Responsibilities of the Remuneration Committee

Responsibilities of the Remuneration Committee in Corporate Governance

Following are the Responsibilities of the Remuneration Committee,

1. Evaluate and approve the remuneration policy of the chairman and executive directors of the board according to the overall performance of the company.
2. Evaluate and approve the remuneration of the senior management and other employees including the Chief Executive Officer (CEO).
3. Provide transparency to shareholders that remuneration of the executive directors is set by the result of the committee decisions without any external commands.
4. Propose the non-executive directors’ remuneration to the Board.
5. Review the structure and criteria for assessing employee performance and remuneration.
6. Examine and recommend the terms of performance-related incentives /annual bonuses given to the Chief Executive Officer and other senior management.
7. Conduct formal evaluation of the management including the CEO using the performance objectives as the base.
8. Assessing the compensation and benefits strategy for its executive personnel by an annual review of the company’s overall compensation framework.
9. Ensure that the company can attract the best talents in the market to maximize shareholder value.
10. Ensure that individual directors will not involve to decide their remuneration.
11. Aware of the external pressures to link remuneration with performance such as market conditions, competitor’s payment, etc.

Role of the Remuneration Committee in Corporate Governance

The remuneration committee determines the remuneration policy of the directors and key management. The Remuneration package should consist of fixed pay and also performance-related pay to motivate the executives to fulfill the long-term objectives of the shareholders. The remuneration committee enhances the corporate governance effects by providing transparency to shareholders that the remuneration of the executive directors is set by the outcome of the committee decisions, without any external influences.

The remuneration committee consists of a majority of non-executive directors. The Chairman of the Remuneration Committee shall be an independent non-executive director and, at least three non-executive directors should be in the committee. Committee members usually require to have a thorough understanding of the company and the internal and external forces that shape director and executive remuneration.

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