Corporate governance report 196 Group Chairman’s governance statement 198 The Board 202 Senior management 204 How we are governed 209 Board activities during 2020 213 Board committees 229 Directors’ remuneration report 256 Share capital and other related disclosures 260 Internal control 261 Employees 264 Statement of compliance 265 Directors’ responsibility statement Corporate governance Corporate HSBC is committed to high standards of corporate governance. We have a comprehensive range of policies and systems in place designed to ensure that the Group is well managed, with effective oversight and control. HSBC Holdings plc Annual Report and Accounts 2020 195 Report of the Directors | Corporate governance report Group Chairman’s governance statement Despite the challenging environment, the Board remained informed on relevant issues, engaged with stakeholders, and oversaw the development of our new Group purpose and values. As Group Chairman, I am ultimately responsible for the Group’s governance arrangements and the effective operation of the Board. I am also responsible for ensuring that the Board sets the right tone from the top of the organisation and monitors the Group’s culture. Given the unique challenges faced during 2020 as a result of the Covid-19 outbreak, it was important that the Board was properly informed on a regular basis on all key issues and priorities affecting the Group. To achieve this, we increased our Board communication and met more frequently during 2020, albeit remotely and with scheduling flexed to meet the challenges of Directors based in different time zones. This allowed us to share insights and receive updates on key developments, supported by the attendance of external subject matter experts. Given the restrictions on travel and large gatherings, and the guidance available to us at the time, we took the decision to hold the 2020 AGM behind closed doors. As we approach our 2021 AGM, we will continue to monitor the situation, and will prioritise the health and safety of the Board, our colleagues and of course our shareholders. Further details Mark E Tucker will be provided when our Notice of AGM is Group Chairman published on 24 March 2021. “ Governance improvements will remain Board changes Following a thorough and robust search an area of focus for the Board and its process, as more fully set out in the subsidiaries in the years ahead as the Nomination & Corporate Governance Committee report on page 213, the Board Group aims to achieve its ambition of unanimously supported the appointment operating with world-class governance.” of Noel Quinn as Group Chief Executive on 17 March 2020. Noel has provided strong direction and excellent leadership to HSBC through these unprecedented times. I would like to thank Sir Jonathan Symonds Dear Shareholder and Kathleen Casey who stepped down from the Board earlier this year. We subsequently With the global pandemic and challenging appointed three new Directors, James Forese, macroeconomic and geopolitical environment, Steven Guggenheimer and Eileen Murray, who 2020 was an extraordinary year for the Board. collectively bring strong universal banking, These challenges have highlighted the operational and technology expertise. importance of our governance framework and operating practices. Against this backdrop, While the Board and its committees have the Board oversaw the development of the operated well in a virtual environment, I do Group’s future purpose and strategy led by not underestimate the value of in-person the Group Chief Executive. We adapted our meetings. Our three new Directors underwent Board and senior management engagement a successful virtual non-executive Director schedule to ensure that as a Board, we induction programme during the year and we continued to deliver on our responsibilities look forward to welcoming them in person at to our key stakeholders. an appropriate point in the future. 196 HSBC Holdings plc Annual Report and Accounts 2020 Today we also announce that Laura Cha will effective and diverse skill sets that are aligned issues, as well as training to provide the Board step down from the Board at the conclusion of with our future strategy. Further details with insight and an understanding of the our 2021 AGM in May. On behalf of the Board, are set out in the Nomination & Corporate developing landscape and stakeholder I wish to thank Laura for her outstanding Governance Committee report on page 213. expectations. dedication and the enormous contribution she has made to the success of HSBC over We enhanced our subsidiary accountability Recognising the importance of these matters many years. I greatly appreciate the support framework, which applies to all subsidiaries to our stakeholders, investors and customers, and counsel that she has provided to me within the Group, by supplementing this with the Board was pleased to announce our personally on many occasions since I clear principles and provisions. The refreshed updated climate ambition in October 2020. became the Group Chairman. framework builds on the progress made to Further information is provided on pages 24 enhance Group standards with the aim of and 44. The Board initiated a search for suitable achieving world-class governance across candidates to join and strengthen the expertise all our subsidiaries. Workforce engagement on the Board, and further enhance our Members of the Board and subsidiary boards Board diversity and knowledge of Asia. We strengthened connectivity between engaged actively with our employees during I was delighted that last week we were able the HSBC Holdings Board and principal 2020 in line with the requirements of the 2018 to announce the appointment of Dame Carolyn subsidiaries by increasing the frequency of the UK Corporate Governance Code in relation to Fairbairn as an independent non-executive Chairman’s Forum meetings. These monthly workforce engagement. Director. Carolyn will bring a wealth of relevant meetings – which I chair – are attended by the experience to our Board and her appointment chairs of the Holdings Board committees and Despite travel restrictions, all of the non- will be effective from 1 September 2021. I am the chairs of the principal subsidiaries’ boards. executive Directors engaged directly with pleased to report we are in advanced stages Given the significant uncertainty and members of the workforce across our global on other searches that will result in further challenges that the Group, the industry and business lines, and through our employee strengthening the Board’s skill set. wider society encountered in 2020, these resource groups. This has provided great more frequent meetings proved hugely insight into the views of the wider workforce Board evaluation beneficial in identifying and navigating the and gave valuable context for the Directors In line with best practice, the Board and its challenges facing the Group globally. in informing their discussions at the Board. committees again conducted a review of the Further details of our workforce engagement governance Corporate effectiveness of our operation and practices. Purpose and values practices during 2020 can be found on As we developed our purpose and values, the page 210. Our 2019 review identified a number of areas Board undertook significant engagement with for improvement in the way that the Board key stakeholders. Their input was important Looking ahead operated. We took a number of actions during and influenced the outcome. It is critical that I am pleased with the progress that the Board the second half of 2019 and throughout the values and associated behaviours are and broader Group have made in enhancing 2020 to address the areas identified, which embedded across the Group. Senior our governance practices during 2020. contributed to improved effectiveness despite management’s success in embedding the Governance improvements will remain an area the challenges posed by Covid-19 and the purpose and values will be overseen by the of focus for the Board and its subsidiaries in uncertain geopolitical environment. Board. The Board and the Group Executive the years ahead as the Group aims to achieve Committee set the tone from the top by its ambition of operating with world-class We took the decision to once again invite adopting these refreshed values, which will governance. Dr Tracy Long, the independent board inform the Board’s engagement practices evaluator, to facilitate our 2020 review, provide and help facilitate an open and collaborative As a result of the Covid-19 outbreak, we assurance on the progress made, and identify relationship with its stakeholders. The have had to adjust how we engage with our any areas where further action was required. boardroom guidelines, which set out the shareholders and other stakeholders, with Further details of the process, findings and ways of working between the Board and in-person meetings substituted for virtual recommendations from the 2020 review can management and which were implemented meetings where necessary. Despite this, we be found on page 211. in 2020, also support the engagement continued to engage fully with institutional between the Board and management. investors. With encouraging news regarding Subsidiary governance successful vaccines, I look forward to During the year, the Board requested Further details of the Board’s consideration resuming in-person engagement practices the Group Company Secretary and Chief when developing the purpose and values with our stakeholders when safe to do so.