Composition

The Human Resources and Remuneration Committee appointed by the Board of Directors, presently consists of four Non-Executive Directors. Ms H M N S Gunawardana an Independent Director is the Chairperson of the Committee. J Durairatnam, Ms A L Thambiayah, and W D Batagoda are the other members.

The Chief Executive attended meetings and participated in its deliberations except when his own evaluation and remuneration was under discussion. The Head of Human Resources assisted the Committee by providing relevant information and functions as the Secretary of the Committee. The Committee obtains input from external specialists as and when required.

The Committee’s composition met the requirements of Rule 9.12.6 of the Listing Rules of the Colombo Stock Exchange (CSE). In line with the revised CSE listing rules, Ms H M N S Gunawardana took over as Chairperson of the Committee from J Durairatnam in October 2023.

Mandate

Terms of Reference of the Committee adopted by the Board encompasses the tasks specified in Section 3 (6) (iii) of Direction No. 11 of 2007 of the Central Bank of Sri Lanka on Corporate Governance for Licensed Commercial Banks and Section 9.12 of the CSE Listing Rules on Corporate Governance.

The Committee in determining the remuneration policy relating to Directors, Chief Executive, and Key Management Personnel of DFCC Bank, ensures appropriate compensation levels in order to attract, retain, and motivate talented staff with the core capabilities matched to its strategy and also to ensure that the Bank consistently delivers value to all stakeholders and to make the organisation more competitive. To achieve this, the Committee uses a mixture of fixed and variable pay to reward employees.

Procedure

The Committee assists the Board in exercising its oversight on matters related to human resource strategies and policies and makes recommendations to the Board. Apart from the general review of remuneration, in keeping with the policy of pay for performance, the Committee reviewed the performance of the Bank against the historical performance, key performance indicators agreed at the beginning of the year as well as against a peer group when determining and recommending to the Board the annual salary increment pool and the performance-based variable pay pool for the Bank. The Committee also reviewed Market Compensation data in comparison with that of the Bank, gathered and analysed by an external consultant, and made recommendations on market corrections for staff of lower grades to ensure that the Bank's remuneration structure will remain sufficiently attractive. Furthermore, the Committee appraised the performance of the Chief Executive based on the pre-agreed targets and desired skills and reviewed his remuneration.

In addition, the Committee considers and recommends to the Board of Directors from time to time, the requirements of additional/new expertise/skills. The Committee annually assesses the succession plan for key management positions and takes appropriate steps to induct external skills to strengthen the Management of the Bank where
it is deemed necessary.

Meetings

The Committee held five meetings during the financial year to carry out its task. The attendance by members is given on Corporate Governance section of the Annual Report.

Ms H M N S Gunawardana
Chairperson
Human Resources and Remuneration Committee

19 February 2024