Circular No. 1200: Guidelines on Compensation and Per Diem of Trustees, Officers and Employees of Non-Stock Savings and Loan Associations

, , ,, . .~, BANGKO SENTRAL NG PILIPINAS Subject: OFFICE OFTHE GOVERNOR The Monetary Board, inits Resolution No. 10/2 dated 29 August 2024, approved the following amendments to Chapter D of Part One of the Manual of Regulations for Non-Bank Financial Institutions (MORNBFl) to add new Sections relative to the guidelines governing the compensation and per diem of trustees. officers and employees of non-stock savings and loan associations, CIRCULAR No. 1200 Series of 2024 Guidelines on Compensation and Per Diem of Trustees, Officers and Employees of Nori-Stock Savings and Loan Associations (NSSLAsj Section I. Chapter D of Part One of the MORNBFl, as amended by Circular No. 11/5 Series of 2021. is hereby amended to add new Section 137-S which shall read. as follows: 1.37 -S ConeENSA':PTON ^I'D PER DTEbl OF IrRUSTEES, OFFTCBRS AND ^, PLOYEES POLLcy Statement. The Bangko Sen t raL Lssues these guide}tries on compensation and per diems of trustees, officers and empJ. oyees of non-stock savLnqs and Loan associations (NSSLAs) in accordance with the policy of the State to Legui. ate and supervise the act:tvittes of NSSL, As, I. n order to pLace theLz operatLons on a sound, stabLe, and efficient basts, and to curtatL or prevent acts or practices which are prejudi. ci. al to thetr members' trite rest, as weLL as to Lay down the into tinum requLrements and the standards under whtch NSSLAs may organize and operate, as provi. ded under Secti. on 2 (b) and (c) of RepubLic Act (R. A. ) No. 8367, otherwi. se known as the it Revi. sed Nori~Stock Savi_rigs and Loan Associ. atton Act of 1997". These gutdeLi. nes aLso take into account the re}evanL provisions of R. A. No. 11232, ocherwi. se known as the 'Revi. sed CorporaLi. on Code of the Phi. }tppi. nes" and Secti. ons 1.4 and 28 of R. A. No. 8367, Ln further ance to the endeavor ot t:he Bangko SentraL to sustai. n resiliency and stab:. Lity of the fi. nanci. aL system, and puzsuant to the Monetary Board' s LeguLatozy power over NSSLAs under Section 22 of Et. ,A, No. 8367. O '* ... ,, O ,,. .""' Deftntt;ion of Teams. For purposes of Chi. s section, the to L Lowtng de fi. ni. ti. on s shat L apply : CoinpenSa CJ on any payment Ln consideration of employment Or Ln eXchange of the work performed, coinpri. sed of, but riot Limited to, saLa::i. es/wages, comints s tons , aL Lowances , emoluments, gratui. ty, bonuses, severance/ retiremen t pay, rewards, and other income/benefit of stintLar nature. (L) SaJary/Wage - constderati. on given to a person ^or hi. s industry tn another person' s business, and a. Pagel of 7

. . I ca r r Jes with ,. t the fundamencaL Ldea of compensation for setv, .ces. It may aLso take the form of a fI. xed compensation for LeguLar work or for conLLnuous sei:vi. ce zendered over a period of Ci. me. Zn general. , saLary is evi. denced by a pay SLi. p or its equivaLent. (2) ComintssZon a fee paid which LS usuaLLy a percentage of money received from a transactLon, as aL}owed under existi. rig laws, LeguLatLons, and the NSSLA' s By-Laws . (3) AJJowance money that is paid by an empLoyer to an empLoyee for expenses incurred in the course of h:. s or her work for the company. Ie. g, , meaL, gas, t e L ephone, cL othi. rig, medi. cal and dent a L , rL ce, craveL) , (4) ErnoLumenC - any pay received in addition to actual. Legu}ar saLaxy based on time and Length of activity for hoLdi. rig offi. ce, SQLv, .ces or empLoyment. (5) Gretutty ~ a premium paid in addLLLon Co what i, s due or expected. ( 6) Bonus refers to what i's required undez the Law end other incentives given based on performance. Amount granted and patd to an QinpLoyee for his industry and loyalty which contributed to the success of the business and reaLi. zat:. on of bigger profits . ( 7 ) Severance/separa Lion pay amount due Co an empLoyee who has been terminated f rom service for causes authorized by Law such as instaLLati. on of labor~saving devices, redundancy, and retrenchment to prevent Losses or the cLostng or cessation of operati. on of the esCabLtshment or undert:aking. (8) Retirement pay amount to be patd to an empLoyee who has reached Lhe coinpuLsory retirement age or who avaLLed of voLuntary Leti. reinent. (9) Reward ~ something of vaLue, usuaLLy money, gi. ven i. n return for some servLce or achtevement. . b. Per Diem reimbursement ^or dai. Ly expenses incurred whi. Le a trustee, officer or empLoyee i's on offi. c:. at bustness outsi. de of hi. s home base, or for attendance in off tci. aL meetings whether face-to-face or virtueL . Trustee~offJcer - a trustee who aLso performs funcci. ons of management such as those oxdi. nazi. Ly performed by LeguLaz off:. cers, pursuant to exi. sttrig LeguLat ions. d. ReasonabJe cornpensatLon and per dLem - Compensation and per diem shaLL be considered reasonabLe or riot excessive when amounts paid are proportionate to the servzces performed consi. der:. rig factors such as, but not I. tmLced to, the LOLLowi. rig : C. Page 2 of 7

