Board Remuneration Framework
Roles of a remuneration committee;
1) Should ensure that the executive directors’ compensation is competitively structured in line with the remuneration for other directors in the same industry.
2) The committee should ensure that remuneration policy is sufficient and linked to performance.
3) The committee should ensure that the remuneration policy contains directors’ fees, attendance allowance and bonuses.
4) The remuneration committee should ensure that the remuneration policy is aligned with the business strategy and long-term objectives of the company.
5) The remuneration committee should ensure that the remuneration of non-executive directors is structured in line with the remuneration of other non-executive directors in the same industry.
Roles of Non-Executive Directors
1) The non-executive directors should provide the necessary checks and balances on the board of the institution so as to ensure the interest of the minority shareholders and the general public are put into consideration when the organization makes its decisions.
2) They provide a clearer or wider view of external factors affecting the company and its business environment.
3) They determine appropriate the levels of remuneration of executive directors.
4) They connect the business and board with networks of potentially useful people and organizations.
5) They monitor the performance of executive management especially with regards to the progress made towards achieving the company strategy and objectives.Appointment to the Board (3 marks)
1. Should be through a recommendation from the nomination committee.
2. The organization should have a rigorous, fair and transparent process of appointing members to the Board.
3. The members appointed to the Board should be competent and should consist of a mix of skills.
Board Size
The size of the Board should be of optimum size to enable the organization achieve its objectives.
The size of the Board should not be too large such that there is no deliberation or too small such that it limits the skills that compromises the debate within the organization.
For public limited companies, the members of the board should be at least 7 persons while for private companies the board should be at least 5 persons.