ACCA Applied Knowledge · Financial Accounting · Duties and responsibilities of those charged with governance
Which committee of the board is normally responsible for determining the remuneration policy and packages of executive directors, and should be made up of independent non-executive directors?
The remuneration committee determines executive directors' pay policy and packages. It should consist of independent non-executive directors so that executives do not set their own rewards, whereas the audit, nomination and risk committees deal with reporting, appointments and risk respectively.
- AAudit committee
- BNomination committee
- CRemuneration committeeCorrect
- DRisk committee
Explanation
The remuneration committee sets pay policy and individual packages for executives. Using independent non-executives avoids executives deciding their own pay. The audit committee deals with reporting and controls, and the nomination committee deals with board appointments.
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