The role of the remuneration committee is to have an appropriate reward policy that attracts, retains and motivates directors to achieve the long term interests of shareholders.
This definition creates a good balance between the opposing viewpoints of stakeholders.
Objectives:
– The committee is independent with access to its own external advice or consultants.
– It has a clear policy on remuneration and has the support of shareholders.
– Performance packages produced are aligned with long-term shareholder interests and have challenging targets.
– Reporting is clear, concise and gives the reader of the annual report a bird’s-eye view of policy payments and the rationale behind them.
Responsibilities:
– Determine and regularly review the framework, broad policy and specific terms for the remuneration and terms and conditions of employment of the chairman of the board and of executive directors.
– Recommend and monitor the level and structure of the remuneration of senior managers.
– Establish pension provision policy for all board members.
– Set detailed remuneration for all executive directors and the chairman, including pension rights and any compensation payments.
– Ensure that the executive directors and key management are fairly rewarded.
– Demonstrate to shareholders that the remuneration of the executive directors and key management is set by individuals with no personal interest.
– Agree any compensation for loss of office of any executive director.
– Ensure that provisions regarding disclosure of remuneration, including pensions, as set out in the Directors’ Remuneration Report Regulations 2002 and the Code, are fulfilled.