Committed to delivering value

Board remuneration committee

Members

• ¹appointed 16 September 2008.
• ²resigned 19 September 2008.

Review and highlights

In addition to its regular agenda items, such as reviewing directors’ compensation, the board remuneration committee (the ‘committee’) activities in 2008 included:

• A wide-ranging reward review which led to an important set of changes on the deferral of annual performance awards being adopted for the 2008 performance year.
  • – The new deferral arrangement applies to all employees (including directors) with annual discretionary performance awards above a certain threshold level.
  • – The arrangement applies Group wide, irrespective of business, with a series of progressive deferral rates of awards into shares being applied i.e. the higher the award, the greater the level of deferral.
  • – The highest mandatory marginal rate of deferral will be 50 per cent in 2008.
• A discussion on how reward is structured and managed across Wholesale Banking, and how such reward may change in the coming years.
• A review of the performance conditions and the composition of the Total Shareholder Return comparator group under the Group’s Performance Share Plan.

Towards the end of the year, the committee also reflected on the Financial Services Authority’s (FSA) issuance of ‘criteria for good and bad remuneration policies’. The Group believes that its existing performance and reward processes are well aligned to the FSA’s recently published draft code of practice on remuneration policies.

Role of the committee

The committee has specific terms of reference which can be found on the Group’s website. In particular, the committee:

• Considers and recommends to the board the Group’s remuneration policy, agreeing the individual remuneration packages of the chairman, Group chief executive, the executive directors and such other senior executives as it is designated to consider; and
• Reviews and approves any major changes in employee remuneration throughout the Group, including the continuous review of bonus arrangements to ensure that they remain appropriate.

Advisors

In 2004, the committee appointed Kepler Associates (Kepler) as its independent advisors. In 2008, the committee reappointed Kepler to advise it on a range of executive remuneration-related issues for a further 12 month period. Kepler does not provide any other advice or services to the Group.

In addition, during 2008, the committee received advice from the Group head of human resources (Tracy Clarke) and the Group head of reward (Neil Cuthbertson).

Towers Perrin provided formal remuneration survey data and advice to the Group on executive remuneration issues as well as retirement consulting issues in Korea and, together with Clifford Chance LLP, also advised on the design and operation of the Group’s share plans. Clifford Chance LLP also advised on issues relating to executive directors’ contracts. McLagan Partners provided formal remuneration survey data and together with Mercer Oliver Wyman provided advice to the Group on market practice in variable compensation plans within the wholesale banking sector.

Remuneration policy

The success of the Group depends upon the performance and commitment of talented employees. The Group’s reward programmes support and drive its business strategy and reinforce its values. Its existing remuneration policy for 2008 and, so far as practicable, for subsequent years is to:

1. Support a strong performance-oriented culture, ensuring that individual rewards and incentives relate directly to the performance of the individual, the operations and functions in which they work or for which they are responsible, the Group as a whole and shareholders’ interests; and
2. Maintain competitive reward that reflects the international nature of the Group and enables it to attract and retain talented executives of the highest quality internationally. Many of the Group’s employees bring international experience and expertise and the Group recognises that it recruits from an international marketplace.

The committee reviews the remuneration policy on a regular basis against significant regulatory developments, market practice and shareholder expectations.

Executive directors

Target remuneration levels for the executive directors are set with reference to individual experience as well as the compensation levels in the Group’s international banking peers and the FTSE 30. These two groupings have business characteristics similar to the Group such as international scope of operations, complexity and size (both in financial terms and with regard to numbers of employees), and represent organisations which compete alongside the Group for talent.

Target remuneration levels are aligned to the market, and the individual executive director is rewarded with higher variable compensation delivered through a combination of annual performance awards, both cash and deferred elements, and performance share awards.

The committee places great emphasis on ensuring that the balance of each executive director’s target remuneration is structured to give the heaviest weighting to performance-related elements.

Other employees

The committee considers the remuneration policy in the context of all Group employees.

Base salaries of employees are determined in a similar way to those of executive directors. The Group’s approach is to ensure that target total compensation is benchmarked to the relevant market in which the individual is employed. Potential total compensation is set at upper quartile or higher for excellent individual and business performance. In addition, employees:

• Are eligible to receive a discretionary annual performance award dependent upon performance and their contractual position. From 2008 a Group-wide deferral arrangement operates, which covers all employees with an annual discretionary performance award above a certain threshold level. Progressive rates of deferral will apply i.e. the higher the award, the greater the level of deferral in shares;
• Are eligible to participate in the Group’s all-employee Sharesave Schemes;
• Are provided with core benefits based on local regulations and competitive practice. These will normally include retirement benefits, medical insurance, life assurance and annual leave; and
• Should have an element of performance-related compensation. The proportion of this variable compensation (which might be delivered through a cash bonus, deferred shares and performance shares) increases with seniority. In addition, as the chart below shows, the balance of shares as a percentage of variable compensation increases with seniority.

Performance shares remain an important part of the overall reward package for directors and the top 700 senior managers. This aligns the interests of shareholders by ensuring that senior managers build and retain an appropriate equity stake in the Bank.

The chart shows the typical level of target variable compensation for directors and senior managers (the Group’s bands 1 and 2) expressed as a percentage of target total compensation.

At 31 December 2008, the Group employed 73,802 employees worldwide in 75 countries and territories. This means many differing local market conditions and therefore compensation is often structured in different ways (for example, base salaries are not always the only element of core compensation). Different costs of living in countries in which the Group operates and fluctuations in foreign exchange rates also impact total compensation levels. The committee consequently does not consider it helpful to use a ratio comparing compensation between executive directors and non-board employees when assessing the fairness of the Group’s practices.

