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I have just started out with AA and had a doubt in the first chapter. I was just wondering aren’t those people who are charged with the governance, management themself? If they are the same then how is governance body allowed to control their own reward system?
“those charged with governance can see whether they think management have struck the right balance between their own need for reward and needs of other stakeholders”
TCWG are responsible for the entity’s strategic direction and accountability including overseeing the financial reporting process. Yes – for most private companies – especially those that are “owner-managed” – management (i.e. the executive directors) will be “TCWG” according to this definition. There’s no reason why owner-managers should not determined their own rewards 🙂
So it is only when thinking about listed/public entities that you need TCWG to be separate from management – hence the UK Corporate Governance Code’s requirements for oversight by non-executive directors.