Exam (elaborations)
Exam (elaborations) HRM3705 - Compensation Management (HRM3705)
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- University Of South Africa (Unisa)
Exam (elaborations) HRM3705 - Compensation Management (HRM3705) EXAM MEMO MAYJUNE 2022
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HRM 3705EXAM MEMO
MAY\JUNE 2022
, QUESTION 1
1.1 Remuneration committee
A remuneration committee aims to restore investor confidence by addressing governance
issues. The committee governs the rules and practices in remuneration. Members of a RemCo
are appointed by the board of directors, and continue to act until they resign or are removed
from office. The committee comprises no fewer than three serving directors of the organisation.
The majority of the members, including the chairman, are non-executive directors. Its main
duties include adherence to good corporate procedural rules, knowledge of the big picture,
deciding on how much remuneration is enough, review of programmes from the shareholders’
perspectives, review of complex plans and programmes, and review of controversial plans and
programmes.
Strategic IT Group’s RemCo is well constituted in terms of membership numbers and positions.
The committee comprises of ten independent members of the company's board of directors. All
the members of the committee have several years of experience serving on RemCo and gained
a lot of experience with regards to the demanding role of committee members. All the ten
members of the committee have been chosen based on their levels of competencies, knowledge,
experience and specific personal attributes that are unique and beneficial to the work as
committee member.
Strategic IT Group’s RemCo also has relevant responsibilities according to the general
responsibilities a RemCo must have. According to the case study, these include establishing
annual and long-term performance goals for the company's executives, evaluating the
performance of the Strategic IT Group’s officers, setting the remuneration of these officers,
and making recommendations to the board with respect to new remuneration plans. These are
in line with the general guidelines of the responsibilities a RemCo must have.
1.2 Features of an effective RemCo
The best way for a remuneration committee to take decisions that are consistent with the
shareholders’ interests is to listen to shareholder pleas and reactions to certain decisions, as
well as perform the first three duties of being a remuneration committee. These three duties are
reviewing the alternative recommendations of consultants, discussing the assets and liabilities
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