2008 remuneration decisions for executive directors
The Group continues to have a robust pay for performance culture and, as a result, made annual performance awards for 2008 to those parts of the Group and employees that have performed well.

In recognition of the Group’s strong, absolute and relative performance, and in consideration of emerging best practice around executive remuneration, the following approach has been taken on directors’ compensation:

• No salary increases were awarded as part of the year end compensation cycle;
• Annual performance awards have been agreed by the committee for each director that reflect both individual and Group performance. Award levels are at least 10 per cent down on 2007 levels;
• The mandatory deferred element of the annual performance award under the new deferral mechanism is in shares which now vest over a two and three year period rather than one year;
• An additional grant of shares under the Group’s Performance Share Plan has been agreed for each director, also at lower levels than for 2007;
• A revised minimum shareholding requirement has been put in place. Directors must now maintain double the number of shares than previously required;
• The existing policy on directors’ compensation already provided that, based on 2008 performance, approximately two-thirds of variable compensation would be delivered in either deferred or performance shares; and
• In addition, the directors have made voluntary deferral for part of their annual performance award resulting in at least 50 per cent of each Company director’s annual performance award being deferred into shares. In excess of 70 per cent of their variable compensation is in deferred and performance shares.

The actual levels of cash and deferred awards are shown in the directors’ emoluments table.

Remuneration arrangements for executive directors

The table below summarises the four key components of executive directors’ remuneration. Further details on each element are set out in the subsequent sections.

Remuneration element	Objective	Delivery	Programme detail
Base salaries	To attract and retain talent by ensuring that salaries are competitive relative to the Group’s international competitors	Cash Pensionable	Reviewed annually taking account of the latest available market data Any increases normally takes effect from 1 April of the relevant year No increases have been awarded as part of the year end compensation review
Annual Performance Award: – Cash – Deferred shares	To focus participants on the achievement of annual objectives, which align the short-term performance of the Group with the creation of shareholder value To provide a portion of total remuneration which is performance related	Awards are in two components: cash and deferred shares. Awards in excess of $50,000 have a proportion deferred into restricted shares The greater the quantum of the annual performance award, the greater the level of deferral, with the highest deferral of 50 per cent A longer vesting period has been introduced. Deferred shares vest in equal tranches after two and three years	Plan maximum increased in 2008 from 200 per cent to 250 per cent of salary, for outstanding performance In 2008, each director had a dollar denominated target performance award, set at 125 per cent of salary and converted to dollars at the start of the year The delivery mechanism for the mandatory deferral element with effect from 2008 is the 2006 Restricted Share Scheme. The Deferred Bonus Plan has been retained for any voluntary deferral made by a director The deferred element is normally forfeited during the vesting period in the event of a voluntary resignation or termination for cause
Long-term Incentives: Performance Share Plan	To focus participants on meeting and exceeding the Group’s long-term performance targets which are linked to safeguarding shareholder interests	Awards of deferred rights or nil price options, exercisable after the third, but before the tenth anniversary of the date of grant, subject to continued employment and performance conditions being met	Target and maximum levels of awards are 150 per cent and 400 per cent of base salary, in any one year Awards are entirely discretionary and are based on directors’ individual performance and contribution to long-term value creation Appropriate performance conditions are set by the committee each time an award is made
Retirement Benefits	To provide a retirement benefit to executive directors, equivalent to two-thirds of base salary for those who have completed at least 20 years’ service	Provided through a combination of approved and/or unapproved defined benefit and cash structures	Defined benefit plans comprise a combination of the Standard Chartered Pension Fund, an approved non-contributory scheme, and an unapproved retirement benefit scheme

Base salaries
The annual base salary levels of executive directors as at 31 December 2008 were as follows:

	31 December 2008	Percentage increase to base salary as at 1 April 2008	Percentage increase to base salary as at 1 April 2009
P A Sands	$1,562,045 (£850,000)	13.3%(2)	0.0%(3)
S P Bertamini(1)	$900,000 n/a	n/a	0.0%(3)
G R Bullock	$918,850 (£500,000)	5.3%	0.0%(3)
R H Meddings	$1,148,563 (£625,000)	22.5%(2)	0.0%(3)

1. Mr Bertamini was appointed to the board on 1 June 2008 and has a US dollar denominated base salary, whereas other directors have sterling denominated base salaries.
2. Messrs Sands and Meddings were appointed to their current roles in November 2006. The committee decided to phase in base salary increases over a period of time, rather than implementing a larger one-off increase to align their base salary with the market level.
3. The committee has supported a recommendation from the executive that no changes be made to base salaries for 1 April 2009.

Annual performance award
Executive directors (and most employees) are eligible to receive a discretionary annual performance award based on Group and individual performance.

The committee formally assesses each year Group performance, and so determines the overall bonus pool size against a series of profit-based targets. The committee then exercises its discretion on the final bonus pool by considering a number of quantitative and qualitative measures, including earnings per share (EPS); revenue growth; costs and cost control; bad debts; risk management; total shareholder return and progress against the Group’s strategic management agenda, as well as the Group’s performance relative to its peers.

Individual performance is appraised taking account not only of the results achieved by the individual but also their support of the Group’s values and contribution to the collective leadership of the Group. The ‘values’ principle is applied throughout the organisation. Each executive director has written objectives which are presented to the committee at the start of the financial year and then assessed at the year-end.

