|The company discloses the engagement of any remuneration consultants and their independence in the company’s annual report.|
This Provision covers the appointment of remuneration consultants by the RC, and the related disclosure requirements.
Remuneration is one area that often requires external advice because internal sources including the Board may not be fully objective. In addition, a key aspect of remuneration is benchmarking with comparable organisations. Such data is often not available in-house.
It goes without saying that it is important the external consultant is indeed independent and objective. Some useful measures to achieve these goals include:
- Requiring disclosures by the consultant and management of past and existing relationships, and the consultant’s declaration of its independence.
- Ensuring that the consultant is selected by the RC, and reports directly to the RC rather than management.
Where an external remuneration consultant is used, the company should disclose the name and firm, including any relationship the consultant has with the company and personnel that could affect its independence and objectivity.
B. Practice Guidance
C. Related Rules and Regulations
D. CG Guides
- RC Guide 7.8: Independent Advisors and Consultations [Stakeholder Engagement].
E. Related Articles
- “A question of pay” by Adrian Chan. (457KB)
- “Addressing remuneration matters as set forth in the new Code of Corporate Governance” by Na Boon Chong. (89KB)
- “Improving remuneration governance” by Jon Robinson. (115KB)