-	1
$25,500,001 - $26,000,000	$3,256,493 - $3,320,346	-	1
$29,500,001 - $30,000,000	$3,767,315 - $3,831,168	-	1
$39,500,001 - $40,000,000	$5,044,371 - $5,108,224	-	1
$41,000,001 - $41,500,000	$5,235,930 - $5,299,782	-	1
$44,000,001 - $44,500,000	$5,619,047 - $5,682,899	-	1
$44,500,001 - $45,000,000	$5,682,899 - $5,746,752	-	1
$45,500,001 - $46,000,000	$5,810,605 - $5,874,458	-	1
$52,500,001 - $53,000,000	$6,704,544 - $6,768,397	-	1
$53,000,001 - $53,500,000	$6,768,397 - $6,832,250	-	1
$55,500,001 - $56,000,000	$7,087,661 - $7,151,514	-	1
$56,500,001 - $57,000,000	$7,215,367 - $7,279,219	-	1
$60,500,001 - $61,000,000	$7,726,189 - $7,790,042	-	1
$61,000,001 - $61,500,000	$7,790,042 - $7,853,894	-	1
$64,000,001 - $64,500,000	$8,173,158 - $8,237,011	1	1
$69,000,001 - $69,500,000	$8,811,686 - $8,875,539	1	1
$76,000,001 - $76,500,000	$9,705,626 - $9,769,478	1	1
$82,500,001 - $83,000,000	$10,535,712 - $10,599,565	1	1
$135,000,001 - $135,500,000	$17,240,256 - $17,304,109	1	1

Share capital and other related disclosures

Share buy-back programme

On 20 April 2022, HSBC Holdings concluded a share buy-back programme of its ordinary shares of $0.50 each that had been announced in October 2021. Under this buy-back programme in 2022, a total of 191,466,093 ordinary shares were repurchased for cancellation on UK trading venues, including the London Stock Exchange, BATS, Chi-X, Turquoise and/or Aquis Exchange.

On 3 May 2022, HSBC Holdings commenced a further share buy-back programme of its ordinary shares of $0.50 each up to a maximum consideration of $1.0bn. This programme concluded on 28 July 2022,

with 86,606,357 ordinary shares repurchased for cancellation on the UK trading venues and 70,066,800 ordinary shares repurchased for cancellation on The Stock Exchange of Hong Kong Limited ('HKEx').

The purpose of both buy-back programmes was to reduce HSBC's number of outstanding ordinary shares.

As at 31 December 2022, the total number of ordinary shares purchased and cancelled during the year was 348,139,250, representing a nominal value of $174,069,625 and an aggregate consideration paid by HSBC of £1,426,598,865 on the UK trading venues and HK$3,514,580,618 on the HKEx. The shares cancelled represent 1.72% of the shares in issue and 1.74% of the shares in issue, excluding treasury shares.

The table that follows outlines details of the shares purchased and cancelled on a monthly basis during 2022.

	Number of shares purchased 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 2022		£	£	£	£
Month shares cancelled
Jan-22	25,382,519	5.2700	4.4555	4.9784	126,363,981
Feb-22	19,064,151	5.5510	5.1530	5.3395	101,793,492
Mar-22	72,125,062	5.4040	4.4935	4.9129	354,343,000
Apr-22	74,894,361	5.4100	5.1460	5.2608	394,002,122
Total	191,466,093				976,502,595

	Number of shares purchased 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 2022		£	£	£	£
Month shares cancelled
May-22	21,447,447	5.2700	4.7800	4.9911	107,047,291
Jun-22	31,082,904	5.4960	4.9780	5.2729	163,897,398
Jul-22	33,126,211	5.5530	5.0840	5.2598	174,235,941
Aug-22	949,795	5.2170	5.1230	5.1755	4,915,640
Total	86,606,357				450,096,270

	Number of shares purchased 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 HKEx in 2022		(HK$)	(HK$)	(HK$)	(HK$)
Month shares purchased
May-22	5,244,800	52.8500	46.5000	50.8537	266,717,438
Jun-22	31,582,400	52.7000	48.2500	50.8657	1,606,461,400
Jul-22	33,239,600	52.3000	47.4000	49.3809	1,641,401,780
Total	70,066,800				3,514,580,618

Dividends

Dividends for 2022

An interim dividend of $0.09 for the 2022 half-year was paid on 29 September 2022. For further details of the dividends approved in 2022, see Note 8 on the financial statements.

