Resolution Reforming Article 4 of the Standard on Bonus Payments in Financial Institutions

1 Resolution No. CD-SIBOIF-887-2-ABR28-2015 Dated April 28, 2015 STANDARD REFORMING ARTICLE 4 OF THE STANDARD ON BONUS PAYMENTS IN FINANCIAL INSTITUTIONS

The Board of Directors of the Superintendence of Banks and Other Financial Institutions,

CONSIDERING

I That on November 24, 2010, the Standard on Bonus Payments in Financial Institutions was approved, contained in Resolution No. CD-SIBOIF-655-2-NOV24-2010, published in La Gaceta, Official Gazette No. 15 of January 25, 2011.

II That the audited financial statements of financial institutions are auxiliary supervision instruments and, in this sense, must be issued in accordance with what is established in the Standard on External Audit, contained in Resolution No. CD-SIBOIF-739-1-AGOS2-2012, published in La Gaceta, Official Gazette No. 211 of November 05, 2012; and reviewed by the Superintendent to verify compliance with the regulations in the cited standard; therefore, it is necessary to reform Article 4 of the aforementioned standard.

III In accordance with the considerations set forth above, and based on the powers established in Article 3, numeral 13), and Article 10, subsections 1) and 2) of Law No. 316, Law of the Superintendence of Banks and Other Financial Institutions and its reforms.

In exercise of its powers,

HAS ISSUED

The following:

RESOLVES

CD-SIBOIF-887-2-ABR28-2015 STANDARD REFORMING ARTICLE 4 OF THE STANDARD ON BONUS PAYMENTS IN FINANCIAL INSTITUTIONS

2

FIRST: Article 4 of the Standard on Bonus Payments in Financial Institutions, contained in Resolution No. CD-SIBOIF-655-2-NOV24-2010, dated November 24, 2010, published in La Gaceta, Official Gazette No. 15 of January 25, 2011, is hereby reformed, which shall read as follows:

"Art. 4. Minimum content of bonus policies. - The bonus policies referred to in the previous article must contain, at least, the aspects to be indicated below and must be applied at the individual and financial group level: a) The decision-making process used to determine the bonus policy; indicating that bonuses for workers must be approved by the board of directors. Workers may access bonuses once a year, based on their contributions and individual performance in the exercise of their position according to the parameters established in this standard. The payment of bonuses to the workers referred to in this standard must be made, if applicable, once the financial statements of the financial institution have been audited in accordance with the regulations governing external audit. The payment of bonuses to members of the boards of directors of financial institutions is prohibited, as well as the use or implementation of other figures or modalities intended to pay benefits to members of said boards of directors, who shall only have the right to the profits corresponding to them, if any, to allowances and remuneration for their participation in board of directors sessions, and to remuneration received for their work in the internal committees in which they participate. The criteria used to evaluate and measure performance and its risk adjustment, which shall include, among others, the following: i. The cost of capital required to support the risks assumed, from the point of view of the evaluation of profitability; ii. The evolution of asset quality over time and not only regarding aspects related to their placement; iii. The cost of liquidity assumed in the development of business or activity, from the point of view of the evaluation of the financial margin; and iv. The evaluation of the profitability of assets, from the point of view of their evolution over time, in accordance with the goals established in operational plans. b) Bonuses must be paid in accordance with performance and the fulfillment of the global goals of the institution, the business unit in particular, and the individual goals of the worker. c) The link between payment and performance.

3 d) Express prohibition of guaranteed bonuses, as these are not consistent with prudent risk management practices or the principle of pay-for-performance. e) Policy on the deferral of bonus payments and granting criteria, in cases where this form of payment is necessary to align the payment of the bonus with the nature of the business, its risks, and the activities of the worker in question; as well as to create incentives aligned with long-term value creation and risk time horizons. f) The parameters used to pay the bonus, whether in cash, shares, or options. g) Bonuses must be sensitive to the non-financial performance aspects of the worker. Misconduct (particularly unethical behavior and lack of compliance) must be sufficient to discredit good financial performance and reduce the bonus. h) Both performance measures and risk adjustments must be adjusted to the level and responsibilities and to the compensation approach used. The board of directors is obligated to request from the general management a report on bonuses paid. Likewise, the board of directors must present to the shareholders' assembly, in the annual report, a detail of the aspects indicated above."

SECOND: This standard shall enter into force upon its notification, without prejudice to its subsequent publication in La Gaceta, Official Gazette. Following are inconsequential parts. (f) Ovidio Reyes R. (f) V. Urcuyo V. (f) Gabriel Pasos Lacayo (f) Fausto Reyes B. (f) illegible (Silvio Moisés Casco Marenco) (f) illegible (Freddy José Blandón Argeñal) (f) U. Cerna B. Secretary. URIEL CERNA BARQUERO Secretary of the Board of Directors SIBOIF