REMUNERATION REPORT

Remuneration Report for the Board and Executive Management

The Board of Directors designs the remuneration policy. This policy sets the basis for the remuneration of the Board and the executive management and its compatibility with the objectives and performance of the Company. The policy reflects the objectives of the company and considers the integrity of its operations and its financial position.

This policy is part of the corporate governance framework. The Board implements this policy through the Nominations and Remuneration Committee (BNRC).

The Company’s remuneration policy was created in accordance with the following principles:

1. Link rewards to the degree of risk.
2. Attract and retain the best professionals.
3. Ensure equality within the company and competitiveness outside.
4. Comparison of performance levels in the market using analyses received from specialized consulting firms in the area.
5. Ensure transparency in awarding bonuses.
6. Link to performance indicators (KPIs) for Board members and Executive Management.
7. Be consistent with the Company’s strategy and objectives both long-term and short-term
8. Match the experience and qualifications of the company’s employees at different levels of employment.

The remuneration policy of the company determines the reward system in line with the objectives of the company, shareholders and stakeholders. This policy reflects standards and principles of best practices in good governance based on the relevant regulatory requirements.

The BNRC is responsible for the implementation of this policy. It is also responsible for reviewing the policy on an annual basis and when necessary, taking into consideration the extent of compliance with the laws and guidelines issued by the relevant regulatory bodies such as the Capital Markets Authority and others. The Committee submits proposed policy amendments to the Board for approval.

The Board is keen to promote the principles of effective governance within the company’s remuneration system. The Board, through the Nomination and Remuneration Committee, continues to prepare and update the remuneration policy in line with the Company’s strategy and overall risk framework.

The executive management is responsible for designing the staff reward system in accordance with the approved policy, as well as the responsibility of following up the implementation of the approved system.

The KPIs are based on the Company’s overall strategy and are approved by the Board. The Executive Management implements this strategy and reports thereon to the Board on a regular basis.

Board Remuneration

• The total Board remuneration shall not exceed 10% of the net profits of the Company (after depreciation, reserves and payment of dividends to shareholders not less than 5% of the Company’s capital or any higher percentage, as provided in the Articles of Association of the Company).
• The Board remuneration is approved during the Annual General Meeting of shareholders as per the recommendations of the BNRC, and by the Board itself.
• The Board remuneration is approved during the Annual General Meeting of shareholders as per the recommendations of the BNRC, and by the Board itself.
• In 2019, the total remuneration granted to the Board members was KD 510,000 subject to shareholders’ approval at the Annual General Meeting.

Executive Management Remuneration

The Executive Management Remuneration System takes into consideration the environment in which the company operates, the results achieved and the company’s risk tolerance, and includes the following key components:

Fixed Remunerations

• Fixed remuneration is determined by the level of responsibilities assigned and the specific career path of the executive member at the Company. The remuneration index is established for each job, reflecting the value to the Company.
• Fixed remuneration is reviewed by the Nomination and Remuneration Committee (NRC), in coordination with the relevant departments if necessary (i.e. human resources), on an annual basis to reassess the total remuneration package, market conditions, and performance of divisions across the company.
• Fixed remunerations including salaries, allowances and benefits (and end of service indemnity) are awarded under the approved salary and grading structure by the Board of Directors, the applicable laws and regulations and the manual of contractual agreements of employees issued by human resources.

Variable Remunerations

• Variable remunerations are linked to the achievement of predefined goals.
• This type of remuneration is designed to motivate and reward Executive Management members. Variable bonuses are allocated based on the individual performance of the Executive Management member and the overall performance of the Company.
• Variable remuneration in Zain can comprise of two elements: annual variable remuneration (variable remuneration granted to employees on an annual basis) and multi-annual variable remuneration (variable remuneration granted to employees over multiple years indicating that the Board of Directors focuses on short and long-term objectives).
• There are two types of annual objectives: financial indicators (financial targets to be achieved by the Company and departments during the fiscal year) and non-financial indicators (non-financial operational objectives to be achieved by the Company through activities and processes such as product introduction, entering a specific investment, etc.).

Balance between fixed and variable remuneration

The Company ensures that there is an appropriate balance between fixed and variable remuneration to allow for the possibility of reducing variable remuneration in the case of weak or adverse financial performance. The percentage of fixed and variable remuneration is reviewed and determined annually by the Board of Directors based on BNRC recommendation.