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DIRECTORS REMUNERATION POLICY. MCB Bank Limited Directors Remuneration Policy VERSION 2.0

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Version 2.0 Page 1 of 7

D

IRECTORS

R

EMUNERATION

P

OLICY

2020

VERSION 2.0

"The Policy document is for internal use of staff of MCB Bank Limited and should be accorded the same level of secrecy as is done for other internal policies of the Bank. Copies of this

document should not be shared prior to the approval of the competent authority.”

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Version 2.0 Page 2 of 7

Table of Contents

... 3

Document Control Sheet

... 4

Preamble:

... 4

Objective:

... 4

Applicability:

... 5

Remuneration of the Board Members for attending Board and its Committees Meetings:

... 5

Approval of Remuneration:

... 6

Exclusions to the Policy:

... 6

Travelling, Boarding and Lodging Expenses:

... 6

Payment and Disbursement:

... 7

Disclosure:

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Version 2.0 Page 3 of 7

Document Control Sheet

Title

Directors Remuneration Policy

Owner

Corporate Affairs Division

Applicability

Board of Directors, MCB Bank Limited

Review Frequency

Once in every Two Years

First Board Approval Date

February 20, 2019

Previous Board Approval Date

February 20, 2019

Current Board Approval Date

Being presented to the Board in its Meeting

scheduled for February 04, 2020

Next Review Date

February 2022 or earlier on need basis.

Version

2.0

Prepared by

Company Secretary

Reviewed & Recommended by:

Human Resource & Remuneration Committee

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Preamble:

The Remuneration Policy for Directors (the “Remuneration Policy”) of MCB Bank Limited (“MCB” or the “Bank”) has been prepared in accordance with the provisions of the Prudential Regulations for Corporate and Commercial Banks, issued by the State Bank of Pakistan (“SBP”), the Listed Companies (Code of Corporate Governance) Regulations, 2019, the Companies Act, 2017 and other applicable laws, rules and regulations as amended from time to time.

SBP vide BPRD Circular No. 03 of 2019, dated August 17, 2019 made amendments in Para 2 of Section C of Prudential Regulations G-1 for Corporate and Commercial Banks, which inter-alia deals with the remuneration of the Board of Directors of banks. The said Circular requires that the Remuneration Policy shall be recommended by Board’s Human Resource & Remuneration Committee (“HR&RC”) and approved by the Board of Directors of the Bank. The said Policy shall also be approved by the Shareholders of the Bank, on pre or post facto basis, in its Annual General Meeting.

Objective:

The Remuneration Policy aims to set out the requirements and methodology for the determination of the scale of the remuneration to be paid, from time to time, to the Chairman and other Directors for attending the Board and its Committees meetings. It ensures that the Board Members are fairly rewarded with regard to their respective responsibilities undertaken, and also to attract and retain high-caliber, experienced directors by offering appropriate remuneration levels commensurate with their expertise, skill and experience. The Remuneration Policy has been formulated with clear mandate and charter, keeping in view the ownership structure, governance mechanism, risk profile, scope of operations and performance of the Bank.

MCB Board should comprise of directors who have diversified experience, suitable knowledge, appropriate skill set/expertise and competencies considered relevant in the context of Bank's operations and to make the Board an effective oversight and decision making body. The Bank being financial services provider should always adhere to practicing good governance, enabling to enhance its efficiency and footprints in financial sector.

Applicability:

The Remuneration Policy for Directors of the Bank is applicable to Non-Executive/Independent Directors, Executive Director(s) and the Chairman of the Board of Directors.

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1. Remuneration of the Board Members for attending Board and its

Committees Meetings:

1.1. The Board, on the recommendation of HR&RC, shall approve the scale of remuneration to be paid to the Chairman and its other Members {excluding Executive Director(s)}, for attending Board and its Committees meetings. Such level of remuneration shall be appropriate and commensurate with the level of expertise and experience of each Member and responsibility assigned. The remuneration of each member shall be such that it encourages independence, motivation and retention, all of which is essential for meaningful value addition at the Board level.

1.2. While determining and approving the scale of remuneration for each Board Member, as defined in Clause 1.1 of the Policy as mentioned above, for attending Board and its Committees Meetings, maximum limits shall be kept in view as delineated in the SBP Prudential Regulations G-1 for Corporate and Commercial Banks, as amended from time to time.

1.3. The Board may determine additional remuneration for a director including the Chairman for performing extra services. However, such additional remuneration shall not exceed the limits as prescribed in BPRD Circular No. 03 of 2019.

2. Approval of Remuneration:

2.1 Based on the guidelines given above, the Board, on the recommendation of HR&RC, shall approve, from time to time, the compensation of the Chairman and Other Directors excluding Executive Director(s).

2.2 Such compensation shall also be approved by the Shareholders of the Bank, on pre or post facto basis, in its Annual General Meeting.

2.3 The Board Members shall be accountable for their conduct according to the scope of their roles and responsibilities as determined by the Board of Directors, from time to time, and the scale of remuneration may be reviewed/adjusted based on their annual performance evaluation conducted as per Guidelines issued vide SBP BPRD Circular No. 11 of 2016.

2.4 No remuneration shall be paid to the Executive Director(s) except for traveling, boarding, lodging and/or any other expenses incurred for attending Board and its Committees meetings. 2.5 The Administrative expenses pertaining to the office, staff and security allocated etc., to the

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3.

Exclusions to the Policy:

No consultancy or allied work shall be awarded to a director or to the firm(s), institution(s) or company (ies) etc. in which he/she individually and/or in concert with other directors of the same Bank, holds substantial interest.

4. Traveling, Boarding and Lodging Expenses:

4.1 The Bank shall either make all arrangements for travelling, boarding and lodging of Board Members for attending Board and its Committees meetings and any other meeting relating to Bank’s business or reimburse such expenses to the Board Members, on actual basis.

4.2 Non-Executive/Independent Directors shall be entitled for maximum of First Class airfare along with boarding, lodging expenses and/or any ancillary expenses incurred for attending Board and its Committees meetings and any other meeting relating to Bank’s business, on actual basis. However, considering the stature of the Chairman, he is allowed the option of availing the services of chartered plane and expenses related to such facility shall be borne by the Bank, on actual basis.

4.3 Executive Director(s) shall be entitled for travelling, boarding, lodging and/or any other expenses incurred for attending Board and its Committees meetings, on actual basis, as per the Bank’s standard rules and regulations.

5. Payment and Disbursement:

5.1 Remuneration shall be fixed invariably in Pakistani Rupees (PKR). However, the payment of the same may either be made in Pakistani Rupees or in equivalent foreign currency (ies) as stated hereinafter:

5.2 The Payment of remuneration, travelling, boarding/lodging and other expenses for attending Board and its Committees meetings shall be made either through Pay Orders/ Bankers Cheques or direct credit into the designated Bank Accounts of the Board Members. However, in case of foreign directors, such payments may be made in equivalent foreign currency (ies) directly into their designated bank accounts, in compliance with applicable laws and the regulations and subject to the deduction of applicable taxes, if any.

5.3 Subject to participation in the meetings of the Board and its Committees, the payment of remuneration shall be made to the Board Members preferably before the close of respective quarter of each calendar year.

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Disclosure:

Proper disclosures of remuneration and other benefits/facilities provided to the Board Members shall be made in the annual financial statements of the Bank. The disclosure shall also include the details of attendance of each director in Board and its Committees meetings.

Review of the Policy:

The Remuneration Policy shall be reviewed by the Board of Directors biennially or on need basis and any change(s) therein shall be approved by the Shareholders of the Bank, on pre or post facto basis, in its Annual General Meeting.

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