Regulation of Nomination, Remuneration and Governance Committee

Transcription

1 Regulation of Nomination, Remuneration and Governance Committee January 1, 201

2 General Terms... Part I: General and Preliminary Provisions The Document Definition.... Purpose.... Objectives.... Approval Scope of Regulation and Management of Conflict Distribution of Regulation... Part II: Formation and Functions of the Committee Rules for Selection of Members Membership and Dismissal.... Remuneration and Compensation of Members.... Powers of Chairman and Secretary of Committee.... Committee s Method of Work:... Purpose and Powers... Functions and Responsibilities... Meetings and Reporting Amendment and Implementation

3 General Terms The words and terms contained in this manual shall have the meanings set out below unless the context requires otherwise: Regulation: The. Company: The National Commercial Bank. Board: The Board of Directors of the Bank. Chairman of the Board: The Chairman of the Board at the National Commercial Bank. CEO: The Chief Executive Officer of the National Commercial Bank. Chairman: The Chairman of the Nomination, Remuneration, and Governance Committee of NCB. Director: The Member of the Board of Directors or the committees of the board. Independent Director: The Member of the Board with full independence. Non- Executive Director: The Member of the Board who typically does not engage in the day-to-day management of the bank or receives a monthly or an annual salary from the Bank. Bylaw: The Bylaw of the National Commercial Bank. Committee: the NCB Nomination, Remuneration, and Governance Committee. Part I: General and Preliminary Provisions: 1. The Document:. 2. Definition: The is indicative regulation showing the framework and responsibilities of the Committee.. Purpose: The purpose of The document is to clarify the rules, responsibilities, and systematic framework of the Nomination, Remuneration, and Governance Committee.. Objectives: The document aims to: Enhance performance and efficiency in accomplishing the various tasks related to the Nomination, Remuneration, and Governance Committee. Develop the compensation and remuneration policies. Define the responsibilities, duties, and powers of the Committee. Determine the administrative and functional structure of the Committee.

4 . Approval: The Regulation shall be approved by the Board of Directors based on the recommendation of the Committee. 6. Scope of Regulation and Management of Conflict: The Regulation provides for the main guidelines, standards, and principles for the organization of the work of the Nomination, Remuneration, and Governance Committee. The terms of Regulation shall apply without prejudice to the Articles of Association and Bylaw of the Company, and the related laws governing the business of the Company. 7. Distribution of Regulation: Members of the Board of Directors and the Nomination, Remuneration, and Governance Committee shall be considered as Related Parties, therefore, the Regulation shall be published to all related parties. Part II: Formation and Functions of the Committee 1. Rules for Selection of Members: The Board of Directors shall form the Nomination, Remuneration, and Governance Committee as follows: The Committee shall consist of a minimum of three () directors. The member of the Committee shall have appropriate scientific degree and knowledge of the financial and administrative aspects and the nature of the business of the Company. The Committee shall include two independent, non-executive director; the director shall be deemed to be independent if the following criteria are met: The director shall not have direct or indirect interest in the business and contracts which are made in favor of the Company. The director shall not have direct financial or commercial interest with the Executives of the Company. The director shall not be closely related to any of the Executives of the Company. The director shall not be one of the members of the Executive Board of Directors of the Company, nor engage in a technical or administrative work of the Company. The director shall not participate in any competing business or engage in any commercial activities that may be contrary to the interest of the Company. The Chairman of the Committee shall be a member of the Board of Directors, and the Chairman of the Board of Directors shall not be the Chairman of the Committee. The Chief Executive Officer may be invited to attend the meeting of the Committee without the right to vote. The Head of Human Resources Group may be invited to attend the meeting of the Committee without the right to vote. 2. Membership and dismissal: The chairman and members of the Committee shall be elected according to the aforementioned rules, as follows: The Chairman of the Committee shall provide the Board of Directors with a list of the names of the members he deems appropriate for the membership of the Committee and meet the necessary conditions. The list shall be attached with the biographies of each candidate. The Board of Directors shall choose from among the candidates for the membership of the Committee. The members of the Committee shall be appointed for three () years or the term of the Board of Directors, whichever is shorter. The member may be re-appointed in the Committee for a second term. A member of the Committee may be dismissed by a decision of the Board on the recommendation of the Chairman of the Committee in the following cases: If the member requested to be dismissed from his/her membership. If the member misused his/her office at the Committee or for the misconduct that the Board deems detrimental to the objectives and reputation of the Company. If the member is absent from three consecutive meetings without excuse acceptable to the Chairman of the Committee. If the member fails to meet any of the conditions to be met in the membership of the Committee. Where the Member s term expires during the term of Committee because of death, resignation, disability, or dismissal, the Board shall, on the recommendation of the Chairman of the Committee, appoint another qualified member, taking into account the conditions to be met by the member of the Committee and after obtaining applicable regulatory approvals. The duties of a member of the Committee are as follows: The member shall regularly attend, and effectively participate in, the meetings of the Committee. The member shall inform the Chairman of the Committee of his/her necessary absence.