.. , , . . (I. ) The LndLvi. duaL' s quaLLttcat, .ons which hi. sIher experti. se and work expertence ; (2) The nature, i. rid5. v, .dua L ; ( 31 The i_n st :. t uti. o n ' s coinpe ns ati. on officers and empLoyees; (4) The compensation history of the indi. vi. dueL and other i. ridi. viduaLs with coinparabLe expertise at the tn Sti. t u t i. On ; extent and scope of work of the (5) PrevaLLi. rig rates of compensation for comparebLe posttI ons at coinpaLabLe I asLi. tutIons, based upon factors such as asset SLze, geographLC IOCatton, and the coinpLexLty of the Loan portfoLLo or other assets; . CornpensatJon and Pet 04em POJtcy; GeneraZ PrtnctpJes. In consonance with the POLLcy On Corporate governance and cons:. stent wLLh the trite rests of aLL stakehoLders, the board of trustees ShaLL eStabLi. Sh a Sound POLICY on coinpensat, .on and per dtem, as bezeln deftned, that can be used by the NSSLA to attract/recrutt and retain highi. y quaLi. tied workforce. Said POLLcy shaLL appropriateLy motivate personnel and dLscourage excessive rtsk taking. This can be achteved through timeLy assessment of ind:. vi. dua L VC rk pe r forman ce and coinpet e nci. e s ba se d on set st andards ResuLts of the :. ridi. vLduaL work pe r t orma rice assessment/appra:. saL and not mereLy che number of loans made or on the trite rest or tees COLLecCed thereon can be used In the N S S LA ' s coinpen s at Lon- re L at ed deci. SL ons . { 61 (7) The general economic condi. tLons. The financi. aL condition of the NSSLA; and IncLude policy for all. Congensat, .on and Per D^an of Trustees and Trustee-Offteers. The board of trustees shaLL escab3. ish policies on compensation of trustees and trustee-offI. cers, wh, .ch shaLL contain, at a ini. nimum, the ECLLowi. rig : a. Compensation and Per Diem of trustees and trustee￾off Lcers shaLL be :. n accordance wtth the provtsLons of the NSSLA' s By-Laws; b . Lncreases Ln compensation of trustee and trustee￾offi. cer, in any form, i. n excess of ten percent (Lot) per anntzm sheLL require approval of the Bangko SentzaL pursuanL to Sect:. on 1.4 or the Rev:. sed Non-Stock Savings and Loan AssocLatLon Act of 2997. For this purpose, the increase in compensation shaLL be computed based on the Cota:. compensation package of each trustee or trustee￾of t:. cer preced, . rig caLendar/ f i. s caL year : On the Provided, That CotaL accumulated coinpensati. on of aLL the members of the board, after the proposed i. ncrease, i's compliant w:. Lh I. tern *'d" (Definition of Terms) ; c . Trustees and Tzustee-offLcers shaLL riot participate in the determination of theLr own per diems or compensation Page 3 of 7

