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CS Executive · Company Law and Practice · Meetings of Board and its Committees

While framing the remuneration policy, the Nomination and Remuneration Committee of Arjun Steels Ltd must ensure which of the following under section 178(4)?

The Committee must ensure remuneration of directors, key managerial personnel and senior management balances fixed and incentive pay, reflecting short and long-term performance objectives. This is required by section 178(4)(c). Equal pay, purely fixed pay or general-meeting-only fixation is not what the section demands.

  1. ARemuneration of directors, KMP and senior management balances fixed and incentive pay reflecting short and long-term performanceCorrect
  2. BRemuneration of all directors is fixed at an equal amount
  3. CRemuneration is determined only in the general meeting
  4. DIncentive pay is excluded to keep remuneration purely fixed

Explanation

Section 178(4)(c) requires remuneration to directors, key managerial personnel and senior management to involve a balance between fixed and incentive pay reflecting short and long-term performance objectives. The other options contradict this, and equal pay or exclusion of incentives is not required.

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