Explanation:
The remuneration committee is responsible for determining the compensation of senior management, including the CEO. Having the CEO act as the Chairman of the remuneration committee creates a direct and significant conflict of interest, as they would be setting their own pay and the pay of their executive team. This would severely compromise the independence and objective oversight of the board.
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Q.23 Board independence is fundamental to effective corporate governance, as it ensures objective oversight and decision-making free from conflicts of interest. Identifying factors that may compromise this independence is crucial for maintaining the integrity and accountability of the board. Which of the following combinations is most likely to affect the independence of the board?
A
Chief Executive Officer as a member of the board of directors.
B
Chairman of the board as a member of the remuneration committee.
C
Chief Executive Officer as the Chairman of the remuneration committee.
D
Chairman of the board as the Chairman of the ethics committee.
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