On 21 February 2023, the Directors approved a second interim dividend for 2022 of $0.23 per ordinary share, making a total of $0.32 for the 2022 full-year. The second interim dividend for 2022 will be payable on 27 April 2023 in cash in US dollars, or in sterling or Hong Kong dollars at exchange rates to be determined on 17 April 2023. As the second interim dividend for 2022 was approved after 31 December 2022, it has not been included in the balance sheet of HSBC as a liability. The distributable reserves of HSBC Holdings at 31 December 2022 were $35.2bn.

A quarterly dividend of £0.01 per Series A sterling preference share was paid on 15 March, 15 June, 15 September and 15 December 2022.

Dividends for 2023

The Group intends to pay quarterly dividends during 2023.

A dividend of £0.01 per Series A sterling preference share was approved on 21 February 2023 for payment on 15 March 2023.

Share capital

Issued share capital

The nominal value of HSBC Holdings' issued share capital paid up at 31 December 2022 was $10,146,803,705 divided into 20,293,607,410 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 2022.

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 418.

Dividend waivers

HSBC Holdings' 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 2022 was $10.7m.

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 2021 and 2022 may be found in Note 8 on the financial statements on page 359.

Further details of the rights and obligations attaching to the HSBC Holdings' issued share capital may be found in Note 32 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.

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 2022

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.

All-employee share plans¹

	HSBC Holdings ordinary shares issued	Aggregate nominal value	Market value per share
	HSBC Holdings ordinary shares issued	Aggregate nominal value	from	to
		$	£	£
HSBC International Employee Share Purchase Plan	234,830	117,415	4.9385	5.1

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 309 for details of options granted, exercised and lapsed.

HSBC share plans
	HSBC Holdings ordinary shares issued	Aggregate nominal value	Market value per share
	HSBC Holdings ordinary shares issued	Aggregate nominal value	from	to
		$	£	£
Vesting of awards under the HSBC Share Plan 2011	9,991,391	4,995,696	4.789	5.498

Authorities to allot and to purchase shares and
pre-emption rights

At the AGM in 2022, shareholders renewed the general authority for the Directors to allot new shares up to 13,475,996,328 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 purchases of up to 2,021,399,449 ordinary shares. The Directors exercised their market purchase authority from both the 2021 and 2022 AGMs and purchased 348,139,250 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 4,042,798,898 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 32 on the financial statements.

Other than as disclosed in the tables above headed 'Share capital changes in 2022', the Directors did not allot any shares during 2022.

Debt securities

In 2022, HSBC Holdings issued the equivalent of $25.4bn of debt securities in the public capital markets in a range of currencies and maturities in the form of senior and subordinated 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 32 on pages 393 and 402.

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. At 31 December 2022, pursuant to Chapter 6 of the UK Companies Act 2006, 325,273,407 ordinary shares were held in treasury. This was the maximum number of shares held at any time during 2022, representing 1.60% of the shares in issue as at 31 December 2022. The nominal value of shares held in treasury was $162,636,704.

Notifiable interests in share capital

During 2022, 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').

On 13 February 2023, pursuant to Rule 5 of the DTRs, Norges Bank gave notice that on 10 February 2023 it had the following: a direct interest in HSBC Holdings ordinary shares of 598,657,162; and

qualifying financial instruments with 9,249,895 voting rights that may be acquired if the instruments are exercised or converted, representing 2.998% and 0.046% respectively, of the total voting rights at that date.

No further notifications had been received between 31 December 2022 and 15 February 2023. 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 2022, 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 2022 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 2022.

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 2022 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 2022 or date of cessation, if earlier
	At 1 Jan 2022, 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 (appointed to the Board on 1 May 2022)	-	15,000	-	-	-	15,000
Rachel Duan¹	-	15,000	-	-	-	15,000
Dame Carolyn Fairbairn	-	15,000	-	-	-	15,000
James Forese¹	115,000	115,000	-	-	-	115,000
Steven Guggenheimer¹	15,000	-	-	15,000	-	15,000
Irene Lee (retired on 29 Apr 2022)	15,000	15,000	-	-	-	15,000
José Antonio Meade Kuribreña¹	15,000	15,000	-	-	-	15,000
Eileen Murray¹	75,000	75,000	-	-	-	75,000
David Nish	50,000	-	50,000	-	-	50,000
Noel Quinn²	1,131,278	1,422,650	-	-	-	1,422,650
Ewen Stevenson²	838,154	1,064,626	-	-	-	1,064,626
Jackson Tai^1,3	66,515	32,800	11,965	21,750	-	66,515
Mark Tucker	307,352	307,352	-	-	-	307,352
Pauline van der Meer Mohr (retired on 29 Apr 2022)	15,000	15,000	-	-	-	15,000

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, Steven Guggenheimer has an interest in 3,000, José Antonio Meade Kuribreña 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 276. At 31 December 2022, 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 - 3,940,314; and Ewen Stevenson - 3,135,841. Each Director's total interests represents approximately 0.02% of the shares in issue and 0.02% of the shares in issue excluding treasury shares.