The annual performance award comprised two components; a cash award and deferred shares. For 2008 performance year onwards, executive directors will have a proportion of their annual bonus award deferred into restricted shares which vest in equal tranches over a two and three year period. This compares to the previous Deferred Bonus Plan where one-third of any performance bonus award was deferred for 12 months. The restricted shares will be granted under the 2006 Restricted Share Scheme. Two important features of the Group-wide mechanism are that: firstly, any deferred element receives ten per cent uplift in recognition of the loss of potential dividends and, secondly, the rates of deferral are progressive i.e. the more you earn the more you defer, with the highest deferral percentage of 50 per cent of the incremental bonus earned above the highest threshold. The Deferred Bonus Plan has been retained to deliver any voluntary deferral of an annual performance award made by a director.

The importance of Group and individual performance as a determinant of the level of awards is reflected in the variation of the actual annual performance awards made to executive directors in recent years.

Long term incentives
2001 Performance Share Plan (the PSP)
Outline of the PSP
The PSP is designed to be an intrinsic element of total remuneration for the Group’s executive directors and a growing number of senior executives. The significance of the PSP as a percentage of executive directors’ total potential remuneration is one of the strongest indicators of the Group’s commitment to paying for sustainable performance. As shown in the table below, there has been variation in the levels of share awards made to executive directors, illustrating the importance the Group places on individual performance. A performance test is therefore effectively applied both at the time of award and upon vesting.

At its meeting in February 2009, the committee recommended the following proposed PSP awards for executive directors in respect of performance for the 2008 financial year (2008 awards are shown in brackets).

2009 Proposed and 2008 Actual PSP Awards

	Face value (£000s)	Percentage of current base salary
P A Sands	2,888 (2,625)	340% (350%)
S P Bertamini	1,288 (n/a)	263% (n/a)
G R Bullock	1,188 (1,544)	238% (325%)
R H Meddings	1,785 (1,785)	286% (350%)

Performance conditions
Half of the award is dependent upon the Group’s total shareholder return (TSR) performance compared to that of a comparator group at the end of a three-year period. The other half of the award will be subject to an EPS growth target applied over the same three-year period.

The committee reviewed the performance conditions in 2008 and concluded that, in aggregate, the combination of the TSR and EPS performance measures and their targets remained appropriate, providing a balance between driving stretching performance and having an effective retention and motivation tool. The rationale for the selection of TSR and EPS performance conditions is set out in the following table:

TSR	Measuring growth in share price plus dividends paid to shareholders, relative TSR is recognised as one of the best indicators of whether a shareholder has achieved a good return on investing in the Group relative to a basket of companies or a single index
EPS	An EPS performance condition provides an appropriate measure of the Group’s underlying financial performance

TSR element
During 2008, the committee discussed the composition of the comparator group on several occasions. In light of the acquisition of ABN AMRO (ABN), a comparator group constituent, the committee decided, in February 2008, that, for unvested awards granted in 2006 and 2007, ABN should be replaced with a ‘synthetic’ company comprising the median TSR performance of the remaining comparator group companies. In addition, for awards to be granted in 2008, the committee agreed to remove ABN from the comparator group and substitute it with ICICI, a bank of a broadly similar size in one of the Group’s key revenue-generating markets. The committee has also decided that for unvested awards granted in 2006, 2007 and 2008, HBOS, a comparator constituent, would also be replaced by another synthetic company, in view of its acquisition by Lloyds TSB. The constituents of the comparator groups for awards made in 2006, 2007 and 2008 are set out below:

For awards made prior to 2009

ABN AMRO*	HSBC
Bank of America	ICICI**
Bank of East Asia	JPMorgan Chase
Barclays	Lloyds TSB
Citigroup	Overseas Chinese Banking Corporation
DBS Group	Royal Bank of Scotland
Deutsche Bank	United Overseas Bank
HBOS	Standard Chartered

• ^*For awards made prior to 2008.
• ^**For awards made in 2008 only.

In June, the committee subsequently conducted a comprehensive review of the comparator group and decided to increase the number of constituents from 15 to 21 for awards to be made in 2009 and beyond. The enlarged group better reflects the increased size and scope of the Group’s business since the original comparator group was established. The committee used a combination of measures, including size, business scope and geographic spread, to identify the most appropriate companies before agreeing the following enlarged comparator group:

For awards made in 2009 and after

Banco Santander	JPMorgan Chase
Bank of America	Kookmin
Bank of China	Lloyds Banking Group
Bank of East Asia	Overseas Chinese Banking Corporation
Barclays	Royal Bank of Scotland
Citigroup	Standard Bank
DBS Group	State Bank of India
Deutsche Bank	Unicredito
HSBC	United Overseas Bank
ICBC	Standard Chartered
ICICI

Following the increase in the number of constituents from 15 to 21, the vesting schedule has been re-calibrated to ensure the vesting level at median and upper quintile remains broadly unchanged. The percentage of award exercisable at the end of the relevant three-year performance period is calculated on a straight-line basis. Minimum vesting occurs if the Group achieves median ranking, with full vesting achieved if the Group is ranked in the upper quintile or above position in the comparator group.

The committee continues to believe that it is preferable to measure TSR performance using a local currency approach. This is considered the most appropriate approach given the international composition of the comparator group, particularly as a significant proportion of comparator companies’ profits are in the same currency as their primary listing. This local currency approach measures the real impact for a shareholder focusing on relative stock movement rather than taking into account exchange rate fluctuations.

EPS element
The percentage of award which will normally be exercisable at the end of the relevant three-year performance period is as follows:

Increase in EPS	Percentage of award exercisable
Less than 15%	nil
15%	15
Between 15% - 30%	>15 but <50*
30% or greater	50

• ^*Calculated on a straight-line basis.

