(5) Remuneration strategy should consider encouraging long-term loyaltythrough share purchases schemes, the availability of company resources, morebenefit in kind for lower basic salary.

　　Remuneration packages

　　(Basic salary)

　　Is not related to performance, but is determinedthrough benchmarking peer group salary, which how much other companies might beprepared to pay.

　　(Performance related bonuses)

　　It is elements of remuneration dependent onthe achievement of some of performance measurement criteria, such as cash bonus.

　　(Shares & share options)

　　(1) Share options are the most common form of long-term incentivescheme. It gives directors the right to buy shares at a specified exerciseprice over a specified time period in the future. If the stock price rises sothat it exceeds the exercise price by the time the option can be exercised,directors can buy at lower price than market price and then might sell it at aprofit.

　　(2) Share options can be used to give the executive the incentive tomanage the company in sch a way that share price rises so that it alignsmanagement and shareholder interests. This alignment would, in theory, overcomethe agency problem.

　　(Benefits in kind & Pensions)

　　(1) Benefits in kind are various non-wage compensations provided todirectors and employees in addition to their normal wages or salaries such aslife insurance, company car scheme, holidays, and loans.

　　(2) There may be separate pension scheme available for directors athigher rates than for employees.

　　Other Issues associated with directors’ remuneration

　　(Legal)

　　(1) Considering compensation for the directors in the case of earlytermination.

　　(2) Aiming to avoid rewarding poor performance.

　　(Ethical)

　　(1) Public reaction to high profile corporation failure where directorswere receiving what was perceived as excessive remuneration in relation totheir performance.

　　(2) Recent changes to best practice disclosure requirements on boardstructure and executive pay.

　　(3) Incorporating business ethics into performance-related remunerationsystem.

　　(Competitive)

　　(1) It is vital for a company to have a proficient, motivated board ofdirectors working for the interest of shareholders.

　　(2) Shareholders should provide the company with resources to recruitand retain directors under competitive terms.

　　(Regulatory)

　　(1) Directors need to submit a remuneration report to members at theannual general meeting each year.

　　(2) The report must provide full details of directors’ remuneration,and should be clear, transparent and understandable to shareholders.

　　(3) When an executive director serves as a non-executive directorelsewhere, the remuneration report should state whether or not the remunerationof that director will retain and what the remuneration is.

　　(4) The increasingly regulatory environment reflects the additionaldemand on and responsibilities of directors, and the heightened externalscrutiny to the remuneration of directors.