Chairman’s Statement

Role of the Committee

The main responsibilities of the Committee, which are mainly based on the Banking Act Direction No. 11 of 2007 on Corporate Governance for Licensed Commercial Banks in Sri Lanka issued by the Central Bank of Sri Lanka are as follows:

• Determining the remuneration policy (salaries, allowances and other financial payments) relating to Key Management Personnel (KMP) of the Bank.
• Setting goals and targets for the General Manager (GM) and KMP.
• Evaluating the performance of the GM and KMP against the set targets and goals periodically and determining the basis for revising remuneration, benefits and other payments of performance based incentives.
• Reviewing staff matters referred to it by the Board.
• Determining the Human Resource Policy and Organisational Structure of the Bank.

Composition and Quorum

The members of the Committee, during the year under review, were as follows:

• Mr H P Ajith Gunawardana
  Chairman
  Independent Non-Executive Director
• Mr Ronald C Perera PC
  Member
  Independent Non-Executive Director
• Ms Pushpa Wellappili
  Member
  Non-Executive Ex Officio Director
  (from 27 February 2015 to 31 March 2016)
• Mr Sajith R Attygalle
  Member
  Non-Executive Ex Officio Director
  (from 11 May 2016 todate)
• Mr Charitha N Wijewardane
  Member
  Independent Non-Executive Director
• Mr Attygalle was appointed in place of Ms Wellappili with her retirement from public service, with which, she ceased to be a Director.

The quorum of the Committee is two members. The GM is present at all meetings except when matters relating to the GM are discussed. The Deputy General Manager (Human Resources) and other members of the staff are invited to attend the meetings when the Committee requires their presence. The Secretary, Bank of Ceylon/Secretary to the Board functions as Secretary to the Committee.

Meetings and Activities

The Committee has met thrice during the year under review. The attendance of members at meetings is given on page 66 All minutes of the Committee meetings are tabled and ratified at meetings of the Board and approval of the Board thus is obtained for implementation of the recommendations made by the Committee. Follow-up action is taken on outstanding matters.

According to the aforesaid Banking Act Direction No. 11 of 2007, this Committee has to determine the Remuneration Policy relating to Directors. However, in the case of Bank of Ceylon, the remuneration of Directors is determined in accordance with the circulars and instructions issued by the Government of Sri Lanka, the sole shareholder of the Bank. The provisions in the Bank of Ceylon Ordinance No. 53 of 1938 and its amendments, the Act of Parliament that established Bank of Ceylon are also taken into consideration in this regard. The Bank has a Remuneration Policy in place, prepared, based on the above, which is reviewed as and when new regulations are issued by the Government. This policy was revised within the year under review. The details of the remuneration given to Directors, are disclosed in the Annual Report on a yearly basis.

The goals and targets for GM and Deputy General Managers (DGMs) are embodied in the rolling Corporate Plan and Action Plan. The GM is responsible for the implementation of the Corporate Plan through the DGMs. Based on the Action Plan prepared according to the Corporate Plan, the Assistant General Managers are given targets by the respective DGMs.

Major activities of the Committee for the year 2016 are as follows:

• The remuneration of employees is revised once in three years, with the approval of the Ministry, under whose purview the Bank falls as per the provisions of the Bank of Ceylon Ordinance and during the year under review, no revision was done to the remuneration of employees. However, as part of the remuneration package for the three-year period from 2015–2017, the allowances offered for KMPs were recommended.
• Reviewed and recommended the Remuneration Policy of the Chairman and Directors of Bank of Ceylon.
• Recommended the Remuneration Policy for KMP.
• Reviewed the training needs of the Bank and made the necessary recommendations.
• The Committee evaluated the performance of the DGMs against the targets given to them at the beginning of the year. Performance of the Assistant General Managers are evaluated through the evaluation carried out on them by their superiors, viz DGMs.
• Revised/revisited the Human Resource and Remuneration Committee Charter.
• The Committee revisited the Organisation Structure proposed under the transformation exercise of the Bank with The Boston Consulting Group in 2015 and recommended the revised Organisation Chart of the Bank for the higher grades.
• Reviewed and recommended the promotion policy and schemes for the grades from Office Assistant to Chief Manager.
• Followed up the decisions pending implementation.
• The Committee evaluated its performance for the year 2016 as per the committee's Charter and is fully satisfied that it has fulfilled its obligations as required.

Conclusion

The Committee shall continue to assist the Board of Directors in fulfilling its responsibilities in regard to human capital and remuneration matters.

On behalf of the Human Resource and Remuneration Committee.

H P Ajith Gunawardana
Chairman
Human Resources and Remuneration Committee

29 March 2017
Colombo