, . , pucsuant LO Sectton 29 of the RevLsed Corporat:. on Code; and d. Total accumuLated coinpensat:_on of aLL the members of the board received in the:. r capacity as trustees during the current yea r shaLL be at amounts riot to exceed ten percent (1.0%) of the NSSLA' s net income before tax during the preceding year pursuant to Secti. on 29 of the Revised Corporation Code . ApprovaJ. Tn the absence of any provision in the by Laws fixing the:. z coinpensati. on, t:he trustees shall riot icecei. ve any coinpensat:. on i. n thetr capaci. ty as such, except for reasonable per d5. ems : Pzovi. ded however, That the major:. ty of the members may grant trustees with compensation and approve the amount thereot at a LeguLar or speci. aL meeting Mon, .*ortng, ConezoZ, Record. trig and ReportZng, The board of trustees shaLL be transparent to Lbs members on a11 coinpensaCi. on and per di. eru received. As such, POLLc:. es shall aLso include measures chat titL, . monitor and controL coinpLi. ance with the foregoi. rig, i. ncLudtng, but riot 1.1mtted to the toLLowi. rig: a. DeftnLng the compensation and per diem of trustees and L EUS L ee -of f L ce rs L n a c corda rice wi. th t he s e gu 5. de L, .ne s , LncLudi. rig the frequency, natuze, and marinez of payment and record:. rig; b. Directing management of the NSSLA Co monitor and report to the compliance function the IeveJs received by the t ru s C ee s and t rus t ee~ o f fi. cers ; c. Performance of annuaL Officer on the to LLCi, ing : (1) Reasonab:. eness of coinpensati. on and per atem; (2) Adequacy and effecti. veness of the compensation and per d:. em POLLci. es, and mechanisms on moni. tortng and reporti. rig of management and the coinp} i. an ce off, . c er ; and an (3) Adequacy of the actions taken to address the breache s ,. n po Li. ci. es, chzesho}d and/ o r L Lintt ; d. Commitment of the board of trustees to report annuaLLy to the members in the generaL assembly the cocaL an rinaL compensation rece, .ved by each of thetr trustees, and a repo EC on coinpL, .ance with compensation and per d:. eru POLLci. es, and the threshoLd and Limits prov:. ded Ln appLLcabLe Laws; and revLew e. by Putts. rig on record in the minutes of meetings the reports s ubm:. t t ed, d, . S CUS SL On S made , and decisions Or LeseLut5. ons on bceaches, annuaL Levi. ew, amendments of POLLCLes and me chant. sins, and on the reporti. rig to the member's . the Det err, in att on of Coinpensatt on Zn crease; Factors to Constder. The compensation increase shaLL be computed based on i. tern *'b" (Coinpensat:. on and Per d5. em o^ Trustees and Trustee￾CoinpLi. an ce Page 4 of 7

, .. . I Officers) . NSSLA meeting the LOLLow:. rig prudenti. aL czLLerLa may submit for approvaL of Bangko SentraL an appLlcati. on for increase i. n coinpensat:. on Ln excess of ten percent (1.0%) : a . The i. ncrease i. n compensation i's coinpLi. ant with exLSL, .rig Laws and regal attons and approved by the majority of members at a regular or speci. aJ. generaL assembly; b. The NSSLA has a composite rating of at Least chree (3) "St abLe " the Latest Bangko SentraL report at zn exami. nat ton ; c. The NSSL. A' s capita;.-co-zi. sk assets rati. o i, s at Least ten percent (LO%) ; d. The NSSLA has not incurred continuous Losses for the past two (2) years' t e. The >Is SLA has nO inaJor supervzsory governance , r:. sk inari ageme nC s ys t ems , controls and coinp L i. an ce system; t. The NSSLA does not engage an acts, practLces Or QinL S S LO n S that a re con sidered pre jud:. ci. a L to the interest of the members and/or has riot conducted its bus:. ness i. n an unsafe or unsound manner, wh:. ch are continuing or reinatn uricorrected; and 9. The Lnczease LS Ln accordance wLth item " b " (Coinpensat. ,. on and Per Diem of Trustees and Trustee￾Offi. cers) and the NSSLA has estabLLshed, adopted and impLemented duLy approved coinpensatton POLLci. es in accordance with these guideL:. nes . Provided, That i. ncrease i. n coinpenseti. on as mandated by Law, EULes and/or wage board i's riot covered by the ten percent 11.0%) L, .inLt . The NSSLA shaLL define and document Ln its POLLCLes whether a caLendar, or a fi. scaL year w:. th a corresponding f:. scaL period, w:. LL be used in determining the compensation Lnczease. Tn the absence of any deftn:. ti. on of the NSSLA, a cal. endar year I'LLL be used to determine the increase in compensation, AppL. teat, .on; Documentary Requtzements. The appltcation ^or Lncrease in compensation in excess of ten percent 11.0%) shaLL be accompan:. ed by the foILOwi. rig documentary requirements : concerns 3. n and internaL a. AppLLcati. on Letter signed by the President Or equi. vaLenL rank, request trig for the appzovaL of Lactease in compensation in excess of ten percent (10%) together with the justi. fLcatton for the proposed ,. ncrea s e ; b . Notari. zed ce rt :. f i. cat t on f rom the P re SLdent Or equLvaLenC rank stating that the NSSLA has coinpLi. ed w:. ch aLL the requLrements for the increase in compensation and aLL the factors to be consi. dered as stated i. n Sec . L37-S of the MORNBF, :; Page 5 of 7

