8.5 Remuneration of directors

8.5 REMUNERATION OF DIRECTORS

The remuneration of directors refers to the compensation or payment provided to directors for their services and responsibilities in managing and overseeing the affairs of a company.

Important factors to consider regarding the remuneration of directors:

1. Determination: The determination of director remuneration is typically done by the company’s shareholders or a committee authorized by the shareholders. This may be outlined in the company’s articles of association or bylaws.
2. Remuneration committee: Larger companies often establish a remuneration committee, comprised of non-executive directors, to make recommendations on director remuneration.
3. Types of remuneration: Director remuneration can be in the form of a salary, fees, bonuses, stock options, pension contributions, or other benefits. The specific structure and components of remuneration may be determined based on the company’s policy, industry practices, and legal requirements.
4. Disclosure: Companies are usually required to disclose details of director remuneration in their annual financial statements or annual reports. This includes the total remuneration paid to each director and any additional benefits or incentives.
5. Independent advice: In some jurisdictions, companies may be required to obtain independent advice to ensure that director remuneration is fair and reasonable, especially in cases where there is a potential conflict of interest.
6. Shareholder approval: In many cases, the remuneration of directors, particularly executive directors, requires approval by shareholders. This is typically done through a resolution at the company’s annual general meeting or a special meeting.