Share Based Plans

12 Months Ended

Dec. 31, 2011

Share Based Plans [Abstract]

Share-Based Plans

17.    Share-Based Plans

Restricted Share Plans Subsequent to our acquisition by HSBC, key employees have been provided awards in the form of restricted share rights (“RSRs”), restricted shares (“RSs”) and restricted share units (“RSUs”) under the HSBC Group Share Plan. These shares have been granted subject to either time-based vesting or performance based-vesting, typically over three to five years. Currently, share-based awards granted to U.S. employees are granted in the form of RSUs. Annual awards to employees in 2011 and 2010 are subject to three-year time-based graded vesting. Also during 2011, we made a one-time grant of performance-based awards, which represented a significant portion of the shares awarded in 2011, that are subject to performance-based vesting periods ranging from 12 to 30 months. Annual awards to employees in 2009 vest after three years. We also issue a small number of off-cycle grants each year, primarily for reasons related to recruitment of new employees.

Information with respect to RSRs and RSUs awarded under HSBC’s Restricted Share Plan/Group Share Plan, all of which are in HSBC ordinary shares, is as follows:

Year Ended December 31,	2011		2010		2009
RSRs and RSUs awarded		1,410,531		740,340		3,346,266
Weighted-average fair value per share	$	9.40	$	10.33	$	8.76
RSRs and RSUs outstanding at December 31		3,578,689		2,485,665		6,636,911
Compensation cost: (in millions)
Pre-tax	$	12	$	10	$	20
After-tax		8		6		13

As of December 31, 2011, future compensation cost related to grants which have not yet fully vested is approximately $8 million. This amount is expected to be recognized over a weighted-average period of 0.67 years.

Employee Stock Purchase Plans The HSBC Holdings Savings-Related Share Option Plan (the “HSBC Sharesave Plan”), allows eligible employees to enter into savings contracts of one, three or five year lengths, with the ability to decide at the end of the contract term to either use their accumulated savings to purchase HSBC ordinary shares at a discounted option price or have the savings plus interest repaid in cash. Employees can currently save up to $400 per month over all their HSBC Sharesave Plan savings contracts. HSBC ordinary shares granted and the related fair value of the options for 2011, 2010 and 2009 are presented below:

	2011				2010				2009
	HSBC Ordinary Shares Granted		Fair Value Per Share of Shares Granted		HSBC Ordinary Shares Granted		Fair Value Per Share of Shares Granted		HSBC Ordinary Shares Granted		Fair Value Per Share of Shares Granted
1 year vesting period		30,957	$	1.62		45,322	$	2.00		229,545	$	2.07
3 year vesting period		19,880		2.08		38,328		2.57		356,025		2.41
5 year vesting period		12,099		2.22		9,764		2.76		244,087		2.19

Compensation expense related to the grants under the HSBC Sharesave Plan totaled less than a million in 2011, $1 million in 2010 and $2 million in 2009.

The fair value of each option granted under the HSBC Sharesave Plan was estimated as of the date of grant using a third party option pricing model. The significant assumptions used to estimate the fair value of the options granted by year are as follows:

	2011	2010	2009
Risk-free interest rate	.25 - 2.17%	.47 - 2.63%	.52 - 2.10%
Expected life	1, 3 or 5 years	1, 3 or 5 years	1, 3 or 5 years
Expected volatility	25%	30%	50%, 35%, 30%

Stock Option Plans The HSBC Holdings Group Share Option Plan (the “Group Share Option Plan”), which replaced the former Household stock option plans, was a long-term incentive compensation plan available to certain employees prior to 2005. Grants were usually made annually. At the 2005 HSBC Annual Meeting of Stockholders, the shareholders approved and HSBC adopted the HSBC Share Plan (“Group Share Plan”) to replace this plan. Since 2004, no further options have been granted to employees although stock option grants from previous years remain in effect subject to the same conditions as before. Such options were granted at market value. There was no compensation expense related to the Group Share Option Plan during 2011, 2010 or 2009. At December 31, 2011, 2010 and 2009, there were 6,076,829 HSBC ordinary shares outstanding and exercisable with a weighted average price per share of $12.93. At December 31, 2011, the stock options outstanding under the Group Share Plan had exercise prices in the range of $12.51 to $15.00 and a weighted-average remaining life of 1.98 years.

Prior to our acquisition by HSBC, certain employees were eligible to participate in the former Household stock option plan. Employee stock options generally vested equally over four years and expired 10 years from the date of grant. Upon completion of our acquisition by HSBC, all options granted prior to November 2002 vested and became outstanding options to purchase HSBC ordinary shares. Options granted under the former Household plan subsequent to October 2002 were converted into options to purchase ordinary shares of HSBC, but did not vest under the change in control. No compensation expense related to the former Household plan was recorded in 2011, 2010 or 2009 as all shares under the former Household plan are fully vested. At December 31, 2011, there were 1,904,957 stock options outstanding under the former Household plan which had exercise prices ranging from $9.01 to $12.50 with a weighted-average price per share of $9.29 and a weighted-average remaining life of 0.87 years.