1、Reward Trends Hong K from the top 50 Hong Kong-headquartered companies 2023 KPMG Tax Services Limited,a Hong Kong(SAR)limited liability company and a member firm of the KPMG global organisationof independent member firms affiliated with KPMG International Limited,a private English company limited by

2、 guarantee.All rights reserved.Reward Trends Hong Kong1Contents01Executive summary202Talent landscape403Overviewof findings804Benefits1005Incentive compensation1406How we can help19Executive summary01 2023 KPMG Tax Services Limited,a Hong Kong(SAR)limited liability company and a member firm of the K

3、PMG global organisationof independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Reward Trends Hong Kong3OverviewReward Trends Hong Kong takes an in-depth look at the Hong Kong talent market and the remuneration practice

4、s of the citys leading employers.The report is based on the top 501Hong Kong SAR(“HKSAR”)publicly listed companies(“the Companies”)by market capitalisation,with research into their financial statements for the years 2020 to 2022,as well as employment/census data published by the HKSAR Government.Sou

5、rce:1.CompaniesMarketCap-Largest companies in Hong Kong by market capitalizationKey findingsSalary and compensation packages are a key driver forattracting and retaining talentCompanies experienced 6%annual increases in staff costs,although headcounts remained at similar levelsOrganisations are incr

6、easingly tailoring short-termand long-term incentive arrangements to support their strategies/business plansEmployers have an opportunity to differentiate by offeringflexibility,housing benefits and enhanced retirement benefitsOthers10%Conglomerates6%Technology and new economy 6%Financial Services12

7、%Utility&Transportation16%Consumer Markets18%Real Estate 32%Gabriel HoDirectorPeople Services KPMG ChinaDavid SiewPartner Head of People Services Hong KongKPMG ChinaTalent landscape02 2023 KPMG Tax Services Limited,a Hong Kong(SAR)limited liability company and a member firm of the KPMG global organi

8、sationof independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Reward Trends Hong Kong5Employment market likely to remain competitiveSource:HKSAR Government Census and Statistics DepartmentRebound in labour forceFollowi

9、ng a contraction of Hong Kongs labour force during the period from 2018 to 2022 there have been signs of a rebound in 2023.The inbound flow of foreign talent has been on the rise with over 100,000 visas approved and 60,000 talents arriving in Hong Kong since the HKSAR Governments initiatives to attr

10、act new talent were introduced1.In his 2023 Policy Address2,the Chief Executive announced further measures to attract,retain and develop talents,and promote re-employment.Demand for talentDemand for talent grew with the number of job vacancies increasing.Vacancies were up 26.5%in June 2023 year-on-y

11、ear3,but the unemployment rate remains at a low level(3%)4.Organisationsshould review their talent needs and strategies heading into the new year.David SiewPartner,Head of People Services Hong Kong Sources:1.HKSAR Government-HK Talent Engage office opens2.HKSAR Government-The Chief Executives 2023 P

12、olicy Address3.HKSAR Government,Census and Statistics Department-Quarterly Report of Employment and Vacancies Statistics for June 20234.HKSAR Government,Census and Statistics Department-Unemployment and underemployment statistics for August-October 20233,650,0003,700,0003,750,0003,800,0003,850,0003,

13、900,0003,950,0004,000,0004,050,000200022Labour force 2023 KPMG Tax Services Limited,a Hong Kong(SAR)limited liability company and a member firm of the KPMG global organisationof independent member firms affiliated with KPMG International Limited,a private English company limite

14、d by guarantee.All rights reserved.Reward Trends Hong Kong6Increasing costsStaff costs are increasingBetween 2020 and 2022 the total staff costs of the Companies researchedincreased,while headcounts remained at similar levels.Staff costs increased substantially in 2021.This is aligned with our obser

15、vation that the employment market was active,with more than a quarter1of talents changing jobs and many securing sizeable salary increases after moving positions.In 2022 we observed fewer job changes,although we anticipated earlier this year that salaries would continue on an upward trend in 20231an

