Terms of reference - Remuneration committee

Notes:
References to “the committee” shall mean the full remuneration committee.
References to “the Board” shall mean the full Board of directors.

1.  Purpose

The role of the committee is to approve and implement the company’s remuneration policy and specifically:

• To review annually and agree with the Board the broad policy framework for the remuneration of executive management.
• To agree terms of executive directors’ and other designated senior executives’ service contracts and remuneration.
• To determine the nature and scale of short and long term incentive performance arrangements that encourage enhanced performance and reward individuals in a fair and responsible manner for their contribution to the success of the company.

Responsibility for determining the fees of the company chairman and the non-executive directors sits with the executive directors.

2.   Membership

2.1   The committee shall comprise at least three members, each of whom shall be appointed by the Board, but on the recommendation of the nomination committee in consultation with the chairman of the remuneration committee.

2.2   All members of the committee shall be non-executive directors who are independent of management and free from any business or other relationship which could interfere with the exercise of their independent judgement.

2.3 The Board shall appoint the committee chairman and determine the period for which he or she shall hold office. The company chairman is not eligible to be appointed as chairman of the committee.

2.4 The principal professional advisors to the committee will be appointed annually by the committee.

2.5 Membership of the committee shall be reviewed once a year as part of the Board performance review.

3.  Secretary

3.1 The company secretary or their nominee shall act as the secretary to the committee.

4.  Quorum

4.1 The quorum necessary for the transaction of business shall be two. A duly convened meeting of the committee at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested or exercisable by the committee.

5.  Meetings

5.1  The committee shall meet at least four times a year and at such other times as the chairman of the committee decides. As far as is practicable, meetings will be scheduled in advance for the full calendar year.

5.2  Any member of the committee may request additional meetings through the chairman of the committee and these will be organised by the secretary.

5.3  Unless otherwise agreed, notice of each meeting, confirming the venue, time and date together with an agenda of items to be discussed, shall be forwarded to each member of the committee, any other person required to attend and all other non-executive directors, no fewer than five working days prior to the date of the meeting.

5.4  Only members of the committee have the right to attend committee meetings.  However, other individuals such as the company chairman, chief executive, human resource executives and external advisers may be invited to attend for all or part of any meeting as and when appropriate.

6.  Minutes of the meetings

6.1 The secretary shall minute the proceedings and resolutions of all committee meetings, including the names of those present and in attendance.

6.2  Minutes of committee meetings shall be circulated, once agreed with the committee chairman, to all members of the committee and all members of the board prior to the next board meeting.

7.   Annual general meeting

7.1 The chairman of the committee shall attend the Annual general meeting and be prepared to respond to any shareholder questions on the committee’s activities.

8.   Duties

The committee shall:

8.1  Determine and agree with the Board the broad policy for the remuneration of the company’s chief executive, the company chairman, the executive directors, the company secretary and such other members of the executive management as it is designated to consider.  The remuneration of non-executive directors shall be a matter for the company chairman and executive members of the board. No director or manager shall be involved in any decisions relating to his or her own remuneration.

8.2  In determining such policy take into account all factors which it deems necessary. The objective of such policy shall be to ensure that the executive management of the company are provided with appropriate incentives to encourage enhanced performance and are, in a fair and responsible manner, rewarded for their individual contributions to the success of the company.

8.3  Ensure that it is kept fully aware of the company’s reassessment of the performance of individuals who fall within its remit by reference to the company chairman and chief executive.

8.4 Review the ongoing appropriateness and relevance of the remuneration policy.

8.5  Approve the design of, and determine targets for, any performance related pay schemes operated by the company and approve the total annual payments made under such schemes.

8.6  Within the terms of the agreed policy and in consultation with the company chairman and/or chief executive as appropriate, determine the total individual remuneration package of each executive director and other senior executives including the bonuses, incentive payments and share options or other share awards.

8.7  Determine the policy for and scope of pension arrangements, service agreements for the executive management, termination payments and compensation commitments.

8.8  Approve/determine the specific termination payments that may arise for executive directors and senior executives, with due regard to the nature of the termination, in a fair and honourable manner taking due note of company practice and precedent.

8.9  In determining such packages and arrangements, give due regard to the comments and recommendations of the Combined Code as well as the UK Listing Authority’s Listing Rules and associated guidance.

8.10  Oversee any major changes in employee benefit structures throughout the company or group.

8.11  Ensure that provisions regarding disclosure of remuneration including pensions, as listed in Section 9.8.8 of the Listing Rules and the Directors Report Regulations, Directors' Remuneration Report and the Combined Code are fulfilled;

8.12  Produce an annual report of the committee’s remuneration policy which will form part of the company’s Annual report and accounts.

8.13  Ensure each that the Annual report and accounts is put to shareholders for approval at the Annual general meeting.

8.14 Agree the policy for authorising claims for expenses from the chief executive and company chairman.

9.  Authority

9.1  The committee is authorised by the Board to seek any information it requires from any employee of the company in order to perform its duties.

9.2  In connection with its duties, the committee is authorised by the Board to obtain, at the company’s expense, any outside legal or other professional advice including the advice of independent remuneration consultants, to secure the attendance of external advisers at its meetings if it considers this necessary, and to obtain reliable, up-to-date information about remuneration in other companies. The committee shall have full authority to commission any reports or surveys which it deems necessary to help it fulfill its obligations. 

10.  Reporting responsibilities

10.1 The committee chairman shall report formally to the Board on its proceedings after each meeting on all matters within its duties and responsibilities.

10.2 The committee shall make whatever recommendations to the Board it deems appropriate on any area within its remit where action or improvement is needed.

11.  Performance

11.1  The committee’s performance shall be reviewed as part of the Board performance review at least once a year.