REPORTS OF THE BOARD COMMITTEE CHAIRMEN
1
AUDIT & COMPLIANCE COMMITTEE
Composition as at 31 December 2013:
Mohamed Darwish Al Khoori (Chairman),
Aysha Al Hallami,
Abdulla Khalil Al Mutawa,
Omar Liaqat
Secretary: Rami Raslan
Statement from the Chairman of the Audit & Compliance Committee
Dear Shareholders,
During 2013, the Audit & Compliance Committee continued focusing on integrity and transparency of the Bank’s financial statements, and the effectiveness of the Bank’s internal audit, internal controls and compliance functions, in addition to reviewing the work provided by the Bank’s statutory auditors, PricewaterhouseCoopers.
The Audit & Compliance Committee was composed of four Non-executive Directors, the majority of whom were considered by the Bank to be independent. The Chairman of the Committee was an independent Director with relevant qualifications and experience.
The Committee held nine meetings in 2013, during which the Committee discussed, reviewed and worked on the following matters:
- overseeing and continuously assessing the effectiveness of the financial reporting and disclosure process;
- monitoring the choice of accounting policies, principles and judgments;
- overseeing regulatory compliance and development of the Bank’s compliance function;
- overseeing and continuously assessing the effectiveness of the external audit process;
- monitoring internal controls;
- approving the annual audit plan;
- discussing the annual audited financial statements with management and the external auditor, and, in particular, considering the appropriateness of the Bank’s specific and general provisions;
- overseeing the performance and activities of the internal audit function;
- reviewing audit issues raised by the internal and external auditors and management’s responses;
- evaluating the external auditor’s qualifications, performance and independence;
- discussing risk-management policies and practices with management; and
- reporting regularly to the Bank’s Board of Directors.
The Committee regularly met separately with the external auditors and internal auditors in the absence of the Bank’s management.
The views of the external and/or internal auditors were solicited when required.
The Board approved the 2013 annual accounts, at the Committee’s recommendation, based upon the external auditors’ report and the Committee’s view that, as a whole, the accounts accurately reflected the Bank’s performance in 2013 and that they are fair, balanced and provide the information required by shareholders to assess the Bank’s performance. No significant issues were considered by the Committee with respect to the 2013 accounts.
The Board Audit & Compliance Committee has received confirmation from management that the Bank’s internal controls have been assessed to be effective and operating as designed, and that management has taken or is taking the necessary action to remedy any failings or weaknesses identified.
The Committee considers that it made positive progress during 2013 towards meeting its responsibilities.
LOOKING AHEAD TO 2014
The Audit & Compliance Committee shall continue to focus on its governance responsibilities in 2014.
Mohamed Darwish Al Khoori
Chairman of the Board’s Audit
& Compliance Committee
2
CORPORATE GOVERNANCE COMMITTEE
Composition as at 31 December 2013:
Mohamed Ali Al Dhaheri (Chairman),
Khalid Deemas Al Suwaidi,
Omar Liaqat,
Sheikh Sultan bin Suroor Al Dhahiri
Secretary: Rami Raslan
Statement from the Chairman of the Corporate Governance Committee
Dear Shareholders,
During 2013, the Corporate Governance Committee continued to oversee the development of the Bank’s governance policies. In particular, the Committee engaged the Bank’s divisions to assess their development of certain key governance themes, and oversaw the Board evaluation and implementation of policy adjustments arising from that evaluation.
The Corporate Governance Committee monitors local and international best practices regularly, and reviews and makes recommendations to the Board to enhance the Bank’s governance practices in order to achieve high standards of corporate governance.
The Committee adopted a rolling agenda for 2013 that focused on, amongst other things, remuneration governance, risk governance, organisational transparency, Islamic banking governance, financial disclosure, and product governance.
The Committee held five meetings over the course of 2013. Amongst other things, in 2013 the Corporate Governance Committee worked on the following matters:
- reviewing the results of the 2012 Board evaluation and the adoption and monitoring of the action plan arising from it;
- reviewing and recommending amendments to Board and management committees’ terms of reference;
- reviewing and recommending amendments to the Bank’s governance policies;
- engaging the Bank’s divisions and various businesses in its governance framework and providing guidance on enhancing governance practices;
- Directors’ professional development programmes;
- ongoing review of international developments in corporate governance and assessment of Bank practices;
- considering corporate governance sponsorships;
- publication of corporate governance information;
- making recommendations to the Board and Board Committees on governance matters; and
- considering internal Bank initiatives to embed corporate governance within the organisation.
The Corporate Governance Committee plays an advisory role, reporting its recommendations to the Board for final approval. The Committee considers that the Bank has developed a robust governance framework, appropriate for the size and status of the Bank. However, there remain areas for improvement.
The Committee considers that positive progress was made during 2013 in the implementation of the Bank’s corporate governance initiatives. The Bank’s ongoing achievements in corporate governance resulted in the Bank receiving the ‘Corporate Governance Award — UAE’ from World Finance magazine in 2013. The award is in recognition of ADCB’s achievements in corporate governance and is an affirmation of the Bank’s commitment to upholding the highest standards of governance. The Bank also supported various governance initiatives that were aimed at raising awareness in the SME sector, by seconding its professionals to speak at several conferences.
LOOKING AHEAD TO 2014
The Committee’s agenda for 2014 will reflect its ongoing commitment to governance across the Bank through a series of deep-focus sessions into governance matters including, amongst other things, ethics & compliance, bribery & fraud, strategy governance, risk governance, IT governance, sustainability & corporate social responsibility, and procurement governance.
