Corporate Governance Codes:
* Most corporate governance codes around the world require that remuneration committees be composed solely of independent non-executive directors.
Role of the Remuneration Committee:
* The committee is responsible for setting the pay and compensation packages for executive directors.
* Having non-executive directors ensures objectivity and independence, reducing potential conflicts of interest.
Global Standards:
* This practice is part of broader corporate governance reforms aimed at improving accountability and aligning executive compensation with long-term shareholder value.
* The UK Corporate Governance Code and similar codes in other jurisdictions mandate that remuneration committees should be independent.
References:
* The expectation for remuneration committees to be populated solely by non-executive directors is highlighted in the final ESG investing book.