Assignment # 1

Class : M.Com 4 (Evening)

Subject : Corporate Governance

Submitted to : Dr Imad ud din Akbar

Submitted by : Aftab Liaqat (L-1291) , Kainat Javed (L-
1299) , Sana Rasheed (L-1224)

Topic : The Greenbury Committee -1995

Summary : The Greenbury Committee-1995

Introduction :

During the 1990s, there were considerable concerns about the remuneration of company
directors in the UK, in particular, the ones in privatized utility companies. It was felt that there
were excessive pay increases, large gains from share options as well as disproportionate .

Definition :

The way that the UK deals with issues relating to corporate governance is by setting up
committees to look into them. In this light, the Greenbury Report is a UK Corporate
Governance Report. The Greenbury Committee was set up in January 1995 by the
Confederation of Business Industry (CBI), the UK’s top business lobbying organization. It was
chaired by Sir Richard Greenbury, who was the chairman and chief executive of Marks &
Spencer at the time. Its main focus was to examine the remuneration of directors in large public
companies, and it reported its findings and proposals in July 1995.

Explanation : (Summary)

 Set up in January 1995

 Chairmanship of Sir Richard Greenbury.
 Confederation of British Industry(CBI)
 To identify good practice in determining director's remuneration.
 Final report of group published on 17 July 1995

Recommendations :

 Remuneration committee.
 Disclosure and Approval provision.
 Remuneration policy.
 Service contracts and compensation

Remuneration committee :
  Set remuneration committee of non-executive director
 Articles of Association should be amended.
 Non-Executive Directors with no personal financial interest.
 Board is determine remuneration of non executive director.
 R.C chairman should meet AGM.

Disclosure and Approval provision:

 The remuneration committee should make a report each year

 Company's policy on executive remuneration, performance criteria and measurement,
pension provision, contracts of service and compensation commitments on early
termination.
 Full consideration to the best practice.
 The report should also include full details of all elements in the remuneration package
of each individual Director.

Remuneration Policy :

 Remuneration committees must provide the packages

 Remuneration committees should be sensitive
 Eligible for annual bonuses
 Executive share options should never be issued at a discount

Service Contracts and Compensation :

 Remuneration committees should consider what compensation commitments.

 Remuneration committees should, however, be sensitive and flexible, especially over
timing.
 Periods should reduce after the initial period.
 Remuneration committees should take a robust line on payment of compensation