EDITION

2023

ICICI BANK :
Compensation Structure Report

HUMAN RESOURCE
MANAGEMENT
Puneesh (22020841216)
  HISTORY OF BANK
“ICICI Bank was established by the Industrial Credit and Investment Corporation of India
(ICICI), an Indian financial institution, and was its wholly-owned subsidiary. ICICI's
shareholding in ICICI Bank was reduced to 46% through a public offering of shares in India
in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000,
ICICI Bank's acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal
2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal
2002. ICICI was formed in 1955 at the initiative of the World Bank, the Government of India
and representatives of Indian industry. The principal objective was to create a development
financial institution for providing medium-term and long-term project financing to Indian
businesses.”

“In the 1990s, ICICI transformed its business from a development financial institution
offering only project finance to a diversified financial services group offering a wide variety
of products and services, both directly and through a number of subsidiaries and affiliates like
ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial
institution from non-Japan Asia to be listed on the NYSE.”

“In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of
ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial
Services Limited and ICICI Capital Services Limited, with ICICI Bank. The merger was
approved by shareholders of ICICI and ICICI Bank in January 2002, by the High Court of
Gujarat at Ahmedabad in March 2002, and by the High Court of Judicature at Mumbai and
the Reserve Bank of India in April 2002. Consequent to the merger, the ICICI group's
financing and banking operations, both wholesale and retail, have been integrated in a single
entity.”

 COMPENSATION POLICY STRUCTURE

The Compensation Policy is divided into three parts. Applicable for only these profiles –

1. Compensation of employees including KMPs & SMPs.

2. Relating to compensation of the Managing Director & CEO and Other Whole-time
Directors,
 3. For non-executive Directors.

APPROACH BEHIND TO DECIDE THE COMPENSATION STRUCTURE

1. “Low & Mid Managerial Personals – The Board of Directors and the Board
Nominations & Remuneration Committee (BNRC) have provided guidance to the
Company, which has consistently implemented responsible compensation practices.

The Company's compensation policies are guided by principles of fairness and merit,
balanced with a cautious approach to risk management. The method used for
determining compensation is based on the total cost to the company. The
administration of the Compensation Policy is informed by the results of both the
performance management and talent management systems.”

2. “For Executive Directors – Compensation will be aligned to both financial and non-
financial indicators of performance including controls like risk management, process
perspective, customer perspective and others.”

3. “For Non-Executive or Independent Directors - All Independent Directors would

be entitled to reimbursement of expenses for attending Board/Committee meetings,
official visits and participation in various forums on behalf of the Company. Only the
Independent Directors on the Board of the Company will be paid profit related
commission, in accordance with the extant applicable regulatory or statutory
requirements. The remuneration payable to non-executive Directors would be
governed by extant applicable requirements prescribed by IRDAI, SEBI or any other
relevant authority, the Companies Act, 2013 and the Insurance Act, 1938.”

“BASIC COMPONENTS INCLUDE IN THE COMPENSATION STRUCTURE ARE

AS FOLLOWING” –
“The allocation of funds for compensation should be determined based on the expected
business goals, necessary staffing levels, and the desired profit margins.”

1. “Annual Guaranteed Pay (AGP) – AGP consists of various components including

basic salary, optional allowances and retirals. Optional allowances include a basket of
components including house rent allowance, company car lease allowance,
 conveyance allowance, car maintenance and fuel expenses, domiciliary medical
allowance, leave travel allowance, supplementary allowance, meal allowance, gift
allowance, superannuation allowance & national pension scheme (for applicable
employees) or any other allowance(s) introduced from time to time.”
2. “Variable Pay – The budget for variable compensation is established based on the
financial capability of the company. The amount of variable pay received by each
employee is linked to their individual performance for sales personnel and both
individual and company performance for non-sales employees and managers.
The guidelines for sales incentive distribution must be approved by the Chief Human
Resources Officer and the Chief Distribution Officer of the company.”
“Variable compensation for non-sales front-line workers and managers is provided
through Performance Linked Rewards (PLR) for employees in levels 1-6 and
performance bonuses for employees in levels 7 and higher. The performance bonus is
limited to a maximum of 100% of the basic salary for the employee with the highest
evaluation.”
3. “Long Term Pay – The company's long-term compensation plans aim to foster a
sense of ownership among employees. These plans may be delivered either through
the company's employee stock option program or its long-term rewards scheme. This
is typically a key component of recognizing and rewarding middle and senior
management within the company.”
“The criteria for offering employee stock options or long-term rewards may include
organizational performance, individual performance, potential evaluation, experience,
and any other relevant factors.”
“Additionally, stock options may be provided to new hires on a case-by-case basis
with the goal of attracting high-potential talent based on factors such as potential and
skills.”
4. “Non-Cash Benefits – Employees receive non-cash benefits to supplement their
rewards and meet non-financial needs, which vary based on their position within the
company and can include current and future benefits.”
a. “Hospitalisation insurance for employees and dependents”
b. “Group term insurance for employees”
c. “Personal accident insurance for employees”
d. “Company car”
e. “Club membership”
 f. “Company assets for home office”
5. “Post-Retirement Benefits – Employees retiring from the services of the Company
shall be eligible for the following post-retirement benefits”
a. “Group Health Insurance”
b. “Domiciliary Medical Expenses”
c. “Transportation to Home Town”
6. “Gaurnteed Bonus – Guaranteed bonuses go against the idea of merit-based rewards,
and the company discourages them. Hiring bonuses for new employees may be
offered in the first year, but only as part of bringing in new staff from outside the
company.”

