ACCA Applied Knowledge · Financial Accounting · Duties and responsibilities of those charged with governance
Which of the following is a typical responsibility of the remuneration committee of a listed company's board?
A remuneration committee typically recommends the pay and incentive packages of executive directors. It is made up of independent non-executive directors so that executives do not set their own pay, which reduces conflicts of interest and supports accountability to shareholders.
- APreparing the financial statements for approval by shareholders
- BRecommending the pay and incentive packages of executive directorsCorrect
- CCarrying out the external audit of the financial statements
- DOperating the day-to-day accounting system
Explanation
The remuneration committee sets or recommends executive directors' pay, bonuses and incentives, normally made up of independent non-executive directors to avoid conflicts of interest. Preparing accounts is management's task and the external audit is performed by the auditor.
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