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    PracticeACCAACCA BT — Business & Technology Practice Exam 1Question 10
    Medium2 marksMultiple Choice
    Syllabus B: Organisational structure, culture, governance and sustainabilitySection ASyllabus BCorporate Governance

    ACCA · Question 10 · Syllabus B: Organisational structure, culture, governance and sustainability

    According to best practice corporate governance codes, who should primarily comprise the remuneration committee of a publicly listed company?

    Answer options:

    A.

    A mix of Executive and Non-Executive Directors

    B.

    The Chief Executive Officer and the Chief Financial Officer

    C.

    Independent Non-Executive Directors only

    D.

    Major institutional shareholders

    How to approach this question

    Consider the conflict of interest if executives set their own pay. Who is left on the board to do it objectively?

    Full Answer

    C.Independent Non-Executive Directors only✓ Correct
    The remuneration committee is responsible for setting the pay and bonuses of executive directors. To ensure objectivity and prevent executives from inflating their own pay, corporate governance codes mandate that this committee be composed entirely of independent Non-Executive Directors.

    Common mistakes

    Thinking the CEO should be on the committee to advise on staff pay. The CEO may be invited to advise on *lower-level* staff, but cannot be a member of the committee.
    Question 09All questionsQuestion 11

    Practice the full ACCA BT — Business & Technology Practice Exam 1

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