A major change in guidance for the recommendation that the board should establish a remuneration committee (this is Recommendation 9.2, but will be 9.1) is that the committee should be comprised only of non-executive directors. The current version only requires that a majority be non-executive directors. As a consequence there are many companies where the remuneration committee membership includes executive directors.
Our last newsletter examined remuneration committee composition. (See our article HERE).
We were surprised that almost one in five of these committees had the chief executive as a member. To comply with this guidance at least 19% of the ASX 300 will have to ask their chief executive to resign from the committee.
For related articles in this ASX Governance Council’s principles amendments series, see:
Major Changes to ASX Good Governance Principles
ASX Governance Council Requires Evaluation Of Directors And Senior Executives
ASX Governance Council Removes Remuneration Disclosure Recommendation
ASX Governance Council Changes Catch Hedging Of Executive Options
ASX Governance Council Removes Guideline For Disclosure Of Non-Executive Director Retirement Benefits
ASX Council Unsure On Senior Executive Equity Pay
ASX Governance Council And ASX Not Sure Where To Go On Director Equity