Mohamed Ali Al Dhaheri
Chairman of the Board’s Corporate Governance Committee
3
NOMINATION, COMPENSATION & HR COMMITTEE
Composition as at 31 December 2013:
Mohamed Sultan Ghannoum Al Hameli (Chairman),
Eissa Mohamed Al Suwaidi,
Abdulla Khalil Al Mutawa,
Mohamed Ali Al Dhaheri
Joint Secretaries: Ali Darwish, Rami Raslan
Statement from the Chairman of the Nomination, Compensation & HR Committee
Dear Shareholders,
During 2013, the Nomination, Compensation & HR Committee focused on the Bank’s remuneration framework, Board skills and composition, and HR policies.
The Nomination, Compensation & HR Committee met six times during 2013 and considered the following:
- selection and nomination of Directors;
- Directors’ remuneration and fees;
- CEO performance evaluation and remuneration;
- Bank’s remuneration policy for Directors, senior management members and staff;
- variable pay scheme governance;
- implementation of variable pay schemes in line with the international best practices;
- compensation survey findings and position of the Bank’s pay practices against the market;
- compensation and variable pay recommendations;
- long-term incentive plans;
- succession planning for Directors and senior management;
- UAE Nationalisation strategy;
- Ambition University — learning and development aligned with business strategy;
- HR policies and practices; and
- retention plans.
The Bank’s Emiratisation strategy has been amended and expanded in scope. It includes creative and impactful initiatives developed in partnership with government bodies and world-class education providers to ensure that the Bank attracts, selects and retains the best of the available UAE national talent, and contributes to the skill development of young UAE nationals.
The Committee commissioned an independent review of the Bank’s variable pay schemes in 2012 and, during 2013, oversaw the implementation of certain changes recommended by those independent consultants. The changes were aimed at aligning the Bank’s remuneration practices with evolving global best practices. In addition, the Committee consulted the Board’s advisor on remuneration strategy and governance. The Committee considers that the Bank’s remuneration policies are appropriate for the Bank’s current size and status, and that its remuneration governance adheres to evolving global standards.
The Bank’s HR team has designed and operates a succession plan aimed at ensuring that the key jobs across the organisation are continuously backed up by a pool of experienced and engaged high-potential employees. The Committee considers succession planning at the Bank’s senior management levels.
The Committee considers that it made positive progress during 2013 towards meeting its responsibilities.
LOOKING AHEAD TO 2014
In 2014, the Committee shall continue to fulfil its governance responsibilities. Amongst other things, it will focus on UAE nationals strategy, staff retention plans, variable pay, benchmarking Board fees, Directors’ independence, performance recognition rewards, succession planning, and applicable international remuneration, compensation and human resources best practices.
Mohamed Sultan Ghannoum Al Hameli
Chairman of the Board’s Nomination, Compensation & HR Committee
4
RISK & CREDIT COMMITTEE
Composition as at 31 December 2013:
Eissa Mohamed Al Suwaidi (Chairman),
Mohamed Sultan Ghannoum Al Hameli,
Khaled H Al Khoori,
Aysha Al Hallami,
Secretary: Rami Raslan
Statement from the Chairman of the Risk & Credit Committee
Dear Shareholders,
During 2013, the Risk & Credit Committee comprised four Non-executive Directors.
The Committee oversaw management’s administration of the Bank’s credit portfolio, including management’s responses to trends in credit risk, credit concentration and asset quality, and received and reviewed reports from senior management (and appropriate management committees and credit units) regarding compliance with applicable credit risk–related policies, procedures and tolerances. The Committee also assisted the Board in fulfilling its oversight responsibilities with regard to the risk appetite of the Bank, risk-management framework and the governance structure that supports it.
Over the course of 2013, the Committee held 21 meetings and considered a wide range of matters, from credit commitments to risk policies, strategies and new products, with increasing emphasis on risk strategy and policy issues. The Committee:
- considered major credit decisions;
- assisted the Board to define the risk appetite of the Bank and monitored the independence and effectiveness of risk management functions throughout the Bank;
- considered the Bank’s key risks, including concentration and sectoral credit exposures;
- ensured the adequacy of infrastructure, resources and systems to maintain a satisfactory level of risk management discipline;
- exercised oversight of management’s responsibilities, and reviewed the risk profile of the Bank to ensure that risk exposure conforms to the risk appetite determined by the Board;
- monitored the independence of risk management functions throughout the Bank;
- ensured the existence of a pervasive risk-awareness culture throughout the Bank;
- reviewed issues raised by Internal Audit that might impact the risk-management framework; and
- revised credit limits and country limits to ensure that risk exposure conforms to the risk appetite determined by the Board.
Throughout 2013, the Committee conducted risk strategy and policy meetings on a frequent basis (seven meetings were held focusing only on risk strategy and ‘policy issues’, and risk strategy issues were considered on an ‘as required’ basis during other meetings), with the objective of discussing and reviewing strategies, policies, frameworks, models and procedures that lead to the identification, measurement, reporting and mitigation of material risks.
The Committee considers that it made positive progress during 2013 towards meeting its responsibilities.
LOOKING AHEAD TO 2014
For 2014, the surrounding economic environment will continue to shape the Committee’s agenda. The Committee will continue to assess and reassess the Bank’s risk profile, strategy and appetite dynamically. The 2014 schedule contemplates eight focus-sessions on risk strategy and policy issues.
Eissa Mohamed Al Suwaidi
Chairman of the Board’s Risk &
Credit Committee