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 2022 to the date of this report.

Listing Rule 9.8.4 and other disclosures

This section of the Annual Report and Accounts 2022 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	285
Dividend waivers	302
Dividends	302
Share buy-back	301
Emoluments waivers	291
Emissions	47
Energy efficiency	49, 57, 59
Principal activities of HSBC	12, 31, 108, 382
Business review and future developments	11-42, 44, 133, 142, 409

Board governance

Appointment and re-election of Directors

A rigorous selection process is followed for the appointment of Directors. Appointments are made on merit and candidates are considered against objective criteria, having regard to the benefits of a diverse Board. Appointments are made in accordance with HSBC Holdings' Articles of Association. The Nomination & Corporate Governance Committee report sets out further details of the Board selection process.

The Board may at any time appoint any person as a Director or secretary, either to fill a vacancy or as an additional officer. The Board may appoint any Director or secretary to hold any employment or executive office, and may revoke or terminate any such appointment.

Non-executive Directors are appointed for an initial three-year term and, subject to continued satisfactory performance based upon an assessment by the Group Chairman and the Nomination & Corporate Governance Committee, are proposed for re-election by shareholders at each AGM. They typically serve two three-year terms, with any individual's appointment beyond six years to be for a rolling one-year term and subject to thorough review and challenge with reference to the needs of the Board. Where Directors are appointed beyond six years, an explanation is provided in the Annual Report and Accounts.

Shareholders vote at each AGM on whether to elect and re-elect individual Directors. All Directors that stood for election and re-election at the 2022 AGM were elected and re-elected by shareholders.

None of the Directors who retired during the year or who are not offering themselves for re-election at the 2023 AGM have raised concerns about the operation of the Board or the management of the company.

No executive Director is involved in deciding their own remuneration outcome.

Commitments

The terms and conditions of the appointments of non-executive Directors are set out in a letter of appointment, which includes the expectations of them and the estimated time required to perform their role. Letters of appointment of each non-executive Director are available for inspection at the registered office of HSBC Holdings. The anticipated time commitment for a non-executive Director serving on the Board and as a member of any committee is no more than 75 days per annum. Directors who also chair a large committee are expected to commit up to 100 days per annum with the Senior Independent Director expected to serve an additional 30 days per annum. The time commitment of the Group Risk Committee chair is up to 150 days per annum. Any additional time commitment connected with Board-related appointments will be confirmed separately.

Board approval is required for any non-executive Directors' external commitments, with consideration given to their total time commitments and potential conflicts of interest.

Conflicts of interest

The Board has an established policy and set of procedures, reviewed and amended in 2022, 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. As part of its 2022 review, the Board agreed that responsibility for the ongoing review of the conflicts register be conducted by the Board, having previously been overseen by the Nomination & Corporate Governance Committee. 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 re-vetted by the compliance team every three years following appointment and as part of such process all conflicts checks are refreshed.

Joint Company Secretary

Aileen Taylor is the Group Company Secretary and Chief Governance Officer.

In addition to being appointed as Deputy Group Secretary in December 2021, for administrative purposes, Hannah Ashdown (46) was also appointed in October 2022 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 2022, 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', and pension trustees', liability insurances.

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 2022, 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.

As set out in the Section 172(1) statement on page 20, 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 decision making and engagement with stakeholders' on page 20, the Board's engagement with shareholders on page 256 and the Group Remuneration Committee Chair's letter on page 276. During 2022, approximately 570 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 2022 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. He can be contacted via the Group Company Secretary and Chief Governance Officer at 8 Canada Square, London E14 5HQ.

Annual General Meeting

The AGM in 2023 is planned to be held in Birmingham, UK at 11:00am on Friday, 5 May 2023. Information on how to vote and participate, both in advance and on the day, can be found in the Notice of the 2023 AGM, which will be sent to shareholders on 24 March 2023 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 [email protected].

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 [email protected].

Articles of Association

New Articles of Association were approved at the 2022 AGM. The principal changes included updates and changes to articles on hybrid meetings, general meetings, untraceable shareholders, Director share qualification, Directors' reappointment, Directors' written resolutions, distribution in specie and dividend forfeiture. The Articles of Association can be found at www.hsbc.com/who-we-are/leadership-and-governance/board-responsibilities. For further details of the 2022 Notice of AGM, see www.hsbc.com/agm.