16、d a recent survey has confirmed this2.With uncertainties in the global economic outlook,organisations will continue to face pressure to manage costs.Sources:1.KPMG Hong Kong Executive Salary Outlook 2023 Employment Trends Survey 2.Hong Kong Institute of Human Resource Management-2023 Pay Trend Surve

17、y11%15%1.1%3%3%2021 vs 20200.2%6%9%2022 vs 2021HeadcountStaff CostOperating Cost3 year average%changes across the years(median)1.1%2023 KPMG Tax Services Limited,a Hong Kong(SAR)limited liability company and a member firm of the KPMG global organisationof independent member firms affiliated with KPM

18、G International Limited,a private English company limited by guarantee.All rights reserved.Reward Trends Hong Kong7What are talents looking for?20232022Salary andCareerWorkflexibilityOrganisationalLearningandJobRelationshipcompensationprogressionandwork-lifeculturedevelopmentsecuritywithexistingpack

19、ageand promotionbalanceopportunitiessupervisor(s)71%48%32%44%23%55%39%28%21%20%16%18%16%77%Sources:1.KPMG Hong Kong Executive Salary Outlook 2023 Employment Trends Survey Remuneration package at the top of their listThe attractiveness of salary and compensation packages has been rated by professiona

20、ls in Hong Kong as the top driver for pursuing a new job opportunity1.The offer of an attractive remuneration package continues to be of key importance in attracting and retaining talent.The next sections of this report focuses on the observations and compensation trends identified from our research

21、 across the 50 companies considered.With uncertainties in the global economic outlook,organisationswill be cautious about increasing salaries.Theyshould consider innovative ways to improve the attractiveness of remuneration packages,and alternatives to increasing salary,as a way of managing costs.Da

22、vid SiewPartner,Head of People Services Hong Kong Drivers for seeking a new job opportunity1Overview of findings03 2023 KPMG Tax Services Limited,a Hong Kong(SAR)limited liability company and a member firm of the KPMG global organisationof independent member firms affiliated with KPMG International

23、Limited,a private English company limited by guarantee.All rights reserved.Reward Trends Hong Kong9BasesalaryBase salary is typically the largest individual componentof total remuneration.The Companies reviewed and adjusted base salary annually,referencing the roles and responsibilities of the posit

24、ion,the experience of the employee,and the market salary for the role in question.Core remuneration componentsBenefitsThe types of benefits provided varied but would typically include medical insurance coverage,leave entitlement and retirement benefits.Around 30%of the Companies make employer contri

25、butions to retirement schemes in addition to the mandatory MPF contributions.Organisations are looking for opportunities to enhance staff benefits to differentiate themselves from others,and to attract and retain talent.Short-term incentivesAll of the Companies have short-term incentive(STI)arrangem

26、ents and may grant annual bonuses and/or performance-based cash incentives.Annual bonuses may be guaranteed or discretionary.For executive directors,around one-third of total remuneration is provided in the form of short-term incentives.Long-term incentivesAround 60%of the Companies have long-term i

27、ncentive(LTI)plans.Around three-quarters of these firms have granted LTI awards in the past three years.Awards are mainly granted to directors and key management personnel.Common types of awards include share options and share awards.For executive directorsgranted LTI awards,such awards may make up

28、a quarter of their total remuneration.We discuss below the core components of executive and employee remuneration,following analysis of data from the Companies between 2020 to 2022.Benefits04 2023 KPMG Tax Services Limited,a Hong Kong(SAR)limited liability company and a member firm of the KPMG globa

29、l organisationof independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Reward Trends Hong Kong11Most desired benefits in Hong Kong1Opportunities to enhance staff benefitsSources:1.KPMG Hong Kong Executive Salary Outlook

30、 2023 Employment Trends Survey 2.KPMG A Global Look at Benefits50%Employers additional voluntary contribution to retirement scheme53%Flexible benefits arrangements53%Share options,share awards or long-term incentive awards85%Medical benefits for self and/or familymembers59%Housing benefits74%Flexibl

