Abstract
This chapter summarizes the practice of remuneration committee. The best practice provisions in the Combined Code recommend that the board establish a remuneration committee of at least three non-executive directors. As a result of a change made to the Code in June 2006, the company chairman may be an additional member of the remuneration committee if he/she was considered to be independent at the time of his/her appointment as chairman. The committee should make available its terms of reference to explain its role and the authority delegated to it by the board. If remuneration consultants are appointed, a statement should also be made on whether they have any other connection with the company. The remuneration committee should have delegated responsibility for setting the remuneration of all executive directors and the company chairman, including pension rights and any compensation payments. The committee should also recommend and monitor the level and structure of remuneration for senior management. The definition of senior management for this purpose should be decided by the board but should normally include the first layer of management below board level. The board should determine the remuneration of the non-executive directors but, where the company's articles permit, responsibility for this may be delegated to a small sub-committee, which may include the chief executive.
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