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Remuneration Committee: Terms of Reference

(as approved by the Board of Directors of the Company on 17th May 2004 and as amended on 29th November 2006 and 30th May 2007 and 27th February 2008)

Membership:
Keith Harris
William Ronald
Nigel Wilson

• The Remuneration Committee comprises not less than three non executive directors of the Company, to be selected by the Board, who are all independent in character and judgement and free from any relationships or circumstances which are likely to affect, or could appear to affect, the Committee member's judgement. Appointments to the committee shall be for a period of up to three years, which may be extended to two further three-year periods provided that the majority of the committee members remain independent.
• If any member of the Remuneration Committee is unable to act for any reason, the chairman of the Remuneration Committee may appoint any other independent non executive director of the Company to act as his alternate.
• The chairman of the Remuneration Committee shall be appointed by the Board. In the absence of the chairman of the Remuneration Committee, the remaining members present shall elect one of their number to chair the meeting.
• The Company secretary is the secretary of the Remuneration Committee.
• The quorum for meetings of the Remuneration Committee is any two of its members.
• No one other than a Committee Member is entitled to attend meetings of the Remuneration Committee but others may attend by invitation.
• Meetings of the Remuneration Committee are to be held not less than twice a year.
• A meeting may be called by the secretary of the Remuneration Committee at the request of any Committee Member. A meeting may be called by five working days' written notice unless all Committee Members agree to shorter notice. Committee Members may participate in a meeting by means of a conference telephone, video conferencing facility or other similar communicating equipment.
• No committee member shall participate in any discussion or decision on their own remuneration.
• The Remuneration Committee is authorised by the Board:
• • to investigate remuneration paid to directors of other companies of a similar size in a comparable industry sector in the UK;
  • to obtain information on the remuneration of any employee of a Group Company;
  • to obtain such legal or other independent professional advice as it deems necessary to fulfil its responsibilities;
  • to obtain the advice and assistance of any of the Company's executives provided their role in providing such advice and assistance is clearly separated from their role within the business; and
  • to secure the attendance of any person with relevant experience and expertise at committee meetings if it considers this appropriate.
  • be exclusively responsible for establishing the selection criteria, selecting, appointing and setting the terms of reference for any consultants who advise the company on the matters of remuneration and recruitment
• The duties of the Remuneration Committee are:
• • to make recommendations to the Board on the Company's framework of remuneration for the executive management, the secretary and the chairman of the Board and its cost;
  • to review the ongoing appropriateness and relevance of the remuneration policy;
  • to determine on behalf of the Board specific remuneration packages for each of the executive directors and the chairman of the Board, including pension rights and any compensation payments;
  • to consult the Company's chairman and/or chief executive about its proposals relating to the remuneration of the executive directors;
  • to note that the Chief Executive will bring to the Board annually a review of, and recommendations in respect of, the fees payable to the non-executive directors;
  • to provide the packages needed to attract, retain and motivate executive directors of the quality required (but avoid paying more than is necessary for this purpose);
  • to approve the terms and duration of any service agreement to be entered into with any executive director, bearing in mind that an objective should be to set notice or contract periods at one year or less and that the performance related elements of remuneration should form a significant proportion of the total remuneration package of executive directors and should be designed to align their interests with those of the shareholders and to give such directors incentives to perform at the highest level;
  • to recommend and monitor the level and structure of remuneration to senior management;
  • to comply with the principles and provisions of the Combined Code on directors' remuneration and to ensure that the provisions of the Directors' Remuneration Report Regulations 2002 regarding disclosure of remuneration are fulfilled, producing an annual report of the company’s remuneration policy and practises which will form part of the company’s annual report and ensure each year that it is put to shareholders for approval at the AGM.
  • to consider whether the directors should be eligible for annual bonuses and, if so, to consider an upper limit for such bonuses;
  • to review the design of all share incentive plans for approval by the Board and shareholders. For such plans, determine each year whether awards will be made, and if so, the overall amounts of such awards, to consider whether the directors and other senior executives should be eligible for awards under such incentive schemes and the performance targets, if any, to be used.
  • to consider the pension consequences and associated costs to the Company of basic salary increases and other changes in remuneration, especially for directors close to retirement;
  • to consider where to position the Company relative to other companies and to be aware what comparable companies are paying, taking account of relative performance and using such comparisons with caution;
  • to be sensitive to the wider scene, including pay and employment conditions elsewhere in the Group, especially when determining annual salary increases;
  • to consider what compensation commitments (including pension contributions) the directors' service agreements, if any, would entail in the event of early termination. Particular consideration should be given to the advantages of providing explicitly in the initial contract for such compensation commitments except in the case of removal for misconduct;
  • in early termination cases where the initial contract does not explicitly provide for compensation commitments, to tailor its approach (within legal constraints) to the circumstances. The aim should be to avoid rewarding poor performance, while dealing fairly with cases where departure is not due to poor performance and to take a robust line on reducing compensation to reflect departing director's obligations to mitigate loss;
  • to agree the policy for authorising expense claims for the senior executives, Chief Executive and the Chairman;
  • to review annually its own performance, constitution and terms of reference; and
  • to consider other matters as referred to the Remuneration Committee by the Board.
  • The Committee chairman shall report formally to the Board on its proceedings after each meeting on all matters within its duties and responsibilities.
• The Remuneration Committee's chairman, or in his absence an appointed deputy, should attend the Company's annual general meeting to be available to answer shareholders' questions.
• The secretary must circulate the minutes of meetings of the Remuneration Committee to all Remuneration Committee members.