ICICI Bank 2014 Annual Report Download - page 27

Annual Report 2013-2014 25
The KPIs include both quantitative and qualitative aspects. The BGRNC assesses organisational
performance as well as the individual performance for WTDs and equivalent positions. Based on
its assessment, it makes recommendations to the Board regarding compensation for WTDs 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WTDs&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.
e) Discussion of the Bank’s policy on deferral and vesting of variable remuneration and the Bank’s
policy and criteria for adjusting deferred remuneration before vesting and after vesting
The quantum of bonus for an employee does not exceed a certain percentage (as stipulated in the
compensationpolicy)ofthetotalfixedpayina year.Withinthispercentage,ifthequantumofbonus
exceedsapredefinedthresholdpercentageofthetotalfixedpay,apartofthebonusisdeferredandpaid
overaperiod.Thedeferredportionissubjecttomalus,underwhichtheBankwouldpreventvestingofall
orpartofthevariablepayintheeventofanenquirydetermininggrossnegligenceorbreachofintegrity.
Insuchcases,variablepayalreadypaidoutisalsosubjecttoclawbackarrangements.
f) Description of the different forms of variable remuneration that the Bank utilises and the rationale
for using these different forms
The Bank pays performance linked retention pay (PLRP) to its front-line staff and junior management
andperformancebonustoitsmiddleandseniormanagement.PLRPaimstorewardfrontlineandjunior
managers,mainlyon thebasisofskillmaturityattainedthroughexperienceandcontinuityinrolewhichis
akeydifferentiatorforcustomerservice.TheBankalsopaysvariablepaytosalesofficersandrelationship
managers in wealth management roles while ensuring that such pay-outs are in accordance with the
requirementofRBIfromtimetotime.TheBankensureshigherproportionofvariablepayatseniorlevels
andlowervariablepayforfront-linestaffandjuniormanagementlevels.