Vesting of 2006 awards
The committee recently reviewed whether the performance conditions on the awards granted in 2006 were satisfied at the end of December 2008. The table below sets out EPS and TSR performance over the three-year performance period and the percentage of the 2006 awards that has now vested.

		Vesting
Element	Performance	March 06 Awards	May/Sept 06* Awards
EPS growth	30.04%	50%	50%
TSR ranking	6 out of 15	35%	29%
Total		85%	79%

• ^*Revised performance conditions apply to awards granted since May 2006 AGM.

For awards granted in 2008, normalised EPS of 173.0 cents (197.6 cents pre-rights issue) has been used as a base figure.

Executive Share Option Scheme (the ESOS)
Outline of the ESOS
It is proposed that no further awards will be made under the ESOS. However, the scheme will be retained for use in exceptional circumstances or if there is a subsequent change in policy in response to future market trends. Under the ESOS, options to acquire the Company’s ordinary shares are exercisable after the third, but before the tenth, anniversary of the date of grant. The exercise price per share is the share price at the date of grant and options can normally only be exercised if a performance condition is satisfied.

Restricted Share Scheme (the RSS)
The RSS is used as a vehicle for deferring part of annual performance awards for certain employees and as an incentive plan to motivate and retain high performing staff at any level of the organisation. Except where used for deferral purposes, executive directors are not generally eligible to participate in the RSS. However, upon recruitment to the Group, awards may be made on an exceptional basis, for example, to newly appointed executive directors to compensate for share awards forfeited on leaving their previous employer. No such awards have been made since 2003.

Under the RSS, the value of shares awarded in any year to any individual may not exceed two times their base salary. Half of the award vests two years after the date of grant and the balance after three years. The RSS, in line with other similar schemes operated by our competitors, does not have performance conditions.

All employee Sharesave Schemes
The Group believes strongly in encouraging employee share ownership at all levels in the organisation. It seeks to engage employees in the Group’s performance, align their interests more closely with those of shareholders and offer them an opportunity for long-term savings and a share in the Group’s financial success that they help to create. The Group has operated UK and International Sharesave schemes since 1984 and 1996 respectively; the latter being specifically launched to allow all non-UK based employees to participate. In 2008, the Company introduced an Irish Sharesave Scheme for employees.

Under Sharesave, employees are invited to open a three-year or a five-year savings contract. Within a period of six months after the third or fifth anniversary, employees may purchase ordinary shares in the Company at a price which is at a discount of up to 20 per cent on the share price at the date of invitation. As at 31 December 2008, 37 per cent of employees globally participate in the Group’s all-employee Sharesave schemes (2007: 42 per cent). There are no performance conditions attached to options granted under these schemes.

In some countries in which the Group operates, it is not possible to operate Sharesave, typically because of securities laws, regulatory or other similar issues. In these countries the Group offers an equivalent cash-based scheme to its employees.

Further details on the long-term incentives operated by the Group are set out in note 42 on pages 148 to 153 to the financial statements.

Shareholding guidelines
The Group operates a shareholding guideline policy which aims to align the interests of executives with shareholders by ensuring that they build up a significant equity stake in the Company. The key aspects of the guidelines are as follows:

• There is a single shareholding target for employees at specific levels;
• Executives will be expected to retain any shares acquired on the exercise of awards granted under the PSP and any deferred shares until such time as the shareholding guideline is satisfied. However, executives may sell sufficient shares to pay for any tax and exercise price (if any). Unexercised RSS awards and interests under the Deferred Bonus Plan count towards the guideline level;
• The committee annually reviews the progress made by executives in terms of meeting their guideline targets. It will also continue to review the guideline levels to ensure they remain challenging and appropriate; and
• In February 2009, the committee agreed to increase the minimum guideline levels that members of the Group management committee were required to hold.

The minimum number of shares executives are expected to hold are as follows:

	Original	Revised
Group CEO	100,000 shares	200,000 shares
Group executive directors	60,000 shares	120,000 shares
Standard Chartered Bank directors	40,000 shares	80,000 shares
Other members of Group management committee	15,000 shares	50,000 shares
Other senior management	10,000 – 15,000 shares

Retirement benefits
Retirement benefits are provided through a combination of approved and/or unapproved defined benefit and cash structures depending upon when the executive director joined the Group and his geographical location. Executive directors are given the opportunity to waive a proportion of the cash element of any potential annual performance award, to enhance their unfunded unapproved retirement benefits. Any amounts waived in respect of 2008 are shown in the Audited information section below and the additional pension benefits have been calculated by the Group’s actuary using the assumptions adopted for IAS 19 reporting.

The defined benefit plans comprise a combination of the Standard Chartered Pension Fund, an approved non-contributory scheme, and an unapproved retirement benefit scheme. The unapproved scheme is unfunded but the benefits are secured by a charge, in the name of an independent trustee, over specific Group assets. The unapproved unfunded retirement benefit scheme provides that part of the executives benefit which exceeds the UK Government’s lifetime allowance. In other respects the terms of the unapproved scheme are designed to mirror the provisions of the Standard Chartered Pension Fund. Upon the death in service of an executive director, pension benefits are available to a spouse and dependant children and a lump sum is payable.

Base salary is the only element of remuneration which is pensionable.

Executive directors’ contracts of employment
The Group policy is for all executive directors to receive and be required to give 12 months’ notice. The dates of the executive directors’ contracts of employment are as follows:

Mr P A Sands	31 December 2003
Mr S P Bertamini*	22 April 2008
Mr G R Bullock	19 October 2004
Mr R H Meddings	12 December 2003
Mr M B DeNoma**	11 December 2003

• ^*Mr Bertamini joined the Group on 19 May 2008 and was appointed to the board on 1 June 2008.
• ^**Mr DeNoma resigned from the board on 1 June 2008.

