| The RC comprises at least three directors. All members of the RC are non-executive directors, the majority of whom, including the RC Chairman, are independent. |
A. Explanation
The Provision sets out guidance for the composition of the RC.
It states that the RC should consist of:
- Minimum of three directors.
- All members should be Non-Executive Directors (NEDs).
- The majority including the RC Chairman, should be Independent Directors (IDs)
The reason for such a composition is to minimise conflicts of interest.
Indeed, the greater concern, internal and external, is on the remuneration levels of the Executive Directors (EDs) rather than NEDs. NED fees are generally straightforward, and are often a fraction of ED compensation. The perceived excessive levels of senior executives’ pay, as well as the ratio of top executives’ pay to average workers’ pay, have been subjects of considerable public debate globally.
B. Practice Guidance
C. Related Rules and Regulations
- Nil.
D. CG Guides
- RC Guide 1.1: Introduction [RC Composition].
- RC Guide 1.2: Structure and Authority [RC Composition].
- RC Guide 1.3: Terms of Reference [RC Composition].
- RC Guide 1.7: Selection of RC Members [RC Composition].
- RC Guide Appendix 1C: Scope of an RC’s Responsibilities [RC Composition].
- RC Guide Appendix 1D: Sample RC Terms of Reference [RC Composition].
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