One of our most asked questions is: “how often should the board review executive and director remuneration?”. The simple answer is that the incentives of executive remuneration need to be reviewed annually, all and other aspects not far behind.
GRG Remuneration Insight 185
28 February 2026
Why Remuneration Committees Must Review Executive & Board Remuneration Annually
The most important role of Remuneration Committees is to review the appropriateness of senior executive and director remuneration. It is in effect a legal requirement to ensure that executive and director remuneration is reasonable, and a strategic imperative to ensure that it is appropriately configured and aligned to the strategy, balancing stakeholder tensions. Yet one of the questions most frequently posed to executive remuneration consultants is “how often should the board review executive and director remuneration”. The answer is simple in that many aspects, those related to incentives, of executive remuneration need to be reviewed annually.
Annual Executive & Board Remuneration Reviews: What Boards Should Assess Each Year
Attached is a checklist of aspects that form part of reviews of executive and director remuneration, with brief comments on each aspect. Perhaps what directors are really asking is how often they should seek external advice and recommendations to assist in their reviews of executive and director remuneration. As indicated in the checklist, market practice data should generally be sought no less often than each 2 years, in a “tick” (major review year) and “tock” (minor maintenance review year) cycle. Of course, when circumstances change the need for market data may arise within the 2-year period.
There is a case to review non-executive director remuneration in most years as stakeholders tend not to like infrequent large increases in either board fees or the aggregate fees limit (fees cap). Receiving and following independent external recommendations to regularly increase board fees will minimise the prospect of criticism on board fees.
Executive remuneration is a more complex matter requiring consideration of a variety of matters at each review. Thus, when a company’s circumstances are relatively stable external advice may not be needed more often than each 2 to 3 years. Each 2 years should provide a balanced approach to retaining key talent and ensuring that executive remuneration supports the company’s business plans and strategies.
The Role of External Remuneration Consultants in Remuneration Reviews
GRG is well placed to provide independent expert advice and recommendations to assist Remuneration Committees to undertake reviews of executive and director remuneration. GRG has a complete remuneration database of key management personnel remuneration covering both senior executives and non-executive directors. However, data is increasingly a hygiene factor; knowing what the market statistics are is only part of the challenge facing remuneration committees. The modern remuneration committee needs to understand stakeholder tensions, and balance them, which requires consideration be given to a wide range of issues from psychology/behaviour, through tax and compliance matters, and into governance. GRG’s consultants, supported by the use of our database, are deeply experienced in dealing with taxation, legal, governance, stakeholder management and compliance matters relevant to executive and director remuneration. Thus, GRG is a one stop shop when undertaking reviews of executive and director remuneration.
If you have any questions related to matters covered in this Insight, please reach out to one of the authors.
Executive & Board Remuneration Review Checklist for Remuneration Committees
Fixed Pay (FP) of Executives & Directors
Reviews should be undertaken at least annually, usually preceding the end of the company’s financial year so that any changes to FP may be put into effect at the commencement of the new financial year.
Annual reviews may be undertaken by the Remuneration Committee without external assistance particularly if the company’s circumstance have not changed since the last review. Often a data access resource is relied upon in this instance, since some basic statistics will often suffice.
However, external assistance should be sought in circumstances such as if:
- more than 2 years have elapsed since last review, or
- the company’s size (market capitalisation or revenue) has increased by more than one-third since the last review, or
- business circumstances have changed such as merger or divestment.
Short Term Incentive (STI) Quantum
To be reviewed at the same time as FP.
Setting the quantum of STI needs to be undertaken in the context of the market competitiveness of the total remuneration package (TRP) and the company’s remuneration strategy.
STI Plan Design
Annual reviews are not necessary. However, reviews may be undertaken every 2 to 3 years to align with change in the market and alignment with stakeholders.
If new Board members have inherited existing plans, this is a good time to review the plans as the new Board members will be responsible for the plans they have inherited. The following should be reviewed in the context of STI:
- Type of STI Plan
- Termination of Employment
- Gates and Modifiers
- Impact of STI
- Exercise/Disposal Restrictions
- Malus and Clawback
- Change in Control, Sale, Delisting
STI Performance Metrics
To be reviewed prior to commencement of company’s financial year.
STI performance metrics should be selected and weighted having regard to the company’s business plan for the coming year.
Long Term Incentive (LTI) Quantum
To be reviewed at same time as FP.
Setting the quantum of LTI needs to be undertaken in the context of the market competitiveness of the TRP and the company’s remuneration strategy.
LTI Plan Design
Annual reviews are not necessary. However, reviews may be undertaken every 2 to 3 years to align with change in the market and alignment with stakeholders.
If new Board members have inherited existing plans, this is a good time to review the plans as the new Board members will be responsible for the plans they have inherited. The following should be reviewed in the context of LTI:
- Instrument
- Termination of Employment
- Tax and Accounting
- Measurement Period
- Frequency of Grants
- Exercise/Disposal Restrictions
- Malus and Clawback
- Change in Control, Sale, Delisting
- Corporations Act Compliance
LTI Performance Metrics, Vesting Scales, Measurement Period and Instrument
To be reviewed prior to commencement of company’s financial year.
LTI performance metrics, vesting scales, measurement period and instruments should be selected and weighted having regard to the company’s business plan for the coming years.
Remuneration Report
Compliance check against the Corporations Act and Listing Rules to be done every year.
Remuneration report reviews act as a tool for communicating to shareholders. Remuneration report reviews may be done regularly to maximise shareholder support by balancing the needs of each stakeholder group, which includes the Board, the compliance audience, retail shareholders, institutional investors and proxy advisors. This generally involves disclosure that goes substantially beyond statutory requirements. Over time, market expectations changes and minimum disclosure may not be enough. Therefore, regular full reviews from time to time may be undertaken.
The considerations outlined in this Insight are also expanded upon in the “GRG Remuneration Committee Companion” which includes tools for remuneration committees, including a suggested Remuneration Committee Calendar, to support maintenance and governance of remuneration committee activities, alongside compliance references. This unique publication is available to long-term GRG clients on a complimentary basis, or for a modest fee on our website.
