A Company must have a Board-approved compensation system that supports sound Corporate Governance and risk management, including appropriate incentives aligned with prudent risk-taking. Performance standards must be consistent with the long-term sustainability and financial soundness of the Company.
2.
The Board, must approve the compensation of Senior Management and oversee the development and operation of compensation policies, systems and related control processes.
3.
Compensation outcomes must be symmetric with risk outcomes. Compensation payout schedules must be sensitive to the time horizon of risks through arrangements that defer a sufficiently large portion of the compensation until risk outcomes become better known. The compensation framework must provide for mechanisms to adjust variable compensation, including through in year adjustment, and malus or clawback arrangements, which can reduce variable compensation after it is awarded or paid. Any arrangement conducted after the effective date of this Regulation must take claw backs and deferrals into consideration.
4.
Members of the Board must be compensated only with fixed compensation comprising the payment of an annual fixed amount and the reimbursement of costs directly related to the discharge of their responsibilities. Bonus or any incentive-based mechanisms based on the performance of the Company must be excluded.
5.
The compensation of Staff in the control functions of risk management, compliance and internal audit must be predominantly fixed, to reflect the nature of their responsibilities; and determined independently of the performance of the Company. The variable compensation must be based on performance targets related to their functions and independent of the lines of business they monitor and control.
6.
For Senior Management and Material Risk Takers, a proportion of the total compensation must be performance-based. Provisions must be included so that compensation can be reduced or reversed based on realised risks and violations of laws, Regulations, codes of conduct or other policies, before compensation vests.
7.
The annual individual bonus for Senior Management and Material Risk Takers must not exceed 100% of the fixed proportion of their total compensation. A higher bonus of up to 150% must be approved by the Board. A bonus of up to 200%) requires approval by the general assembly of the Company.
8.
The annual total bonus for all Staff must generally not exceed 5% of the Company's net profit. A higher bonus must be approved by the General Assembly of the Company before disbursement, along with an attestation signed by all members of the Board that the Company is in compliance with all relevant laws and Regulations issued by the Central Bank.