All executive directors have contracts subject to 12 months’ rolling notice. These terminate automatically at the first annual general meeting following the executive director’s 60th birthday.

The contracts contain payment in lieu of notice (PILON) provisions which can be exercised at the Group’s discretion. The PILON would comprise an amount equal to 12 months’ base salary, pension contributions/entitlement and certain benefits and allowances (such as life assurance and car allowance). Any annual performance award payable as part of a PILON is determined by the committee taking into consideration individual and Group performance. Any payment under the PILON would be paid in quarterly instalments and be subject to mitigation.

Special provisions apply in the event where the Group terminates the executive’s contract in the 12 months following a change of control without giving notice. These provide that, if the executive’s contract is terminated by the Group (other than where summary dismissal is appropriate or the executive serves out notice), the Group will pay in four equal instalments an amount equal to 12 months’ base salary, annual performance award, pension contributions/entitlement and certain benefits and allowances. The amount of annual performance award payable in respect of the 12 months following the date of termination is the executive’s target bonus. The amount of annual performance award payable in respect of the performance period which the executive director worked prior to termination will be decided by the committee taking into consideration individual and Group performance, unless such a period is less than six months, in which case a pro rata target bonus is payable.

Steve Bertamini
Steve Bertamini joined the Group on 19 May 2008 and was appointed as an executive director with effect from 1 June 2008. Details relating to his compensation arrangements were approved by the committee and announced on 22 April 2008. Further details including proposed deferred share awards, are set out in the directors’ emoluments table.

Mervyn Davies (former chairman)
Contract
Lord Davies stepped down from the board on 14 January 2009 to take up appointment as a minister in the UK Government. Lord Davies’ contract of employment was dated 23 February 2007. Although he had a 12 month notice period, the committee agreed that, in recognition of Lord Davies’ significant contribution and long service, the notice period would be waived and not paid. The committee also decided to exercise its discretion and permit Lord Davies to retain awards under the Group’s share plans awarded to him when Group chief executive (see Long-term incentives table).

Remuneration
Lord Davies was paid a base fee of $1,194,505 (£650,000) per annum, payable in cash. In addition, he was provided with a car and driver, private healthcare provision and life assurance coverage. As chairman, Lord Davies was not eligible to receive discretionary share awards or to participate in either the Group’s annual performance award or retirement plans.

Non-executive directors of Standard Chartered PLC
The fees of the non-executive directors are determined by the chairman and the executive directors and are non-pensionable. Non-executive directors’ fees are reviewed at least every two years and, as with executive directors’ remuneration, reflect the international nature of the roles which they perform.

Basic annual fees and committee fees are set to be competitive against the Group’s international comparator group. The non-executive directors’ fees were revised in 2008 and are set out in the table below (fees prior to review are shown in italics). Increases in fee levels, particularly for involvement in committees, reflect, in part, the growing regulatory and governance responsibilities resulting in an increase in the time commitment required by non-executive directors.

	Ordinary membership	Chairmanship
PLC Board	$137,828 (£75,000) $119,451 (£65,000)	– –
Deputy chairman*	$275,655 (£150,000) $275,655 (£150,000)	– –
Audit and risk	$55,131 (£30,000) $36,754 (£20,000)	$119,451 (£65,000) $91,885 (£50,000)
Board nomination	$18,377 (£10,000) $13,783 (£7,500)	N/A**
Board remuneration	$36,754 (£20,000) $27,566 (£15,000)	$73,508 (£40,000) $55,131 (£30,000)
Sustainability and responsibility	$13,783 (£7,500) $9,189 (£5,000)	N/A**

• ^* As deputy chairman, Mr Peace received an all-inclusive fee.
• ^** Lord Davies was chairman of the sustainability and responsibility committee and the board nomination committee. As Group chairman, he did not receive any fees in his capacity as a member of either committee.

Following Lord Davies’ resignation, John Peace was appointed acting chairman and Rudy Markham was appointed the acting senior independent director. The committee has approved an initial base fee of $1,194,505 (£650,000) per annum for the role of acting chairman. This is an all-inclusive fee, while acting chairman John Peace will not receive a fee for being deputy chairman. The fee is due to be reviewed by the committee in May 2009. While acting as senior independent director, Rudy Markham will receive a fee of $55,131 (£30,000) in addition to his current fees.

With effect from 1 September 2008, UK-based non-executive directors are able to take up to 50 per cent of their monthly post-tax base fees to acquire shares in Standard Chartered PLC. Further detail on non-executive directors’ fees is set out in the emoluments table.

Details of non-executive directorships held by the executive directors

Certain directors serve as non-executive directors of other companies. Details of these directorships are contained in the board of directors section. Details of non-executive fees of the executive directors are shown below:

Name	Organisation	Current annual fees
G R Bullock	Fleming Family & Partners Limited	No fees payable
	MCashback Limited	No fees payable
	Spirax-Sarco Engineering plc	$66,157*
R H Meddings	3i Group plc	$35,321*

• ^* Indicates fees are retained by the director.

Performance graph

The graph below shows the Group’s TSR performance on a cumulative basis over the last five years alongside that of the FTSE 100 and the PSP comparator group. The FTSE 100 provides a broad comparator group against which the Group’s shareholders may measure their relative returns. The Company is a constituent member of the FTSE 100 Index and the London Stock Exchange is the principal exchange for the Company’s shares.

