ICICI Bank 2015 Annual Report Download - page 179

177Annual Report 2014-2015
forming part of the Accounts (Contd.)
Schedules
Financial Statements of ICICI Bank Limited
46. Disclosure on Remuneration
Compensation policy and practices
(A) Qualitative disclosures
a) Information relating to the composition and mandate of the Remuneration Committee
The Board Governance, Remuneration & Nomination Committee (BGRNC) at March 31, 2015 comprised three
independent Directors. The functions of the Committee include recommendation of appointments of Directors
to the Board, evaluation of the performance of the Whole Time Directors (WTDs) (including the Managing
Director & CEO) on predetermined parameters, recommendation to the Board of the remuneration (including
performance bonus and perquisites) to Whole Time Directors, approval of the policy for and quantum of
bonus payable to the members of the staff, framing of guidelines for the Employees Stock Option Scheme
(ESOS) and recommendation of grant of the Bank’s stock options to employees and Whole Time Directors of
the Bank and its subsidiary companies.
b) Information relating to design and structure of remuneration processes and the key features and objectives of
remuneration policy
The Bank has under the guidance of the Board and the BGRNC, followed compensation practices intended to
drive meritocracy within the framework of prudent risk management. This approach has been incorporated in
the Compensation Policy approved by the Board on January 31, 2012, pursuant to the guidelines issued by RBI.
The key elements of the Bank’s compensation practices are:
Effective governance of compensation: The BGRNC has oversight over compensation. The Committee
defines Key Performance Indicators (KPIs) for Whole Time Directors and equivalent positions and the
organisational performance norms for bonus based on the financial and strategic plan approved by the
Board. The KPIs include both quantitative and qualitative aspects. The BGRNC assesses organisational
performance as well as the individual performance for Whole Time Directors and equivalent positions.
Based on its assessment, it makes recommendations to the Board regarding compensation for Whole
Time Directors and equivalent positions and bonus for employees.
Alignment of compensation philosophy with prudent risk taking: The Bank seeks to achieve a prudent
mix of fixed and variable pay, with a higher proportion of variable pay at senior levels and no guaranteed
bonuses. Compensation is sought to be aligned to both financial and non-financial indicators of
performance including aspects like risk management and customer service. In addition, the Bank has an
employee stock option scheme aimed at aligning compensation to long term performance through stock
option grants that vest over a period of time. Compensation of staff in financial and risk control functions
is independent of the business areas they oversee and depends on their performance assessment.
c) Description of the ways in which current and future risks are taken into account in the remuneration processes
including the nature and type of the key measures used to take account of these risks.
The Board approves the risk framework for the Bank and the business activities of the Bank are undertaken
within this framework to achieve the financial plan. The risk framework includes the Bank’s risk appetite,
limits framework and policies and procedures governing various types of risk. KPIs of Whole Time Directors
& equivalent positions, as well as employees, incorporate relevant risk management related aspects. For
example, in addition to performance targets in areas such as growth and profits, performance indicators
include aspects such as the desired funding profile and asset quality. The BGRNC takes into consideration
all the above aspects while assessing organisational and individual performance and making compensation-
related recommendations to the Board.
d) Description of the ways in which the Bank seeks to link performance during a performance measurement
period with levels of remuneration
The level of performance bonus, increments in salary and allowances and grant of stock options are determined
based on the assessment of performance as described above.