ICICI Bank 2016 Annual Report Download - page 190

Annual Report 2015-2016188
Schedules
forming part of the Accounts (Contd.)
Financial Statements of ICICI Bank Limited
Directors and equivalent positions and bonus for employees, including senior management and key
management personnel.
Alignment of compensation philosophy with prudent risk taking: The Bank seeks to achieve a prudent
mix of xed 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 nancial and non-nancial 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 nancial and risk control functions
is independent of the business areas they oversee and depends on their performance assessment.
Whether the remuneration committee reviewed the rm’s remuneration policy during the past year, and
if so, an overview of any changes that were made
The Bank’s Compensation Policy was reviewed by the BGRNC and the Board on April 27, 2015. The section
on ‘Effective Governance of Compensation’ in the Compensation Policy was then modied pursuant to the
‘Guidelines for Implementation of Countercyclical Capital Buffer (CCCB)’.
Discussion of how the Bank ensures that risk and compliance employees are remunerated independently
of the businesses they oversee
The compensation of staff engaged in control functions like Risk and Compliance depends on their
performance, which is based on achievement of the key results of their respective functions. Their goal
sheets do not include any business targets.
c) Description of the ways in which current and future risks are taken into account in the remuneration processes.
Overview of the key risks that the Bank takes into account when implementing remuneration measures
The Board approves the risk framework for the Bank and the business activities of the Bank are undertaken
within this framework to achieve the nancial 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 prots, performance indicators include aspects
such as the desired funding prole 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.
Overview of the nature and type of key measures used to take account of these risks, including risk
difcult to measure
The annual performance targets and performance evaluation incorporate both qualitative and quantitative
aspects including asset quality, provisioning, increase in stable funding sources, renement/improvement
of the risk management framework, effective management of stakeholder relationships and mentoring key
members of the top and senior management.
Discussion of the ways in which these measures affect remuneration
Every year, the nancial plan/targets are formulated in conjunction with a risk framework with limit structures
for various areas of risk/lines of business, within which the Bank operates to achieve the nancial plan.
To ensure effective alignment of compensation with prudent risk taking, the BGRNC takes into account
adherence to the risk framework in conjunction with which the nancial plan/targets have been formulated.
KPIs of Wholetime Directors and 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 prots, performance indicators include aspects such as the desired funding prole 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.
Discussion of how the nature and type of these measures have changed over the past year and reasons
for the changes, as well as the impact of changes on remuneration.
Not applicable