31、e work45%13%22%86%35%49%DesiredProvidedvsvsvsvsvsvsA differentiated benefit offeringOffering benefits that are attractive to talents and tailored to their needs can help organisations to differentiate themselves from their peers.Apart from medical benefits,which are already widely available,organisa

32、tions might consider some of the other desired benefits,as most of them are not as widely provided.We consider these further on subsequent pages.Globally,KPMG has observed recent trends in benefits including support and stipends for remote work,expanded mental health services,telehealth services,pai

33、d leave(e.g.parental and caregiver leave)and employer incentives for electric cars2.2023 KPMG Tax Services Limited,a Hong Kong(SAR)limited liability company and a member firm of the KPMG global organisationof independent member firms affiliated with KPMG International Limited,a private English compa

34、ny limited by guarantee.All rights reserved.Reward Trends Hong Kong08001000Under 3030-3940-4950-5960 and aboveLabour Force(in 000)Retirement benefitsSources:1.HKSAR Government,Census and Statistics Department Labour force and labour force participation2.HSBC Quality of Life Report 2023&Ma

35、nulife Investment Management Diverse Asia the demographic challengeSource:HKSAR Government,Census and Statistics Department Labour force and labour force participationGap in preparedness for retirementRecent census data shows that around 60%of the local labour force is 40 years old or above1.Reports

36、2also suggest a gap in preparedness for retirement.Retirement scheme benefits are one source of post-retirement income.Around 30%of the Companies made contributions to retirement schemes exceeding the mandatory contributions required under MPF.Enhancing retirement benefitsOffering retirement benefit

37、s in addition to mandatory retirement scheme contributions may be attractive to both talents and employers for the following reasons:Enhanced benefits to support talents wellbeing post-retirement.The employer may include vesting conditions for top-up retirement benefits tied to continued employment(

38、helping to retain talent).The availability of preferential Salaries Tax rules for retirement scheme benefits and a Profits Tax deduction for employers.With the launch of Hong Kongs eMPF platform approaching,now is a good time for organisations to review their retirement scheme benefits.Pensions are

39、underused in Hong Kong compared with much of the rest of the world.The provision of additional employer contributions to retirement schemes is a way to contribute to the long-term financial wellbeing of employees,while also building loyaltyand boosting retention.KPMG Hong Kong Executive Salary Outlo

40、ok 2023 Labourforce in 202225%23%13%24%15%2023 KPMG Tax Services Limited,a Hong Kong(SAR)limited liability company and a member firm of the KPMG global organisationof independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserve

41、d.Reward Trends Hong Kong13Housing benefits providedHousing benefitsHousing assistance is highly desiredWith high rents in Hong Kong,housing benefits such as rental reimbursements or allowances are highly desirable and attractive to employees.The favourable tax treatment associated with these benefi

42、ts enhances their appeal.In many cases,tax treatment for housing benefits will be preferential over claiming a deduction for domestic rental expenses,which is capped at HK$100,000 per annum.However,we note that housing benefit is not widely provided,with only 35%of respondents to our employment tren

43、ds survey this year indicating thatthis benefit is being offered1.Organisations which are yet to offer housing benefits(e.g.rental reimbursement)should consider doing so,as they can be implemented and operated at relatively low cost in comparison to the potential value perceived by employees.Firms w

44、hich already offer such benefits could consider reviewing the arrangements,perhaps by expanding the eligibility and scope,as well as by analysing the efficiency and compliance of their existing programmes.Source:1.KPMG Hong Kong Executive Salary Outlook 2022&2023 Employment Trends Survey35%202220212

45、9%Incentive compensation05 2023 KPMG Tax Services Limited,a Hong Kong(SAR)limited liability company and a member firm of the KPMG global organisationof independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Reward Trends

46、 Hong Kong15Base:47 companies disclosed details of directors compensationNotes:1.Directors include executive directors,non-executive directors and independent non-executive directors2.Fixed Pay includes directors fee,base salary,allowances and benefits-in-kind.Source:KPMG analysis on research compan

47、iesFixed Pay251%LTI 11%Retirement contribution5%STI33%Average across the directors202020212022Fixed Pay51%50%52%STI34%33%34%LTI12%11%11%Retirement Contribution3%6%3%Similar findings year-on-yearDirectors pay composition across the Companies remained similar year-on-year.Just under half of their annu