5 The member shall observe the due diligence to conduct the related duties, and keep up with the recent developments related to the business of the Company. The member shall show integrity, chastity, honesty, objectivity, and independency in carrying out his/her work. The member shall not engage in any dishonorable and dishonesty works or activities. The member shall not accept anything valuable from any employee, follower, customer, supplier, or anyone dealing with the Company that could affect the independency and objectivity of the member of the Committee. The member shall disclose to the Board of Directors of the transactions made between him and the Company. The member shall also disclose the relationship with the Board of Directors and the Executive Managers of the Company.. Remuneration and Compensation of the Members: The Board of Directors shall determine the annual attendance allowances and bonuses for the members of the Committee in accordance with the Companies Law and the applicable regulations and instructions of the relevant authorities. The meeting attendance remuneration and allowance shall be calculated as follows: The meetings attendance remuneration shall be only (SAR,000) three thousand riyals per meeting. The meetings attendance allowance shall be (SAR 2,000) two thousand riyals where the meeting is held outside the city of the member. In case of dismissing the member of the Committee for any reason, his/her remuneration shall be calculated based on his/her duration in the membership of the Committee. The report of the Board of Directors shall provide for the remuneration and benefits disbursed to the members of the Committee.. Powers of Chairman and Secretary of Committee: First The Chairman: The Board of Directors shall select the Chairman of the Nomination, Remuneration, and Governance Committee, and the Chairman of the Committee shall supervise the fulfillment of its tasks and shall, in particular,: Appoint the Secretary of the Committee from inside or outside the Committee. Invite the Committee to convene, and determine the time, date, place, and agenda of the meeting in coordination with the members of the Committee. Preside over the meetings of the Committee. Second: The Secretary of the Committee: The Secretary of the Committee shall attend the meeting of the Committee without the right to vote, inform the members of the Committee with the dates of the meetings and agenda, and perform all the Committee managerial business. When choosing the Secretary of the Committee, it shall be taken into account the scientific qualification and the practical experience that enables him to carry out the tasks entrusted to him/her. In general, the Secretary of the Committee shall: Record the date and place of the meeting, the names of attendees and absentees, summary of discussions, and the texts of the recommendations and resolutions reached by the Committee in minutes after each meeting. Send the minutes to all the members and ask them to provide the Committee with their feedbacks within a week from the date of sending the minutes. Amend the minutes according to the feedbacks received from members, and send the minutes to the Chairman attached with the relevant feedbacks. Prepare the minutes in its final form according to the instructions of the Chairman of the Committee, then, the minutes shall be signed by the Secretary, Chairman, and members of the Committee. Where receiving any feedback or reservations from the members, they shall be included in the agenda of the next meeting. The signed copy of the minutes shall be maintained in a special file with the Secretary of the Committee attached with all documents and correspondences relating to the minutes.. Committee s Method of Work: Purpose and Powers: The main purpose of the Nomination, Remuneration, and Governance Committee is to provide support and advice to the Board of Directors on matters relating to the nomination, remuneration, governance, and human resources. Furthermore, it shall: Support the Board of Directors in the fulfillment of its responsibilities towards the shareholders, by ensuring that the Board consists of the best members who are able to assume the responsibilities of the membership, according to the applicable law and the highest standards of governance.

