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  • HC-5.2 HC-5.2 Role of the Board of Directors and Remuneration Committee

    • HC-5.2.1AA

      The board of directors must actively oversee the remuneration system s design and operation for approved persons as well as for material risk-takers. The CEO and senior management must not primarily control the remuneration system.

      Added: January 2014

    • HC-5.2.1

      The Board must establish a remuneration committee of at least three directors which must:

      (a) Review the Islamic bank licensee's remuneration policies for the approved persons and material risk-takers, which must be approved by the shareholders and be consistent with the corporate values and strategy of the bank;
      (b) Approve the remuneration package and amounts for each approved person and material risk-taker, as well as the total variable remuneration to be distributed, taking account of total remuneration including salaries, fees, expenses, bonuses and other employee benefits;
      (c) Approve, monitor and review the remuneration system to ensure the system operates as intended; and
      (d) Recommend Board member remuneration based on their attendance and performance and in compliance with Article 188 of the Company Law.
      Amended: January 2017
      Amended: July 2014
      Amended: January 2014
      October 2010

    • HC-5.2.1A

      In reviewing the remuneration system (see Subparagraph HC-5.2.1(c)), the remuneration committee should ensure that the system includes effective controls, including back testing and stress testing of the remuneration policy. The practical operation of the system should be regularly reviewed for compliance with regulations, internal policies and bank procedures. In addition, remuneration outcomes, risk measurements, and risk outcomes should be regularly reviewed by the Board for consistency with Board's approved risk appetite.

      Added: January 2014

    • HC-5.2.1B

      Stress testing or stressed measures might be used by banks to help ex-ante risk adjustments take into account severe but plausible scenarios, based on possible expected loss on loans, as an example. Due to the uncertainty of payoffs, there will always be a need for ex-post adjustments so as to back-test actual performance against risk assumptions.

      Added: January 2014

    • HC-5.2.1C

      As part of the duties noted under Paragraph HC-5.2.1, the remuneration committee must carefully evaluate practices by which remuneration is paid for potential future revenues whose timing and likelihood remain uncertain. It must demonstrate that its decisions are consistent with an assessment of the bank's financial condition and future prospects.

      Added: January 2014

    • HC-5.2.2

      The committee may be merged with the nominating committee.

      October 2010