   Corporate Governance

 Policy

Policy

PURPOSE

The purpose of Non-Executive Director Nomination and Remuneration Policy (the “Policy”) is to guide the Board and GNRC in:

Selecting candidates for election as NED, by setting out the nomination policies and procedures for NED.
Determining the remuneration of NED, by setting out an overarching framework for the development and administration of a fair and transparent remuneration for the NED. This takes into account the demands, complexity and performance of AmBank Group as well as skills and experience required in the Board and Board Committees.

APPLICABILITY

This Policy is applicable to AmBank Group and any other operating entities which do not have its own Nomination and/or Remuneration Committee as deemed appropriate.

This Policy (only for AMMB) will be made available on the Company’s website.

The contents of this Policy shall be subject to and be varied to such extent as necessary to comply with any changes in the law and/or regulatory requirements.

SCOPE

The scope of this Policy covers the following areas:

Appointment of new Directors
Re-appointment / Re-election of Directors
Remuneration of Directors

REFERENCES

The following provides the relevant regulatory guidelines:

Financial Services Act 2013
Islamic Financial Services Act 2013
Companies Act 2016
Capital Markets and Services Act 2007 (Amendment 2012)
Bank Negara Malaysia ('BNM')'s Corporate Governance Policy Document
BNM’s Fit and Proper Criteria Policy Document
Main Market Listing Requirements ('MMLR') of Bursa Malaysia Securities Berhad ('Bursa Securities')
Malaysian Code on Corporate Governance ('MCCG')
Securities Commission ('SC')'s Licensing Handbook

KEY DEFINITIONS

“AmBank Group” or “the Group” refers to AMMB Holdings Berhad and its banking subsidiaries, namely AmBank (M) Berhad, AmBank Islamic Berhad and AmInvestment Bank Berhad

“Bank/ Banking subsidiaries” refers to AmBank (M) Berhad, AmBank Islamic Berhad and AmInvestment Bank Berhad

“AMMB/ Company” refers to AMMB Holdings Berhad

“Director” refers to a NED of AmBank Group

APPOINTMENT OF NEW DIRECTORS

Policies

The GNRC shall establish the minimum requirements on the skills and core competencies of a Director based on the annual review of the required mix of skills, experience and core competencies within the Board, diversity (including gender and balance between NED and INED) as well as to ascertain the “Fit and Proper” criteria of each Director.
When assessing a person to be nominated for appointment to the Board, the qualifications and criteria to be considered by the GNRC, shall include, but are not limited to:
- whether or not the person is qualified under applicable laws and regulations to serve as a Director of the Company / Bank;
- whether or not the person meets the “Fit and Proper” criteria under applicable laws and regulations, including BNM Policy Document on Fit and Proper Criteria;
- where a firm has been appointed as the external auditor of the Company / Bank, the person cannot be an officer in the firm who was directly involved in the engagement or any partner of the firm, unless at least three (3) years after the person ceases to be an officer or partner of that firm or at least three (3) years after the firm last served as an auditor of the Company / Bank;
- the person cannot be an active member of any national or state legislative body, or who is an office bearer of, holds any similar office or position in a political party;
- the character and integrity of the person;
- in considering a person to be appointed as an INED, the person shall be independent in character and judgement, and free from associations or circumstances that may impair the exercise of his independent judgement. The person shall not be considered to be an INED if he or any person linked to him:
  - has been an Executive Director / NED / Non-Independent Director of the Company / Bank in the last three (3) years,
  - is a substantial shareholder of the Company / Bank or any of its affiliates, or
  - has had a significant business or other contractual relationships with the Company / Bank or any of its affiliates within the last three (3) years, the total value of which exceeded RM1.0 million;
- whether or not the person is willing to serve as a Director and to commit the time necessary to perform the duties of a Director;
- the contribution that the person can make to the Board and to the overall desired Board composition, taking into account the person's business experience, education and such other factors as the Board may consider relevant; and
- the person must not hold more than five (5) directorships in listed companies and not more than fifteen (15) external professional commitments on board of trustees, advisory boards and board of directors of non-listed companies. Companies within the same Group are considered as one (1) for this purpose with the exception of financial institutions (include banks, insurance companies and investment banks), which shall be considered as separate entities even if they are part of the same group.
The GNRC may use executive firms or other Directors for identifying Director candidate(s).

Procedures

The GNRC shall perform a preliminary assessment of potential candidates and shortlist candidates for an engagement session.
Once shortlisted, three (3) members of the GNRC shall engage potential candidates to assess the suitability of candidates in terms of technical expertise, experience and the behavioural and culture fit with the hiring Board of the Company / Bank, in addition to ascertaining candidate’s interest, availability and terms of appointment. The Chairman of the hiring Company/ Bank will have an engagement session with the selected candidate as recommended by GNRC.
Upon completion of the engagement, the engagement results and the GNRC members’ assessment of candidates shall be included as part of the submission to the GNRC for further discussion and deliberation.
Once potential candidates are shortlisted for recommendation, the Company Secretary shall conduct comprehensive reference checks, including checks on financial and character integrity, in line with regulatory requirements for the candidates.
Based on the recommendation of the GNRC, the Board of the hiring Company / Bank shall deliberate on the recommended candidate, subject to BNM’s approval.
Upon approval by the Board, application for the proposed appointment shall be submitted to BNM accordingly.
Once approval from BNM is obtained, the candidate shall complete the required statutory form.
Upon appointment of the candidate, a letter of appointment shall be issued to the candidate.

