Good Governance Guides

Good Governance Guide: No 6.1

Category: Transparency
Subject: Compensation
Source: Chartered Secretaries Canada

Compensation is today one of the most visible topics from a public agenda perspective as driven by the perceived overpayment of CEOs. Similarly, it is recognized that Directors approve these extraordinary compensation packages and are driven to do so by precedent, the competitive environment and by the tools available to reward top executives.

Directors now find themselves in an extraordinary environment as it relates to risk and liability for decision making. Essentially the compensation for Directors is based on a number of factors, not the least of which is a comparative analysis of their industry sector as a whole. Comparative remuneration permits a rational assessment of the annual retainer, meeting fees and fees offered for being Chair of various Committees of the board.

It is important that this is reviewed annually and more frequently should circumstances warrant due to radically increased responsibility.