BOC HONG KONG (HOLDINGS) LIMITED Mandate of the Remuneration Committee
  1. Purpose
    1. The Remuneration Committee (the "Committee") is a standing committee of the Board of Directors (the "Board"). The purpose of the Committee is to assist the Board in fulfilling its oversight responsibility for BOC Hong Kong (Holdings) Limited (the "Company"), Bank of China (Hong Kong) Limited (the "Bank") and its subsidiaries (together, the "Group") relating to:

      • the remuneration strategy and incentive framework of the Group.

      • setting the remuneration of directors, Board committee ("Board Committee") members, certain senior management under the Board's direct management as defined by the Board from time to time (defined as "Senior Management") and Key Personnel.

        The role of the Committee is one of oversight. Subject to the provisions of this Mandate and subject to the strategies and policies as approved by the Board or the Committee (as the case may be), the Chief Executive has the overall accountability in the remuneration and appraisal of the Bank's staff as part of his management responsibility.

    2. Roles and Responsibilities
      1. Overall Remuneration Strategy
        1. The Committee is responsible for reviewing and recommending for the approval of the Board on the overall remuneration strategies for the Group, across the following areas:

          • performance appraisal approaches and processes to ensure that appropriate performance is encouraged and rewarded, and inadequate performance is rectified and improved.

          • remuneration and incentive strategies and policies, including long term incentive programmes and other benefits, to encourage good performance and to help align the interests of staff with those of shareholders.

        2. The Committee is responsible for monitoring at a high-level the implementation of the Group's strategies on remuneration and ensuring that the policies based on these strategies and their implementation are legal, fair, reasonable and are in accordance with the strategies formulated pursuant to 2.1.1.

        3. The Committee shall encourage the Management to establish a remuneration culture which is in compliance with the overall strategy of the Group and which supports fulfilment of the Group's vision, mission and value.

        4. Remuneration policy of the Group
          1. The Committee shall review and make recommendations to the Board on the following matters:

            1. The Company's written remuneration policy and practice covering all employees, in order to ensure that the Company's remuneration policy is consistent with the principles set out in the "Guideline on a Sound Remuneration System" issued by the Hong Kong Monetary Authority and any other legal or regulatory requirements applicable to employees' remuneration. The policy should ensure that the Company's overall approach to risk management is supported, and not undermined, by the remuneration arrangements for employees whose activities during the course of their employment (individually or collectively) could have a material impact on the Company's risk profile and financial soundness. The policy should have specific regard to the remuneration of 4 types of employees: senior management, key personnel, groups of employees whose activities in the aggregate may expose the Company to material risk and who are subject to the same or similar incentive arrangements, as well as employees within risk control functions.

            2. The Company's policy and structure for all remuneration of directors, Senior Management and Key Personnel and the establishment of a formal and transparent procedure for developing policy on such remuneration.

            3. Remuneration of the non-executive directors, adviser(s) of the Company and the members of Board Committees.

            4. Aggregate amount and allocation principles of the Group's annual bonus, as well as the proposal on annual salary adjustment.

            5. Any material changes concerning the structure of the Group's overall employee benefits.

            1. The Committee shall ensure that a regular (at least annual) review independently from management on the Company's remuneration policies and its operation to make sure that the policy remains adequate and effective and that the operation of the remuneration system is consistent with the intended purposes and long-term interests of the Company. Such review should include an assessment of the extent to which the remuneration system is consistent with the principles set out in the "Guideline on a Sound Remuneration System". The review can be either internally conducted or externally commissioned and the result shall be submitted to the HKMA.

            2. The Committee shall be able to exercise competent and independent judgement on remuneration policies and practices and the incentives thereby created for managing risk, capital and liquidity.

            3. The Committee shall work closely with other relevant Board Committees (e.g Risk Committee, Audit Committee) and compliance function to ensure the timely

              monitoring and rectification of compliance aspect in remuneration management. The Committee shall report any material issues in relation to the Company's remuneration system to the Board on a regular basis.

            4. The Committee shall consult risk management, financial control and compliance personnel to obtain input, independent of the relevant business lines, on how compensation relates to risk at various levels within the Company.

            1. Remuneration of Directors, Senior Management and Key Personnel

              The Committee shall:

              1. Have the delegated responsibility to determine the remuneration packages of individual executive directors and Senior Management, including long-term incentive, share option, benefits in kind, pension rights, compensation payments (including any compensation payable for loss or termination of their office or appointment, early payout of deferred remuneration) and performance-based remuneration. Moreover, it will recommend to the Board on their remuneration package upon joining, sign-on bonus and contract guaranteed bonus, etc. The Committee should consider factors such as salaries paid by comparable companies, time commitment and responsibilities, and employment conditions elsewhere in the Group.

              2. Review and make recommendations to the Board for approval of the annual and longer-term performance targets of the Senior Management, evaluate the performance of the Senior Management and make recommendations to the Board on the results of performance appraisals against the targets set on an ongoing basis by reference to corporate goals and objectives resolved by the Board from time to time, and review and approve the performance-based remuneration, including the grants of annual bonus and changes to the remuneration, according to results of performance appraisals approved by the Board.

              3. Review and approve the compensation payable to executive directors and Senior Management in connection with any loss or termination of their office or appointment to ensure that such compensation is consistent with contractual terms and is otherwise fair and not excessive.

              4. Have the delegated responsibility to determine the remuneration packages of Key Personnel, in accordance to the remuneration policy and incentive framework approved by the Board, including but not limited to remuneration package upon joining, sign-on bonus, contract guaranteed bonus, fixed salary and annual salary adjustment, annual bonus and its deferment, long-term incentive, share option, benefits in kind, pension rights and compensation payments (including but not limited to any compensation payable for loss or termination of their office or appointment, as well as early payout of deferred remuneration), etc. In the meanwhile, the Committee re-delegates the authority of approving the remuneration packages (ibid range) of Key Personnel, in accordance to the

                remuneration policy and incentive framework approved by the Board, to the Management Committee.

              5. Review and approve compensation arrangements relating to dismissal or removal of directors for misconduct to ensure that such arrangements are consistent with contractual terms and that any compensation payment is otherwise reasonable and appropriate.

              6. Ensure that no director or any of his/her associates is involved in deciding his/her own remuneration.

              7. Reporting Responsibilities
                1. The Committee shall report to the Board on the matters set out in this Mandate, regularly update the Board about the Committee's activities and consider other topics as defined by the Board.

                2. The Committee shall regularly communicate with other Board committees as appropriate.

                3. The Committee shall review any other reports submitted by the Group relating to the Committee's responsibilities.

              8. Composition
                1. Membership
                  1. All of the Committee members are non-executive directors. The Committee is chaired by an independent non-executive director and a majority of its members should be independent non-executive directors. If the Board seeks advice from the Committee, adviser(s) of the Board (if any) could act as the adviser(s) to the Committee.

                  2. Members of the Committee shall possess appropriate authority and necessary skills and experience and be prepared to determine and advise on forming an independent judgement on the suitability of the remuneration policy and its implications for risks and risk management.

                  3. A quorum shall be three members.

                  4. Members of the Committee shall:

                    • regularly attend the meetings of the Committee and actively express their opinions on the matters discussed during the meeting; and

                    • keep abreast of the roles and responsibilities of the Committee as well as their responsibilities as members of the Committee and of the conduct, business activities and development of the Group.

                BOC Hong Kong (Holdings) Ltd. published this content on 11 November 2016 and is solely responsible for the information contained herein.
                Distributed by Public, unedited and unaltered, on 11 November 2016 09:52:47 UTC.

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