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Corporate

Governance
Composition of the Remuneration Committees
in
Indian Companies

Submitted to:
Submitted by:
Prof. S.N. Sinha
Raunak Gattani

2012237 What is Remuneration Committee? The remuneration committee is established to ensure that remuneration arrangements support the strategic aims of the business and enable the recruitment.  Consider what relation remuneration should have to measurable performance or enhanced shareholder value. Importance and Roles of Remuneration Committee (1) Complying with laws and best practice  To ensure that executive directors do not set their own remuneration.  Remuneration committee should be staffed by non-executive directors. satisfying the expectations of shareholders and remaining consistent with the expectations of the wider employee population. (4) Determining disclosure  To consider what disclosures should be made in the remuneration committee report in the accounts. guides and a range of other useful publications relating to the committee’s operations and responsibilities.  To consider how different aspects of the package are balanced.  To consider what measure are used to assess the performance of individual directors. taking into consideration the remuneration offered by comparable companies. (2) Establishing General Remuneration Policy  Consider pay scales foe directors.  To ensure compliance with any relevant legislation.  The report includes details of overall policies and the remuneration o individual directors. motivation and retention of senior executives while complying with the requirements of regulatory and governance bodies. attract and motivate directors whilst taking into account the interests of shareholders. This section of our site provides you with access to material on current issues facing Australian remuneration committees. Provisions pertaining to Remuneration Committee under the different clauses are as follow: . (3) Determining remuneration packages for each director  To establish packages that will retain.  Consider when directors should receive performance-related benefits. in the corporate governance section. including checklists.

Agenda of Remuneration Committee     Understand Your Company’s Pay-for-Performance Linkage Understand Total Executive Compensation Balance Short-Term and Long-Term Incentives Reassess Executive Remuneration Benchmarking .Clause 49 Remuneration Committee: i. Details of remuneration to all the directors. Brief description of terms of reference ii. The committee shall be chaired by an independent director if the structure of the Board permits. policy relating to remuneration to directors. The Chairperson of the company can be a member of the committee but cannot be a chairperson of the committee. the majority being independent directors if the structure of the Board permits.. 2013 Nomination and Remuneration committee • Mandatory in case of listed companies and other prescribed classes of companies. Composition. – Recommend to BOD. Companies Act. Remuneration Committee structure / composition of NIFTY compositions The Remuneration Committee shall comprise a minimum of two members. – be responsible for evaluation of every director of BOD. striking a balance between fixed and incentive pay etc. Remuneration policy v. • Composition – 3 or more NED of which at least ½ shall be IDs. KMP and other employees keeping in mind appropriate performance bench mark. Attendance during the year iv. as per format in main report. • This committee shall amongst other: – Identify persons who are qualified to be directors and who can be appointed in senior management. name of members and Chairperson iii.

      Don’t Follow the Leader Continuously Assess Your Succession Planning Strategy Write Clear and Transparent Remuneration Reports for Shareholders Develop Open and Constructive Communications with Shareholders Maintain Board Independence and Diversity Look to the Future .