Business Ethics and Corporate Governance, Second Edition

REMUNERATION COMMITTEE

It is now an universally accepted proposition of corporate governance practice that boards appoint appropriately composed remuneration committees to work out executive remuneration on their behalf. The combined code of the United Kingdom says that the remuneration committee will be responsible for working out remuneration packages ‘to attract, retain and motivate executives of the quality required’. The committee should decide where to position their company relative to other companies, and take account of comparable remuneration and relative performance.

With regard to the composition of the committee, an overwhelming majority of guidelines suggest that it be composed exclusively of independent non-executive directors. ...