Reviewing skills and competencies of remuneration committee members

Abstract

Whilst Remuneration Committees are facing increasing pressure to make well-informed decisions that are justifiable to all stakeholders. Very little research, if any, provides information on the skills and competencies of Remuneration Committee members. The rationale for this study emanates from the researcher's desire to look at Remuneration Committees beyond executive pay and the link to company performance, and instead focus on reviewing skills and competencies of its members. The primary data collection method was semi-structured interviews. The sample consisted of 16 Remuneration Committee members and Remuneration Consultants. Data was analysed using the Atlas ti. system. Empirical evidence shows that corporate governance, objectivity, business acumen and knowledge of human resources are must have skills and competencies of Remuneration Committee members. Consequently, a framework that provides a composition of an ideal effective RemCo member is included. Secondly, the study found that the usefulness of Remuneration Consultants varies. Lastly, the study found that the use of Remuneration Committee assessments, as a measurement tool to measure effectiveness were questionable. Additional research on the role of Remuneration Consultants, as well as empirical research into the most effective way of measuring committee/board performance, is required.