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CMA Intermediate · Business Laws and Ethics · Directors - Role, Responsibilities, Qualification, Appointment, Removal, Remuneration and Powers

Under Section 178, in formulating the remuneration policy the Nomination and Remuneration Committee must ensure that:

The committee must ensure remuneration to directors, key managerial personnel and senior management balances fixed and incentive pay, reflecting short and long-term performance objectives suited to the company and its goals. The Act does not prescribe profit-percentage-only pay or equal pay for all directors.

  1. ARemuneration is fixed entirely as a percentage of net profit
  2. BRemuneration to directors, KMP and senior management balances fixed and incentive pay reflecting short and long-term performance objectivesCorrect
  3. CRemuneration is determined solely by the shareholders at the annual general meeting
  4. DRemuneration of non-executive directors is always equal to that of executive directors

Explanation

Section 178(4)(c) requires a balance between fixed and incentive pay reflecting short and long-term performance objectives. The Act does not mandate a profit-percentage-only pay, shareholder-only fixing, or equality between director classes.

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