Events after the balance sheet date

For details of events after the balance sheet date, see Note 37 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 $100,250 during 2022 (2021: $15,500).

Charitable contributions

For details of charitable contributions, see page 84.

Internal control

The Board is responsible for maintaining and reviewing the effectiveness of 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 Handbook, 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 2023, the date of approval of the Annual Report and Accounts 2022.

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.

Risk management framework

The risk management framework supports our Global Principles. 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, including the right to sub-delegate those limits and powers. Each relevant Group Executive Committee member or executive Director has delegated authority within which to manage the day-to-day affairs of the business or function for which he or she is accountable.

Delegation of authority from the Board requires those individuals to maintain a clear and appropriate apportionment of significant responsibilities and to oversee the establishment and maintenance of systems of control that are appropriate to their business or function. Authorities to enter into credit and market risk exposures are delegated with limits to line management of Group companies. However, credit proposals with specified higher-risk characteristics require the concurrence of the appropriate global function. 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 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 and it reviewed 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.

The effectiveness of the Group's system of risk management and internal control is reviewed regularly by the Board, the GRC and the GAC.

During 2022, the GRC continued to focus on the oversight of risk transformation activities to strengthen our risk management capabilities and to develop a best-in-class Risk function. In 2023, the GRC will continue to focus on overseeing emerging risks and potential risks arising from new products and offerings.

The GRC and the GAC received assurance from executive management that a thorough 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.

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 2022. 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 key risk management and internal control procedures over financial reporting include the following:

Entity level controls

The primary mechanism through which comfort over risk management and internal control systems is achieved is through 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. 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 annually as part of the assessment of the effectiveness of internal controls over financial reporting. 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 132. 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

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 2022.

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 2022, 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 2022

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 14 and 264 that we are seeking to enhance our governance, process, systems and controls in both areas, although the scale and nature of the challenges differ between reporting areas. Our improvements in regulatory reporting are to ensure this reporting is produced to a comparable standard of control as our financial reporting. ESG reporting is fast evolving, with few globally consistent reporting standards 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 264).

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 42.

Employees

At 31 December 2022, HSBC had a total workforce equivalent to 219,000 full-time employees compared with 220,000 at the end of 2021. Our main centres of employment were India with approximately 39,000 employees, the UK with 33,000, mainland China with 32,000, Hong Kong with 27,000, 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. In 2022, we introduced a social well-being index that measures the connectedness of our colleagues as we embrace hybrid working practices.

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 where our colleagues can bring their best selves to work. Members of our Group Executive Committee are held to account for the actions they take on diversity via aspirational targets 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 pinpoint inclusion barriers and enable us to take action where required. Our approach to diversity and inclusion is set out on page 74 alongside our goals and progress.

Further details of our diversity and inclusion activity, alongside our Gender and Ethnicity Pay Gap Reports 2022, can be found at www.hsbc.com/diversitycommitments.

Employment of people with a disability

We strongly believe in providing equal opportunities for all employees. The employment of people with a disability is included in this commitment. The recruitment, training, development and promotion of people with a disability are based on the aptitudes and abilities of the individual. Should employees become disabled during their employment with us, efforts are made to continue their employment. Where necessary, we will provide appropriate training, facilities and reasonable equipment.

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 new 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.

In 2021, we launched the HSBC Talent MarketPlace, an AI-based platform, which matches colleagues to projects and experiences based on their aspirations. In 2022, we rolled the platform out to an additional 83,000 colleagues and we will continue the global roll-out in 2023.

Effective people management and impactful leadership remain critical to our ability to energise for growth. Following the success of our refreshed executive development curriculum in 2021, we launched a new programme for our Managing Director colleagues in 2022. This combines internal programmes and business school activities with targeted technical programmes on key topics and skills.

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 2022 to help us understand and manage our health and safety risks:

• We continued to provide enhancements to our workplaces globally to minimise the risks of Covid-19, including enhanced cleaning, improved ventilation and social distancing measures, as well as reviewing and adjusting our risk control measures as government restrictions were lifted.

• 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 240,000 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, subject to local Covid-19 restrictions, to ensure we were meeting our standards and continuously improving our safety performance.

• 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. Our 2022 safety climate survey results showed that we continue to maintain a positive safety culture that is significantly above the industry average. A particular strength that the survey identified is our encouragement of colleagues to make suggestions on how to improve health and safety.

• We expanded 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 3,400 construction workers received safety passporting training across 20 countries.

