i) Three Statements from Ghana’s Code of Best Practices Regarding Remuneration:

1. Competitive:
   The level of remuneration should be competitive, taking into account industry practices. Bazar needs to review its remuneration system in line with what is common in the industry to ensure it can attract and retain qualified employees. Offering competitive compensation would help Bazar remain competitive in the labour market.
2. Performance-oriented:
   There should be a system of short-term and long-term remuneration aimed at providing performance-oriented incentives to management. Short-term incentives could include bonuses based on company performance, while long-term incentives may involve awarding shares or share options. This ensures that managers are motivated to achieve strategic and performance objectives that align with Bazar’s long-term goals.
3. Stock options scheme:
   Stock options, employee share ownership schemes, or other equity-oriented schemes should be considered to align the interests of managers with those of shareholders. By offering such schemes, managers are incentivized to think long term and increase the value of the company, thereby benefiting both employees and shareholders.

(6 marks)

ii) Executive Remuneration as a Governance Issue:

Executive remuneration can pose a significant governance issue when executives have the power to influence or decide their own remuneration packages. This poses several risks:

1. Temptation to inflate pay:
   Executives might be tempted to inflate their remuneration packages, setting compensation levels that are disproportionately high relative to their performance. This can lead to excessive pay that does not reflect the value they bring to the company.
2. Collective remuneration decisions:
   When executive directors can collectively decide on the general level of remuneration for senior executives, they might be inclined to set compensation levels excessively high for mediocre performance. This would go against the interests of the company’s shareholders, who expect performance-driven and reasonable compensation.
3. Linking remuneration to performance:
   It is important that remuneration packages for executives be tied closely to performance metrics that reflect shareholder interests, ensuring that executives are not rewarded for underperformance. Otherwise, large remuneration packages for poor performance could damage Bazar’s reputation and undermine trust in its governance practices.

(4 marks)