CIMA BA4 · Chapter 6 · Question 5 of 10
What is the main purpose of a remuneration committee composed of independent non-executive directors?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) To ensure that no director is involved in deciding his or her own remuneration
Explanation
A key governance principle is that no director should decide their own pay. The remuneration committee of independent non-executives sets executive director remuneration policy, aiming to link it to long-term performance. Employee pay generally, budgets and auditor appointment are outside its core role.
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