A Remuneration Committee needs clear terms of reference. Areas that often require thought and definition are as follows:
- The essential purpose of the committee
- The goals and objectives of the committee, including adherence to the company's guiding principles around decision-making
- The committee's duties and scope of influence
- Membership and governance arrangements
- Meetings - frequency and processes
- Alignment of the committee's objectives with the organisation's overall strategy and values, including how to react and respond to internal and external pressures facing the organisation.
Once the terms of reference are established, QCG's role is to advise on the external environment and identify areas of change relating to national guidance or best practice. We can also identify areas of potential concern around the creation and operation of the Remuneration Committee.