6 Make recommendations to the Board on the compensation policies and practices necessary for the Bank and ensure that these policies and practices are in the best interest of the shareholders and do not pose high-risk transactions for short-term profits. Support the Board of Directors in the developments of the appropriate policies to punish and replace the members to ensure continuity and progression. Coordinate with the Human Resources Group of the Bank to develop and implement succession and replacement policy for executive management. Take a leadership role in establishing effective governance policies and practices, including making recommendation to the Board of Directors on the governance guidelines to be applied in the National Commercial Bank and ensuring compliance with these recommendations. Ensure compliance with all powers set forth in the National Commercial Bank Governance Manual. Functions and Responsibilities: The Committee shall provide the Board of Directors with recommendations on the nomination for membership of the Board in accordance with the approved policies and standards, taking into consideration not to nominate any person previously convicted for a crime involving moral turpitude or dishonesty. The member shall be qualified for the membership of each committee of the Board, and shall be able to enhance the ability of the Board to effectively manage and direct the affairs of the Company. The candidate for the membership of the Board shall, generally, meet the following criteria: A. Integrity, honesty, and trustfulness. B. Financial knowledge and efficiency. C. Leadership characteristics and the ability to the strategic direction. D. Independence without conflict of interest. E. Willingness and the ability to devote the time required to carry out his/her responsibilities under the membership of the Board. F. Good health and the non-existence of a health issue preventing the member from exercising his/her responsibilities. The annual review of the required needs and the appropriate skills for the membership of the Board of Directors and prepare a description for the capabilities and qualifications required for the membership of the Board of Directors, including, identifying the time the member needs to devote for the works of the Board of Directors. Ensure the approval of the Monetary Agency on the candidates following the approval of the Board. Review the structure of the Board of Directors and send the recommendations in respect of the changes that can be made. Identify the weaknesses and strengths in the Board of Directors and propose addressing them in accordance with the best interest of the Company. Annually ensure the independence of independent members and the non-existence of any conflict of interest if the member is a member of another Board of Directors. Develop clear policies for the compensation and remuneration of the members of the Board of Directors and the senior Executives using performance- related criteria. Make recommendation to the Board in respect of the candidates for the membership of the various committees of the Board, taking into account the qualifications necessary for the membership of each committee, especially Audit Committee, as it shall include a financial and accounting specialist. Meetings and Reporting: The Committee shall, prior to the beginning of each financial year, submit to the Board of Directors an annual action plan attached with a schedule of its meetings for approval. The Committee shall hold its meetings periodically at least twice a year, and the invitations of the meeting shall be addressed by the Chairman of the Committee at least one week prior to the date of meeting attached with agenda and related documents. The quorum for any meeting of the Committee shall be the attendance of the majority of the members. The Committee shall hold a meeting if requested by the Chairman, two of its members or the Board of Directors, with clarification of the reasons for such meeting. The decisions and recommendations of the Committee shall be passed by the majority of the vote of the attended members. In case of a tie-vote, the casting vote of the Chairman shall prevail, provided that the members shall not refrain from voting or appoint their representatives to vote. Any member may refuse any decision issued by the Committee, provided that member shall state the main reasons for rejection. If any member left the committee meeting prior to its conclusion, his/her rejection, if any, shall be limited to the decision for which he/she attended its discussion, and he/she shall record in the minutes the items for which he/she attended its discussion, if desired. 6

7 No member of the Committee may authorize another person to attend the meetings of the Committee. The Nomination, Remuneration, and Governance Committee shall be held before the meeting of the Board of Directors. The Committee shall provide the Board of Directors with a copy of the minutes of its meetings within (1) calendar days from the date of the meeting. 6. Amendment and Implementation: The Board of Directors may, in order to facilitate the work of Committee, make any amendment to this regulation on the recommendation of the Nomination, Remuneration, and Governance Committee, provided that such amendment shall not affect the essence of the Regulation and respect the policies and procedures issued by the regulatory authorities. This Regulation is complementary, and not a substitute, to the provisions stated in the rules and regulations of the regulatory authorities in the Kingdom of Saudi Arabia. If there is any conflict between the provisions of the Regulations and the rules and regulations of the regulatory authorities, the rules and regulations of the regulatory authorities shall prevail. This Regulation shall be applied as of the date of its approval by the Board of Directors, and it shall be reviewed by the Board of Directors and the Nomination, Remuneration, and Governance Committee on a regular basis, especially, in case of making any changes to the policy of the Company requiring a review and amendment to the Regulation. The Company management shall notify the Nomination, Remuneration, and Governance Committee with any changes which may arise in the policy of the Company or any other statutory changes require a review of the content of this document. 7