Definition
Nomination and Remuneration Committee
The NRC is a board committee that decides on board appointments and the pay of directors and senior management.
Under SEBI LODR and the Companies Act, the Nomination and Remuneration Committee identifies and recommends board candidates, evaluates director performance, and sets the remuneration policy for directors, key managerial personnel and senior staff. It must comprise non-executive directors with a majority being independent.
The NRC is central to say-on-pay governance, designing pay that aligns incentives without being excessive. Proxy advisory firms often scrutinise the NRC's recommendations on executive compensation at the AGM.
Related terms
- Independent DirectorAn independent director is a board member with no material relationship with the company, brought in to provide objective oversight.
- Audit CommitteeThe audit committee is a board sub-committee that oversees financial reporting, internal controls, audits and related-party transactions.
- Say-on-PaySay-on-pay is the principle that shareholders should be able to vote on the remuneration of a company's senior executives and directors.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.