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Leadership 101 – The Role and Responsibility of Directors – Part 16

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Please note that this pertains to South African Legislation, the King Requirements, and Best Practice.

And today in this final post of this epic journey, in terms of the Roles and Responsibilities of Directors, we tackle the very important matter of remuneration.

We all need to be paid fairly for our experience, knowledge, responsibility, value add, and of course, our ability to both be a leader as well as a team player.

So let’s have a look and see how it should be done.

Firstly, there should be a “Company’s Remuneration Policy” in place and this should be approved by the shareholders, where applicable.

Secondly, in the interest of transparency, companies should divulge the remuneration of each individual director and in certain instances, some of the senior executives as well.

In instances where Companies are not listed entities, this would of course not apply, although a “Company Remuneration Policy” should still be in place.

Here are some of the questions that Directors should be asking around their remuneration policy.

1. “Does the remuneration policy comply with the Principles of King 1,2,3 & 4 and does it reflect current international best practice?”

2. “Are our long-term incentive plan rules consistent with the principles of King 1,2,3 & 4, in terms of the use and application of performance conditions?”

3. “Do our non-executive directors receive options and/or other share incentive awards?”

4. “Does our annual bonus plan link performance to clearly set objectives that create long-term value for shareholders?”

5. “Do we fully disclose remuneration paid to executive Directors, non-executive directors, and certain senior employees in our annual remuneration report?”

6. “Can we explain how our remuneration policy links into our strategic objectives?”

From this you can see that as important as it is for you to get paid fairly, so too it is important to have total transparency and ethical behaviour.

As I stated earlier, this is the last of the articles on the Role and Responsibilities of Directors, and I hope and trust that you have enjoyed the journey as much as I have researching and writing it.

I hope that it has given you insight into how you as a Director, can make a difference, just by ensuring that you have followed the correct rules and regulations.

Good luck.