What role does the compensation committee play in corporate governance?

The compensation committee plays a vital role in corporate governance by primarily focusing on setting market salaries for C-suite executives. This responsibility involves developing compensation strategies that are competitive with the market and aligned with the organization's performance goals. By establishing appropriate compensation packages, the committee seeks to attract, retain, and motivate top executive talent, ensuring that their incentives are aligned with shareholder interests.

Furthermore, the committee assesses the performance of executives and determines bonuses and long-term incentives based on that performance. This is key to driving the desired behaviors that contribute to the company's success, all while maintaining compliance with regulatory guidelines regarding executive compensation.

In contrast, while overseeing risk management strategies, advising on director succession, and managing internal audits are important aspects of corporate governance, they fall under the purview of different committees or areas within the board. The compensation committee specifically zeroes in on executive pay and incentive structures, which is central to its mandate in corporate governance.