Remuneration committee
A remuneration committee supports governance of executive pay and related reward policy within its specified remit. It considers alignment with strategy, long-term performance, risk, fairness and applicable reporting requirements. Appropriate independence helps address the conflict involved when executives influence their own rewards. The relevant framework determines the committee’s composition, scope and approval processes.
Worked example
A committee reviews a proposed bonus that rewards revenue alone. It considers profit quality, customer outcomes and longer-term risk, and recommends a more balanced design with clear measures and appropriate oversight.
Common mistake
Do not assume high pay automatically improves motivation or that hitting a short-term target proves sustainable value was created. Avoid allowing executives to determine their own remuneration unchecked.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | BT | Direct | September 2026–June 2027 |
| ACCA | SBL | Direct | September 2026–June 2027 |
| FIA | FBT | Direct | September 2026–June 2027 |