Director  remuneration  is  one  of  the  most  difficult  issues  to  handle  whether  it  is  at  the shareholders meeting or at the board meeting or outside. It continues to form an important element and factor of good governance and management in effective and growing organizations.

It is plagued  by  diverse  interest  of  different  stakeholders  and  constant questioning  as  to  whether  the director deserved the fee consideration he/she received. Whatever the case, two things are clear: first, the  expectations  of  individuals  as  directors  have  increased  multi-fold  and  include  greater  time commitment,  exposure  to legal  liability  and  scrutiny  by  the  public;  and  secondly,  regardless  of  the increased demands on the director, the greater his/her fees, the time immemorial question of whether he continues to be independent arises.

The King IV report, highlights as principle 14, that: ‘The governing body should ensure that the organization remunerates fairly, responsibly and transparently so as to promote the achievement of strategic objectives and positive outcomes in the short, medium and long term.

Further, it notes that the remuneration policy should be designed to achieve the following objectives:

1. To attract, motivate, reward and retain human capital.
2. To promote the achievement of strategic objectives within the organisation’s risk appetite.
3. To promote positive outcomes.
4. To promote an ethical culture and responsible corporate citizenship

In addition, Capital Market Authority (CMA) guidelines, on good corporate governance concerning directors’ remuneration,  state  that  ‘the  non-executive  directors’  remuneration  should  be  competitive  in  line  with remuneration for other directors in competing sectors.’

Uganda’s Companies Act 2012, Table F, Section 5(1), states that “to retain quality directors, sufficient remuneration shall be made to the directors.”

Among others, we look at:

1. The type of role they are appointed to;
2. The sector the organization operates in;
3. The type of organization;
4. The size of the organization;
5. The turnover of the organization;