Miscellaneous long-term incentive-related matters and employee benefit trusts

The Group has two employee benefit trusts which are administered by an independent trustee and which hold ordinary shares to meet various obligations under the Group’s incentive plans. One trust (the ‘2004 trust’) is used in conjunction with the 2004 Deferred Bonus Plan. The other trust (the ‘1995 trust’) holds shares to satisfy the exercise of awards under the Group’s various share plans. The independent trustee does not have any rights to dividends and voting is at the discretion of the trustee.

The respective holdings of the trusts are as follows:

	31 December 2008*	31 December 2007
1995 trust	2,949,563	261,495
2004 trust	480,166	377,270

• ^* Inclusive of the rights issue subscription.

As each executive director is within the class of beneficiary of these trusts, they are deemed, for the purposes of the Companies Act 1985, to have an interest in the trusts’ shares.

Dilution limits
The Group’s existing share plans contain various limits which govern the amount of awards that may be granted and also the amount of shares which may be issued to satisfy any subsequent exercise of awards. These limits, which are monitored, are in line with those stated in the Association of British Insurers’ corporate guidelines. Under the terms of the Company’s listing on the Stock Exchange of Hong Kong, there is an additional limit which provides that awards under any plan cannot be granted (whether to be satisfied through the issue of new shares or market purchased shares) which would cause the total number of shares under option (all schemes) to exceed ten per cent of issued share capital at that time.

Vesting provisions on a change of control
The rules of the PSP do not provide for automatic vesting in the event of a change in control. However, the rules do provide that the number of shares subject to the award be pro-rated, based on the length of the shortened performance period. The committee may ‘at its discretion, and acting fairly and reasonably’, determine the extent to which awards vest having regard for the performance of the Group in the period since the date of grant.

Rights issue
On 24 November 2008, the Group announced details of a rights issue in participating countries. As a result of the rights issue, the board agreed to make adjustments to all unexercised share options and share awards granted under the Group’s Employee Share Schemes. The basis of the adjustments was the theoretical ex-rights price methodology, which was considered the most appropriate to take into account the impact of the rights issue. The adjustments under certain plans were approved by the relevant tax authorities, where necessary.

Under the Performance Share Plan, EPS at the end of a three-year performance period is measured against a base EPS figure. The board remuneration committee has also adjusted the base EPS figures to take account of the rights issue using a standard theoretical ex-rights price methodology. The EPS figures given below are the adjusted EPS figures.

Year of grant	Original base EPS figure	Revised base EPS figure
2006	153.7	134.5
2007	170.7	149.4
2008	197.6	173.0

International financial reporting standards
Details on how share awards have been expensed under IFRS 2 are set out in note 42 to the financial statements on pages 148 to 153.

General
The middle market price of an ordinary share at the close of business on 31 December 2008 was 875 pence. The share price range during 2008 was 664 pence to 1903 pence per share (based on closing middle market prices). Full details of the directors’ shares and options can be found in the Company’s register of directors’ interests.

Unless indicated otherwise, the foreign exchange rates used in this directors’ remuneration report are based on the average rates throughout the relevant financial year. The rates are £1:$1.8377 (2008) and £1:$2.0054 (2007).

Audited information

Remuneration of directors

Notes

• (a)The benefits column includes amounts relating to car allowances and medical and life insurance benefits. Mr Bertamini and Mr DeNoma carried out their duties overseas and had their remuneration adjusted to take local living costs into account. This adjustment was to put them in a position, after taxation differentials, where they would be no worse off as a result of carrying out their duties overseas. The benefits column for these directors also includes additional benefits, such as allowances for working overseas, the provision of accommodation or education of children. For Mr Bertamini and Mr DeNoma, these allowances and benefits amounted to $461,878 (2007: n/a) and $2,883,919 (2007: $1,233,100) respectively. In line with the Group’s international mobility policy Mr DeNoma was tax equalised for those cash benefits which have been paid through payroll and for employee share scheme exercises made in 2008, which amounted to a total of $381,481.
• (b)The cash bonus amounts shown are net of any amounts waived to provide additional pension benefits. See Retirement benefits table below for further details.
• (c)The amounts shown in the 2008 deferred shares column includes, firstly, the standard proportion of the annual performance award deferred into restricted shares, under the 2006 Restricted Share Scheme and, secondly, an additional portion that the directors indicated to the committee they wished to defer voluntarily into the Deferred Bonus Plan. The amounts of the additional deferral into the Deferred Bonus Plan for each director are as follows: Mr Sands $697,000, Mr Bertamini $266,000, Mr Bullock $279,500 and Mr Meddings $355,000.
• (d)The expected value of any performance share awards granted or to be granted (i.e. March 2009) in respect of the 2007 and 2008 financial years. The values are based on an initial value adjusted for factors such as performance conditions, forfeiture risk and lack of dividends. For Mr Bertamini an initial joining grant made in September 2008 of $1,086,975 (£750,000) is also included.
• (e)Lord Davies resigned as an employee and stepped down from the board, board nomination committee and sustainability and responsibility committee on 14 January 2009.
• (f)Member of the sustainability and responsibility committee.
• (g)Mr Bertamini received a total 2008 discretionary annual performance award of $1,125,000 of which $296,250 and $266,000 is deferred into restricted shares under the 2006 Restricted Share Scheme and the Deferred Bonus Plan respectively. In addition, in recognition of the substantial elements of deferred compensation and share awards which Mr Bertamini forfeited when he left his previous employer, he was also awarded, as part of his joining arrangements, a one-off award of deferred shares to be granted in March 2009 of $1,449,300 (£1,000,000). This will vest in February 2010.
• (h)Mr Bertamini and Mr DeNoma received cash allowances of $140,905 (2007: n/a) and $273,053 (2007: $258,648) respectively in lieu of their participation in any pension plan and this is reflected in the table above, as part of salary/fees. Details of the retirement benefits for other directors are detailed below.
• (i)Member of the board nomination committee.
• (j)Mr DeNoma resigned from the board on 1 June 2008. However, he will continue to be an employee of the Group until 30 June 2009. His base salary and other contractual benefits will continue to be paid until 30 June 2009 in line with his contract of employment.
• (k)Member of the audit and risk committee.
• (l)Member of the board remuneration committee.
• (m)Mr Paynter was appointed as an independent non-executive director with effect from 1 October 2008 and as a member of the audit and risk committee from 1 November 2008.
• (n)Sir CK Chow retired from the board on 7 May 2008, but remains chairman of Standard Chartered Bank (Hong Kong) Limited for which he receives a fee of HK$1.75 million per annum.
• (o)Lord Turner stepped down from the board on 19 September 2008.
• (p)Mr Peace received an all-inclusive fee of $275,655 (£150,000) as deputy chairman.

