ABSTRACT
How do effective directors ensure that the remuneration for executives and management is appropriate?
Based on a framework of global corporate governance best practice that can be used in all organisations anywhere in the world, this chapter of Questions To Ask (QTA) in the boardroom gives a high-level but succinct introduction to remuneration for senior management and executives.
Executive remuneration that is well structured and clearly linked to strategic objectives is important for long-term stability and growth. Executive directors who contribute to long-term organisational success should be rewarded appropriately and on a transparent basis as stakeholders want to see remuneration being used effectively to attract and incentivise executives as well as fostering a culture for sustainable growth.
The work of the remuneration committee is integral to achieving the board-approved objectives, and it is necessary that how executives are remunerated, supports the achievement of those objectives and does not conflict with them.
The chapter’s introduction leads into outlining the key Questions To Ask in the boardroom, giving the reader further insight into how to initiate discussions about executive remuneration. The suggested questions cover long-term incentive plans, annual incentives awards, and the vesting of long-term incentives.
