‘Rem’— the annual process listed companies undertake to set executive remuneration is contentious and vexed. That’s according to the directors of Australia’s top 200 listed companies.
‘Rem’ is the term commonly used by ASX200 directors when describing the executive remuneration setting process, which includes the internal discussions with executives, engagement with external remuneration consultants, meetings with shareholders and proxy advisers, and the actual vote on executive remuneration at the AGM.
I recently conducted an extensive study to understand how ASX200 directors focus their time in their practice of governance under ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (Principles and Recommendations). In what is an Australian first, 41 current ASX200 directors (holding a combined 70 ASX200 board roles) participated in qualitative, open-ended interviews. The study found that when reflecting on their practice of governance, ASX200 directors primarily focus on ‘rem’, relationships and risk (the 3 Rs).