General Notes

• Any base salary/fee or benefit item in the table above has been converted using the 2008 average rate above. Any performance award (comprising cash bonus and deferred shares) for 2008 is determined in US dollars and shown as such in the table. The proposed PSP awards in respect of the 2008 performance year are determined in sterling but for the purposes of the table converted into US dollars using the exchange rate at the end of the year (£1:$1.4493). All emoluments in 2007 have, where necessary, been converted using the average exchange rate for 2007, consistent with the basis shown in last year’s report and accounts. Further details on the fees for non-executive directors are shown in the non-executive directors section.

Retirement benefits of executive directors and the former Group chairman

Notes

• * Mr Bertamini and Mr DeNoma received cash supplements and do not participate, like the other executive directors, in the defined benefit plans set out above. Their cash supplement amounts are shown in the directors’ remuneration table.
• ** The accrued pension amounts include benefits arising from transfer payments received in respect of service with previous employers.
• *** The transfer values in respect of benefits under the unapproved unfunded retirement benefits scheme have been calculated using the Group’s pension accounting methodology and assumptions.
• † Executive directors are given the opportunity to waive a proportion of any potential bonus and/or salary to enhance their unfunded unapproved retirement benefits. The amounts waived in respect of 2008 are shown in the table.
• †† The increase in the accrued pension (net of inflation and bonus waiver) during the year is the difference between the accrued pension at the end of 2007 increased by an allowance for inflation of 3.0 per cent (2007: 4.3 per cent) and the accrued pension at the end of 2008 excluding any bonus waiver in 2008.

General notes

• (a) The ages of the executive directors are shown in their biographies.
• (b) Lord Davies ceased to accrue additional pension benefits on 1 January 2007. His pension payments commenced in November 2007. As at 31 December 2008 he was in receipt of a pension from the Group of $171,602 per annum.
• (c) In addition to the amounts identified in the table above the Group paid $605,996 (2007: $367,688) in retirement benefits to former directors and their dependants.
• (d) The amounts included in the table above as at 1 January and 31 December 2008 are calculated using the exchange rates at the end of 2007 (£1:$1.9877) and 2008 (£1:$1.4493) respectively. The other entries are calculated using the exchange rates shown above.

Deferred compensation
In recognition of the substantial elements of deferred compensation and share awards forfeited when he left his previous employer, Steve Bertamini participates in a deferred compensation arrangement under which a total of $6,500,000 has been allocated into an interest bearing account, and all or part of the account may be invested in an alternative investment vehicle at his discretion. It will vest in three tranches unless he resigns or is terminated for cause: $3,000,000 after the second, $2,000,000 after the fourth and $1,500,000 after the sixth anniversary of joining. No further awards are planned.

	Grant date	Allocation	Vested	Value as at 31 December 2008	Vesting period
S P Bertamini	19 May 2008	$6,500,000	–	$6,606,978	2010-2014

Directors’ interests in ordinary shares

Directors	At 1 January 2008 Total interests*	Personal interests	Family interests	Rights issue subscription**	At 31 December 2008 Total interests***
J W Peace	5,000	5,000	–	1,648	6,648
P A Sands	50,670	81,402	–	26,835	108,237
S P Bertamini	2,000	40,000	–	659	40,659
G R Bullock	88,837	136,427	–	44,044	180,471
J F T Dundas	2,100	2,100	–	692	2,792
V F Gooding	2,045	2,071	–	682	2,753
R H P Markham	2,425	2,491	–	821	3,312
R Markland	2,194	2,254	–	743	2,997
R H Meddings	152,312	156,453	–	51,577	208,030
S B Mittal	2,000	2,000	–	–	2,000
J G H Paynter	2,000	2,000	–	659	2,659
P D Skinner	3,289	4,078	–	1,250	5,328
O H J Stocken	10,000	10,773	–	3,448	14,221
Lord Davies	24,957	2,000	22,957	8,227	33,184
Lord Turner	5,092	5,092	–	–	–
M B DeNoma	139,715	108,888	–	–	108,888
Sir CK Chow	15,664	15,664	–	–	15,664

• ^* Or at date of appointment to the board, if later.
• ^** The number of additional shares subscribed by the individual under the rights issue offer.
• ^*** Or date of resignation from the board, if earlier.

