HC-3.6.5
The remuneration committee should:
(a) Recommend to the Board:
i. An appropriate remuneration policy designed to reduce employees’ incentives to take excessive and undue risk, which must be approved by the shareholders; and
ii. A fair and internally transparent remuneration system, which includes relevant performance measures and effective controls;
(b) Ensure on an annual basis that the remuneration policy and its implementation:
i. Are in full compliance with CBB requirements;
ii. Are consistent with the licensee’s strategy, culture, long-term business objectives, risk appetite, performance and control environment; and
iii. Are creating the desired incentives for managing risk, capital and liquidity.
(c) Work closely with the risk committee in evaluating the incentives created by the remuneration system. The risk committee must, without prejudice to the tasks of the remuneration committee, examine whether incentives provided by the remuneration system take into consideration risk, capital, liquidity and the likelihood and timing of earnings;
(d) Approve the remuneration package and amounts for each approved person and material risk-taker, as well as the total variable remuneration to be distributed based on the results of the performance evaluation system and taking account of total remuneration including salaries, fees, expenses, bonuses and other employee benefits;
(e) Regularly review remuneration outcomes, risk measurements, and risk outcomes for consistency with Board’s approved risk appetite;
(f) Question payouts for income that cannot be realised or whose likelihood of realisation remains uncertain at the time of payout;
(g) Recommend Board member remuneration based on their attendance and in compliance with the Commercial Companies Law;
(h) Evaluate practices by which remuneration is paid for potential future revenues whose timing and likelihood remain uncertain by means of both quantitative and qualitative key indicators. It must demonstrate that its decisions are consistent with the assessment of the licensee’s financial condition and future prospects; and
(i) Obtain feedback on performance evaluation of the Chief Risk Officer, Chief Internal Auditor and Head of Compliance from the designated Board committee responsible for oversight of these functions.
Added: July 2023