• Our Eat Well Live Well programme continued educating and informing our colleagues on how to make healthy food and drink choices. Launched in 2019, and now live in 12 markets across all regions, the programme has helped to shift HSBC employee diets towards more sustainable choices, with a more than 50% rise in healthy food options being selected in our workplace catering outlets since launch. Furthermore, with digital health tools and over 50 healthy and plant-forward recipes created by chefs available online, employees are supported to continue to make healthy choices when away from the workplace.

• 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 2022, there were 38 named storms that passed over 1,667 of our buildings, resulting in no injuries or material business impact.

Employee health and safety
	2022	2021	2020
Rate of workplace fatalities per 100,000 employees	-	-	-
Number of major injuries to employees¹	7	14	15
All injury rate per 100,000 employees	70	64	88
Lost days due to work injury	485	358	449

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 292.

Employee share plans

Share options and discretionary awards of shares granted under HSBC share plans align the interests of employees with the creation of shareholder value. The following table sets out the particulars of outstanding 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 and suppliers of goods or services, nor in excess of the individual limit for each share plan. No options were cancelled by HSBC during the year.

A summary for each plan of the total number of the options that were granted, exercised or lapsed during 2022 is shown in the following table. 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/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 287.

Note 5 on the financial statements gives details of share-based payments, including discretionary awards of shares granted under HSBC share plans.

All-employee share plans

HSBC operates all-employee share option plans under which options are granted over HSBC ordinary shares. Subject to leaver provisions, options are normally exercisable after three or five years. During 2022, options were granted by reference to the average market value of HSBC Holdings ordinary shares on the five business days immediately preceding the invitation date, then applying a discount of 20%. The closing price for HSBC Holdings ordinary shares quoted on the London Stock Exchange on 26 September 2022, the day before the options were granted and as derived from the Daily Official List, was £5.0160.

The HSBC Holdings Savings-Related Share Option Plan (UK) will expire on 24 April 2030, by which time the plan may be extended with approval from shareholders, unless the Directors resolve to terminate the plan at an earlier date.

The HSBC International Employee Share Purchase Plan was introduced in 2013 and now includes employees based in
31 jurisdictions, although no options are granted under this plan.

During 2022, approximately 189,000 employees were offered participation in these plans.

HSBC Holdings Savings-Related Share Option Plan (UK)
						HSBC Holdings ordinary shares
Dates of awards		Exercise price		Usually exercisable		At	Granted	Exercised	Lapsed	At
from	to	from	to	from	to	1 Jan 2022	during year¹	during year²	during year	31 Dec 2022
		(£)	(£)
22 Sep 2015	27 Sep 2022	2.6270	5.9640	1 Nov 2020	28 Apr 2028	123,196,850	8,928,527	3,483,332	12,991,322	115,650,723

1 Options over HSBC ordinary shares granted in response to approximately 9,564 applications from HSBC employees in the UK on 27 September 2022.

2 The weighted average closing price of the shares immediately before the dates on which options were exercised was £5.0534.

Statement of compliance

The statement of corporate governance practices set out on pages 239 to 311 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 2022, save to the extent referred to in the next paragraph, HSBC complied with the provisions and requirements of both the UK and Hong Kong Corporate Governance Codes.

Dame Carolyn Fairbairn was appointed as Chair to the Group Remuneration Committee on 29 April 2022 and has been a member of such committee since September 2021. In approving Dame Carolyn Fairbairn's appointment, the Board considered the UK Corporate Governance Code expectation that the Chair has served at least 12 months as a member on the committee before assuming the position of Chair. Before her appointment she had served on the Group Remuneration Committee for eight months. However, given her previous experience as both a member and chair of the remuneration committees of other UK listed companies, the Board approved the appointment of Dame Carolyn Fairbairn as Chair.

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, save that the HKEx has granted waivers 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.

On behalf of the Board

Mark E Tucker

Group Chairman

HSBC Holdings plc

Registered number 617987

21 February 2023

Directors' responsibility statement

The Directors are responsible for preparing the Annual Report and Accounts 2022, 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 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) N0 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 (IFRSs as issued by IASB). 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 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 IFRSs issued by IASB 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 2022 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 2022, 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 240 to 243 of the Annual Report and Accounts 2022, 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 IFRSs issued by IASB, 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 262 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 2023

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END

ACSEAEAFADPDEFA

TIDM	HSBA
Share Price	GBX 1,308.80-1.00%
Market Cap	£233.18bn

Date	21 Feb 2023
Time	16:30:15
Category	Results
ID	5852Q

TIDM	HSBA
Share Price	GBX 1,308.80-1.00%
Market Cap	£233.18bn

Date	21 Feb 2023
Time	16:30:15
Category	Results
ID	5852Q

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