48、al remuneration is provided in the form of variable pay(e.g.short-term incentive and long-term incentive income).This is not surprising as executive directors would typically have a significant portion of their remuneration provided as variable pay,and this is often required for executives of regula

49、ted businesses.Variable remuneration is mainly short-term incentivesThe bulk of variable compensation is provided in the form of short-term incentives such as annual bonuses.Bonuses are typically determined based on prior year corporate and individual performance.Across the Companies,around one quar

50、ter of total variable compensation for directors is provided in the form of long-term incentive awards like share-based incentives.When considering directors with long-term incentive awards vesting in the past 3 years,around two fifths of total variable pay was long-term incentive awards.We observe

51、an increased interest in long-term incentives(implementing new incentives or reviewing existing ones to attract and retain talent,drive business strategies and achieve desired outcomes for stakeholders).Our findings and observations on long-term incentives are set out in the following pages.Breakdow

52、n of directors compensation1Half of directors pay is variable 2023 KPMG Tax Services Limited,a Hong Kong(SAR)limited liability company and a member firm of the KPMG global organisationof independent member firms affiliated with KPMG International Limited,a private English company limited by guarante

53、e.All rights reserved.Reward Trends Hong Kong16Long-term incentive plansYes62%16%65%81%ESPPShare AwardsShare Options1 Type of award48%2 types42%3 types10%No38%LTI plans are prevalent62%of the Companies have adopted long-term incentive plans.Of these,over half grant more than one type of award.Common

54、 types of awardShare options:A right to acquire shares at a predetermined price(i.e.exercise or strike price).Participants can exercise the rights within a fixed period of time after satisfying the vesting conditions(e.g.continued employment until vesting date).Share awards:An award of shares typica

55、lly subject to vesting conditions.Participants typically pay nil or nominal consideration for the shares.Awards may be structured as an outright grant of shares subject to forfeiture(e.g.ceasing employment prior to vesting)or participants receive shares after vesting if the relevant conditions are s

56、atisfied.Employee share purchase plans(ESPP):Participants may purchase shares at a discounted price or they receive additional free matching shares,subject to conditions.The amounts each employee may spend and the number of shares they may purchase under the ESPP are capped each year.In Hong Kong,sh

57、are award plans are more commonly adopted than ESPPs.They are typically granted to senior executives only,whereas it is more common to offer a wider group of employees the chance to participate in ESPPs.Companies with LTI planType of awardBase:All 50 companiesBase:31 companies which adopted LTI plan

58、sSource:KPMG analysis on research companies 2023 KPMG Tax Services Limited,a Hong Kong(SAR)limited liability company and a member firm of the KPMG global organisationof independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reser

59、ved.Reward Trends Hong Kong17Prevalence of LTI awardsCommon to grant LTI awardsNearly three quarters of the companies with LTI plans have granted awards(i.e.,share options and/or share awards)in recent years.Half of these companies granted share awards annually.Share awards are more popularIt is wor

60、th noting that three-fifths of the companies with share option plans granted options in recent years.On the other hand,85%of the companies with a share award plan have granted share awards.Share awards are granted more frequently in comparison with share options,with 71%of companies with share award

61、 plans granting awards annually.Share OptionsShare AwardsOverall74%60%85%Grant Frequency in 2020-2022(out of companies with LTI Plans)Grant Annually1 year out of 3 years2 years out of 3 years74%9%17%of companies granted awards between 2020-2022Grant Frequency(out of companies with award grants in 20

62、20-2022)In recent years there has been increased interest in implementing share award plans to attract,retain,incentiviseand reward talents.Organisationsshould consider how they utiliseshare awards,and other types of awards,to support their business and talent strategies.Gabriel HoDirector,People Se

63、rvices71%24%6%53%20%27%Base:31 companiesSource:KPMG analysis on research companiesShare OptionsShare AwardsOverallBase:25 companiesBase:20 companiesBase:23 companiesBase:15 companiesBase:17 companies 2023 KPMG Tax Services Limited,a Hong Kong(SAR)limited liability company and a member firm of the KP