SOME OF THE BASIC DIFFERENCE IN THE COMPENSATION STRUCTURES –

Most of the components are same as SMPs and KMPs but volume of that components is
different. Major changes are stated below:

1. The quantum of bonus shall not exceed 70% of the total fixed pay (basic salary +
allowances) in a year.
2. Alignment of Compensation to prudent risk parameter – The company will align
compensation with risk parameters by considering various risk factors and
performance objectives, including persistency, solvency, grievance resolution,
management expenses, claim settlement, claim rejections, overall compliance, and the
company's financial position such as net worth and assets under management.
3. Payment of severance pay other than accrued benefits (mandated by statute) shall be
made with the prior approval of the Board. The compensation policy takes into
account both financial and non-financial indicators of performance, including risk
management, customer perspective, and others.
4. Acts of gross negligence and breaches of integrity will be covered under this policy,
while errors of judgment will not. The variable pay, including performance bonuses,
may be subject to "malus" and employees will be required to sign "claw back"
agreements, where they agree to return previously paid variable pay in the event of a
finding of gross negligence or integrity breach, within the bounds of regulatory
requirements.
5. Considering the above, the permitted modes of remuneration for Independent
Directors would be:
 a. Sitting fee for attending each meeting of the Committee/Board as approved by
the Board from time to time within the limits as provided under Companies
Act, 2013 and related rules.
b. Profit related commission as may be approved by the Board and shareholders
from time to time, subject to availability of requisite profits and compliance
with applicable statutes/regulations.

ANNUAL REVIEW OF COMPENSATION & BENEFITS PRACTICES –

The Human Resources department continuously stays informed about shifts in the company's
priorities and their impact on compensation decisions. They communicate with employees
through various channels to gather their opinions on compensation and benefits, and assess
the effectiveness of the current system. Few of these processes are outlined below:

1. Increment – Compensation and benefits for different levels are periodically evaluated
based on market data, internal fairness, and the company's ability to pay. Increments
for individuals are tied to their performance and potential to avoid short-term
performance being given too much weight. The budget for increments and the
increment grid for employees are approved by the BNRC.
2. Performance Bonus – The performance bonus is paid annually based on both the
company's performance and individual performance. The bonus payment grid is
approved by the BNRC.
3. Grant of Long Term Pay – The company may offer long-term rewards based on
company performance, affordability, and individual performance and talent ratings.
The criteria for eligibility and the maximum amount of long-term reward that can be
given at each level are approved by the BNRC and the board.
4. The decision relating to remuneration of the Managing Director & CEO and other
Whole-time Directors would be reviewed & approved by the BNRC, the Board,
IRDAI, and shareholders of the Company.
o KMPs and SMPs Compensation Structure – INR 4.25 – 5.00 LPA
 o Current CEO Compensation Structure –

 REFERENCES –
1. Compensation Policy Report (June Edition 2022) – ICICI BANK
https://www.icicibank.com/managed-assets/docs/investor/policy-for-determining-
material-subsidiaries/Compenstion-Policy.pdf
2. https://www.erieri.com/executive/salary/sandeep-bakhshi-6i27
3. https://simplywall.st/stocks/gb/banks/lse-0a7m/icici-bank-shares/management
4. https://www.ambitionbox.com/benefits/icici-bank-benefits
5. https://www.icicisecurities.com/UPLOAD/ARTICLEIMAGES/
Compensation_Policy.pdf