Should audit and remuneration committees have an equal number of executive and non-executive directors?

Audit and remuneration committees are crucial components of a company's governance framework, and their composition is guided by best practices aimed at ensuring independent oversight. The correct answer highlights that there is no requirement for these committees to have an equal number of executive and non-executive directors.

Audit committees are typically required to be composed mostly of non-executive directors to ensure that they can provide independent oversight of the financial reporting and auditing processes. The presence of executives in audit committees can create conflicts of interest and diminish the effectiveness of oversight.

Similarly, while remuneration committees may benefit from a mix of perspectives, having an equal representation of executive and non-executive directors is not a standard requirement. It is generally preferred for remuneration committees to include a majority of non-executive directors to promote objectivity in setting director and employee compensation.

Options that suggest equality in numbers or specific conditions regarding remuneration committees do not align with the established governance practices that encourage a predominance of non-executive directors for these committees to maintain objectivity and integrity in their functions. This structure supports comprehensive oversight free from internal influence, thereby enhancing accountability and protecting shareholder interests.