64、MG global organisationof independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Reward Trends Hong Kong18Three-year vesting period is most commonLong-term incentive awards typically have a vesting period of three to five

65、 years.A vesting period of up to three years is most common,and awards often vest in tranches over three years(instead of“cliff vesting”at the end of three years).Performance-based vesting for share awardsAwards are typically subject to vesting conditions where awards vest if the participant remains

66、 employed up to the vesting date,unless they are“good leavers”.Around half of the companies with share award plans may grant share awards that are subject to additional performance-based vesting conditions,such as achieving revenue,profit,return on investment or shareholder return targets.A much sma

67、ller proportion of companies may include performance-based vesting conditions in share options.In our experience,organisationsmay grant senior executives awards that are subject to performance-based vesting conditions to incentivisethem and link the delivery of the rewards to the achievement of long

68、-term business targets and goals.Vesting period and conditionsShare AwardsShare Options55%Share Awards8%Share OptionsVesting Period Awards may include performance-based vesting conditions3 years80%5 years13%4 years7%3 years52%4 years24%5 years18%1 year6%Base:17 companiesSource:KPMG analysis on resea

69、rch companiesBase:15 companiesBase:25 companiesBase:20 companiesHow we can help06 2023 KPMG Tax Services Limited,a Hong Kong(SAR)limited liability company and a member firm of the KPMG global organisationof independent member firms affiliated with KPMG International Limited,a private English company

70、 limited by guarantee.All rights reserved.Reward Trends Hong Kong20Our Reward ServicesKPMG offers a wide range of rewards services,with professionals well versed in talent and rewards,tax,accounting and legal mattersWe would be pleased to discuss your needs and how we can helpExecutive pay benchmark

71、ingAnalyse and share insights on executive payProvide bespoke analysis and reviews against specific peer groupsTax,accounting and legalAdvise on other key considerations for benefits and incentive plans,such as the tax and accounting implications,as well as any legal considerations.Advise on local a

72、nd overseas requirements and obligationsDraft legal documents,such as plan rules and agreementsOngoing supportAssist with employee communicationsProvide other services such as supporting administration for rental reimbursement schemes,and overseas tax withholding calculations for incentive awardsBen

73、efits and incentive plansAdvise on different arrangements,such as housing benefits,retirement schemes and incentive plansDesign new plans or review existing plansOffer insights on market practices and trends 2023 KPMG Tax Services Limited,a Hong Kong(SAR)limited liability company and a member firm o

74、f the KPMG global organisationof independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Reward Trends Hong Kong21Attract and RecruitRetain and RewardGlobalMobilityAgility and Flexibility OperationsExecutive Search and Re

75、cruitment Talent search and recruitmentRemuneration benchmarks and surveysTalent and skills assessmentsImmigration ServicesEmployment and dependent visa applicationsTalent admissionsInvestment visasReward SolutionsEquity incentive plan design and implementationRental Reimbursement policy and scheme

76、designPension optimization and restructuringPayroll ServicesPayroll outsource and managed servicePension setup and administrationPayroll,tax and legal review and health checkGlobal Mobility ServicesGlobal mobility programme and policy designAssignee tax and immigration supportMobility operations sup

77、port and managed servicesAgile Working SolutionsHybrid work planning Work from anywhere Business traveller supportPeople ServicesSupporting your talent needs:Our services:The information contained herein is of a general nature and is not intended to address the circumstances of any particular indivi

78、dual or entity.Although we endeavour to provide accurate and timely information,there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future.No one should act on such information without appropriate professional advic

79、e after a thorough examination of the particular situation.2023 KPMG Tax Services Limited,a Hong Kong(SAR)limited liability company and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.

80、All rights reserved.Printed in Hong Kong(SAR).The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation.Publication number:HK-TAX23-0002Publication date:December a list of KPMG China offices,please scan the QR code or visit our website:https:/home.kpmg/cn/en/home/about/offices.html