General notes

• (a)The beneficial interests of directors and their families in the ordinary shares of the Company are set out above. The directors do not have any non-beneficial interests in the Company’s shares.
• (b)No director had an interest in the Company’s preference shares or loan stock, nor the shares or loan stocks of any subsidiary or associated undertaking of the Group.
• (c)No director had any corporate interests in the Company’s ordinary shares.

2004 Deferred Bonus Plan

Directors	Shares held in trust at 1 January 2008*	Shares awarded during the period(a)	Shares awarded in respect of notional dividend(b)	Shares vested during the period(a)	Rights issue adjustment**	Shares held in trust at 31 December 2008***
P A Sands	24,845	29,998	190	25,035	4,272	34,270
S P Bertamini	–	–	–	–	–	–
G R Bullock	14,789	15,599	113	14,902	2,221	17,820
R H Meddings	18,693	20,398	143	18,836	2,905	23,303
Lord Davies	37,859	–	290	38,149	–	–
M B DeNoma	17,746	16,499	135	17,881	–	16,449

• *Or at date of appointment to the board, if later.
• **Adjustments made to all unexercised share awards granted under the Group’s employee share scheme as part of the rights issue.
• ***Or date of resignation from the board, if earlier.

Notes

• (a) Market value on date of awards/vesting (6 March 2008) was 1643 pence.
• (b) Under the 2004 Deferred Bonus Plan, shares were conditionally awarded as part of the director’s deferred element of their annual performance award. The shares are held in an employee benefit trust and automatically vest one year after the date of acquisition. No exercise is necessary. A notional scrip dividend accrues on the shares held in the trust. The dividend is delivered in the form of shares and is released on vesting.

Subsequent pages contain information on share options and share awards.

Long-term incentives
Share options

• ^* Or at date of appointment to the board or date of grant if later.
• ^** The original exercise price in pence prior to the rights issue is shown in brackets.
• ^*** Adjustments made to all unexercised share options/share awards granted under the Group’s employee share schemes as part of the rights issue.
• ^**** Or date of resignation from the board, if earlier.

For notes refer to the Share awards table below.

Share awards

• ^* Or at date of appointment to the board or date of grant if later.
• ^** Adjustments made to all unexercised share options/share awards granted under the Group’s employee share schemes as part of the rights issue.
• ^*** Or date of resignation from the board, if earlier.

Notes

• (a) Details of performance conditions are described above
• (b) Market value on date of exercise (8 May 2008) was 1839 pence.
• (c) Market value on date of exercise (19 December 2008) was 740 pence.
• (d) Market value on date of exercise (10 March 2008) was 1578 pence.
• (e) Lord Davies has entered into a personal arrangement with an independent trustee under which he has agreed that such awards can not be exercised without the written authority of such trustee for the duration of any appointment that he might have in the UK Government.
• (f) This award was exercisable at the time Lord Davies stepped down from the board of directors. It will remain exercisable until 14 January 2010 at which point any unexercised award will lapse.
• (g) Market value on date of award (11 March 2008) was 1626 pence.
• (h) Market value on date of award (16 September 2008) was 1386 pence.
• (i) These awards are exercisable as any associated performance and service conditions have already been met.
• (j) The performance conditions attached to these awards have been partially met (85 per cent for March awards and 79 per cent for May and September awards) and the awards will be exercisable after meeting the service conditions on 14 March and 11 May 2009 respectively.
• (k) The performance conditions attached to these awards have been partially met (85 per cent for March awards and 79 per cent for May and September awards) and the awards will be exercisable from 14 March and 11 May 2009 respectively. The March 2006 and May 2006 awards will remain exercisable until 14 January 2010 at which point any unexercised awards will lapse.
• (l) The number of shares under award will be reduced to reflect the period of employment as a proportion of the performance period and will be subject to the performance conditions being satisfied, from March 2010 until December 2010, at which point any unexercised award will lapse.
• (m) Market value of awards in previous years: 20 May 2002 – 861.8 pence; 5 March 2003 – 690.5 pence; 13 May 2003 – 742.5 pence; 4 March 2004 – 935.5 pence; 9 June 2004 – 921 pence; 9 March 2005 – 971 pence; 14 March 2006 – 1450 pence; 11 May 2006 – 1460 pence; 12 March 2007 – 1430 pence.
• (n) Market value at year end was 875 pence and the highest and lowest values during the year were 664 pence and 1903 pence respectively.

Remuneration of five highest paid individuals

As a result of the Company’s listing on The Stock Exchange of Hong Kong Limited, it is necessary to disclose certain information relating to the five highest paid employees in the Group. Set out below are details for five individuals (none of whom were executive directors) whose emoluments* were the highest in the year ending 31 December 2008:

Components of remuneration	$
Basic salaries, allowances and benefits in kind	2,659,535
Pension contributions	521,949
Bonuses paid or receivable*	43,040,294
Payments made on appointment	–
Compensation for loss of office
– contractual	–
– other	–
Total**	46,221,778

• ^* Excluding bonuses or commissions linked to profits generated by the individual or collectively with others engaged in similar activities.
• ^** Equal to HK$359,942,851.

The emoluments were in the following bands:

HK (approx. $ equivalent)	Number of employees
HK $41,500,001 – HK $42,000,000 ($5,329,190 – $5,393,397)	1
HK $42,000,001 – HK $42,500,000 ($5,393,397 – $5,457,604)	1
HK $45,500,001 – HK $46,000,000 ($5,842,847 – $5,907,054)	1
HK $47,000,001 – HK $47,500,000 ($6,035,468 – $6,099,675)	1
HK $182,000,001 – HK $182,500,000 ($23,371,387 – $23,435,594)	1

By order of the board

Annemarie Durbin
Group company secretary
3 March 2009