, * . . . c. Deta:. Led breakdown of aLL the compensation received by the trustee/s trustee-officer/s concerned for the pre cedi. rig ca Lenda r/ f :. s caL year ; d. Detai. Led breakdown of the proposed compensation of the trustee/s or trustee-officer/s concerned as approved by the majority of Che members in a Legt:Lar Or specIaI meeting; and Enforcement Acttons. ConsLSLenL with Sec. 002-S, the Bangko SentraL may depLoy enforcement actions co promot e adherence to the requirements set forth in Sec, 137-S and bring about timeLy corrective acti. ons. As part of Lts enforcement actions, the Bangko SentraL may ,. s su e di. rect :. ve s Or Lmpose saricCtons on the NSSLA and/or its trustees, officers and/or erup Loye e s concerned for rioted vi. 0} atton s end/ or supervisory issues on the provisions of this Section, e. Notarized Secretary' s Cert:. fi. cate certifying that the proposed compensation was approved by majority of the members Ln a LeguLar or special meeting . Or Restrt. ctton On Coinpensatton, To protect the funds of depositors and cr ed:. L o r s , the Monetary Board may reguLate/restrict the payment by the NSSLA of compensation to its trustees and officers in exception aL cases and when the circumstances warrant, such as, but riot Itini. ted to the toLLowLng: a, When the NSSLA i's found by the Monetary Board to be engagLng Ln an act, practLce or QinLssi. on considered prejadj. cLaL to the interest of its members; b. When the cocaL compensation package of trustees and offLcers I. s riot reasonabLe as defined in this secci. on; c. When the i'sSLA i's found by the Monetary Board to be :. n an unsati. sfactory f:. nanctaL condi. Lion such as, but riot Li. rutted co, the toLLow:. rig cases : (1) (2) Tn the presence of any one (1) or more of the circumstances meriti. Dried above, the Monetary Board may tinpose the toLLow, .rig restrictions in the compensation of trustees and officezs: Lt has insuEf, .c, .ent L, .gutd/reaLizable assets to meet Lbs matuzi. rig obLi. gat:. ons; and (3) I:t has suffered contLnuous Losses from operations for the past two (2) years' ,:CS capLCaL i's Lmpa:. red; a . Except for the tinancLaL assistance to meet expenses ;60r the med:. ca L, matern, .t y, education and other emergency needs or the trustees or off, .cers or their tinned tat e f ami. Ly, oLhe r f Grins of E ,. nanci. aL a s SIs t a n ce may be suspended; b. The Monetary Board may order the reduction coinpensati. on and per diem to Lbs reasonabLe Levels; Of Page 6 of 7

, , , ... . . The NSSLA and/or its concerned trustees and/or officers may be subject to penaLtIesIsanct:. ons which the Monetary Board may impose pursuent to R. A. No. 8367 (The Revised Nori - Stock Sav:. rigs and Loan Association Act of I. 997 ) , these EULes and any pertinent laws or LeguJ. attons; and d. The provi. 5:0ns of RepubL:. c Act No. 7653 and RepubLi. c Act No. 337, as amended, Irisotar as they are appLLcabLe and riot i. n confLict with any provLsi. on of thi. s Act, shaLL appLy to Associations organ:. zed beret?rider. Transttory Provts. tons. NSSLAs shaLL have one (L) year reckoned from the date of ef^ect5. v, .ty of this Circular within wh:. ch to amend any pertinent provisions of its By-Laws and written poL5. c:. es to adhere Co the foregoing guidelines , Section 2. Section 133-5 of the MORNBFl on "Liability for loans contrary to law" is hereby renumbered to Section 138-S. as follows: C. NO NSSLA shaLL make or purchase any loan or investment noL authorized or permitted under R. A. No. 8367, and any trustee, officer or empLoyee, who on behaLf of any such NSSLA, knowingLy makes or purchases any such Loan or investment or who knowingIy consents thereCo shaLL be personaLLy Li. abLe to the NSSLA for the EULL amount of any such Loan or investment. Section 3. This Circular shall take effect fifteen (15) calendar days following its publication in any newspaper of general circulation in the Philippines. FOR THE MONETARY B ARD: L ,. 38-s LzaBZT!, Y FOR LOANS CONTRARY To LAW ^!:. September 2024 C CHI C. FONACIER Officer-in-Charge Page 7 of 7