RE-APPOINTMENT / RE-ELECTION OF DIRECTORS

Policies

Retirement of Directors by rotation shall follow the requirements as stipulated in the Constitution of the respective Company / Bank.
The tenure of an INED shall not exceed a cumulative term of nine (9) years, except under exceptional circumstances or as part of transitional arrangements towards full implementation of the succession plans of AmBank Group. The commencement of the nine-year tenure shall commence from the date of the first appointment of the independent director to AmBank Group.

Procedures

The GNRC shall assess the performance and contribution of each Director to the Board and Board Committees based on the results of the annual Board Effectiveness Evaluation and individual Directors’ self and peer assessment.
The GNRC shall take into consideration the Director’s performance during his or her term, including consideration of the following factors:
- Compliance with governing legislation, regulations or guidelines, particularly conflict of interest, confidentiality, “Fit and Proper” criteria, and duty of care provisions; and
- Whether or not an INED still qualifies as “Independent” under applicable laws and regulations.
Based on the assessment results, the GNRC shall recommend the Directors seeking re-appointment/re-election to the respective Board who shall then recommend to the shareholders for approval at the Annual General Meeting.
For Directors seeking re-appointment pursuant to BNM-approved tenure, an application for the proposed re-appointment shall be submitted to BNM for approval, upon approval by the Board.

GOVERNANCE OF REMUNERATION

Principles

The Policy and the Group’s remuneration structure reflects the Group’s objectives for good corporate governance as well as long-term value creation for shareholders.
The Group’s remuneration framework is guided by the following key principles:
- Remuneration should reflect the complexity, size and business of the financial institution;
- Remuneration recognises the following different roles played by individual NED:
  - Chairman of the Board;
  - Chairman of the Board Committee;
  - Members of the Board; and
  - Members of the Board Committee
- Remuneration should not be differentiated based on his or her knowledge and experience;
- Remuneration is sufficiently competitive to attract and retain the right calibre of talent; and
- Remuneration levels should not compromise the INED’s independence.
NED should not vote on resolutions approving their remuneration if they are a shareholder.

Oversight of remuneration and periodic review

The GNRC shall assist the Board in implementing policies and procedures on remuneration, including reviewing and recommending matters relating to the remuneration of NED.
The remuneration structure is subject to periodic reviews by the GNRC and approved by the AMMB Board. As a practice, an external consultant shall be engaged once every three (3) years or at any other interval as deemed necessary by the GNRC, to facilitate the GNRC in this review exercise, with the aim to have a holistic and independent review on this Policy to determine its appropriateness, competitiveness and sufficiency to attract, retain and motivate individuals with strong credentials, high calibre and astute insights to serve on the Board of AmBank Group.

Approval of NED’s fees and benefits payable

The fees of the NED, and any benefits payable to the Directors shall be approved at the General Meeting.
Approval of fees and benefits payable to Directors may be sought in advance or in arrears. However, payment of NED’s fees shall only be made in arrears either on a progressive (e.g. monthly, quarterly) or lump-sum basis (i.e. year-end).
The fees are paid in cash and should not be paid in other instruments in lieu of cash. NED should not receive share options, bonuses or retirement benefits from the Company / Bank.

REMUNERATION STRUCTURE

The table below summarises the main components that shall form the remuneration package of NED:

Category	Component	Component Description
Fixed	Fees	A fixed retainer sum shall be provided to NED for his ongoing contribution to the Board
Fixed	Committee Allowance	A fixed retainer sum shall be provided to NED for his ongoing contribution to the Board Committee
Fixed	Meeting Allowance	A payment shall be made to NED on a per-meeting basis with a condition that attendance (physical or virtual) is a prerequisite for remittance
Fixed	Allowance to Chairman	A fixed sum accorded to Chairman of AMMB Holdings Berhad in recognition of his invaluable contribution and guidance to AmBank Group
Variable	Benefits-in-kind	Motor vehicle, petrol allowance, driver, medical, insurance (on claim basis) expenses incurred by the NED in the course of performing his duty

Please click Appendix A for the details of the remuneration structure of NED.

DIRECTORS’ AND OFFICERS’ LIABILITY INSURANCE

NED are accorded with Directors’ and Officers’ Liability Insurance in respect of any liability (civil or criminal) arising in the course of discharging their duties as Directors of AmBank Group provided that such liabilities were occasioned in good faith and not as a result of negligence, default or breach of duty.

The Directors’ and Officers’ Liability Insurance premium shall be borne by AmBank Group separately with Directors collectively paying a portion of the premium which is equivalent to 1% of the total premium and does not form part of the benefits awarded to NED as part of their remuneration package. Payment to be made by the individual director shall be based on the following calculation:

Gross Premium

Total number of Directors of AmBank Group

DISCLOSURE OF REMUNERATION

NED’s remuneration shall be disclosed on a named and individual basis and by the exact amount. The disclosure shall also include NED who was appointed or resigned or retired during the financial year.

BREACHES

All breaches to this Policy will be subjected to the applicable consequence management procedures.
Any deviation from this Policy set out within this document that are deemed necessary due to cross-border situation, commercial or practical reasons shall require endorsement from the GNRC before approval from the Board of AMMB.

EXEMPTION

Exemption to this Policy is not allowed.

DOCUMENT CONTROL AND MAINTENANCE

The Group Company Secretary is the custodian of this Policy who shall be responsible for its maintenance and distribution.
This Policy shall be reviewed in its entirety every two (2) years or earlier when there are changes to the processes to ensure the continued relevance and appropriateness of its contents. The review will take into consideration any changes in applicable guidelines and regulations and changes to existing practices/processes.
Amendments or updates to this Policy shall only be initiated by the Group Company Secretary. Any amendments/updates and the outcome of the review must be endorsed by the GNRC and approved by the Board of AMMB.
The Group Company Secretary shall be responsible to ensure circulation of the amended Policy to the relevant users within AmBank Group.

Nomination And Remuneration Policy