Halfords Group plc - Remuneration Committee

Remuneration Committee: Terms of Reference

Constitution.

The Board of Directors has established, in line with The Combined Code on Corporate Governance 2006, ("The Combined Code"), a committee of the Board, henceforth known as the Remuneration Committee ("the committee"). The board shall appoint the committee chairman, who will be an independent director as defined by The Combined Code.

Membership.

Members of the committee shall be appointed by the board on the recommendation of the Nominations committee in consultation with the Chairman of the committee.

The committee shall consist of a minimum of three members. The Company Secretary or a nominee shall act as the secretary to the committee.

The committee shall only comprise independent non-executive directors of the company.

Appointments to the committee shall be for a period of up to three years, which may be extended to a further two, three-year periods provided the director remains independent.

Quorum.

The quorum necessary for the transaction of business by the committee will be two.

In the event that a meeting of the Committee is required but a quorum might not be secured, an existing member of the Committee shall be empowered to appoint another non-executive director(s) to attend such meeting in consultation with the Chairman of the Committee.

In the absence of the chairman the members attending will elect one of their number to chair the meeting.

Meetings.

Meetings shall be held at least three times a year, and also at such other times as the chairman of the committee shall require. Only members of the committee have the right to attend.

Prior to the commencement of each calendar year, the Chairman of the committee and the secretary shall review the frequency and dates of meetings for the subsequent financial year and propose such dates for agreement by other members of the committee.

A meeting of the committee may be called by the secretary at the request of any member of the committee, and the secretary shall agree the agenda with the chairman.

The Chairman, Chief Executive, other executive and non-executive directors, other senior management and external advisors may be invited to attend for all or part of any meeting as and when appropriate, particular care being taken to recognise and avoid any conflicts of interest.

Meetings of the Committee shall be called by giving at least five working days' written notice unless all the members of the Committee agree to shorter notice.

Members may participate in a meeting by means of a conference telephone, video conferencing facility or other suitable communicating equipment.

No Committee attendee shall participate in any discussion or decision on their own remuneration, fees or terms or conditions of service.

The secretary shall minute the proceedings and resolutions of all meetings as well as keep appropriate records. Minutes of the meetings shall be circulated promptly to all members of the Committee.

Annual General Meeting

The chairman of the committee shall attend the annual general meeting prepared to respond to any shareholder questions on the committee's activities.

In the absence of the chairman of the committee an appointed deputy, should attend the Company's annual general meeting to be available to answer shareholders' questions on the committee's activities.

Authority.

The Committee is authorised by the Board to determine Company policy within its terms of reference.

The Committee is authorised to seek any information it requires from any employee and all employees shall be directed to co-operate with any request made by the Committee, provided their role in providing such advice and assistance is clearly separated from their role within the business.

Independent Advice and Resources.

The Committee is authorised by the Board to obtain outside legal or other independent professional advice as it considers necessary to undertake its duties and to secure the attendance of any such advisers at any meetings of the Committee.

The Committee is exclusively responsible for establishing the selection criteria for such advisors and their appointment and terms of reference.

The appointment and performance of the advisors shall be reviewed by the Committee on a regular basis and at least annually.

Decisions of The Committee

Any decisions of the committee shall be taken on a simple majority basis. The chairman shall have a casting vote in the event of equality of voting.

Terms of Reference.

The duties of the committee are as follows:-

To ensure;

that a framework or broad policy is determined and agreed for the remuneration of the Company's Chief Executive, the Chairman, the other Executive Directors and, in consultation with the Chief Executive, such other members of the executive management, including the Company Secretary as the Committee is designated by the Board to consider ensuring that levels of remuneration are sufficient to attract, retain and motivate directors of the quality required to run the company successfully. The objective shall be to ensure that members of 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.
that no director or manager should be involved in any decisions as to their own remuneration.
that effective communications are maintained with institutional investors and representative bodies on the rationale for the prevailing remuneration policy and practices and any anticipated changes and consult the Chairman of the Board in that regard.
that the Chief Executive will bring to the Board every two years a review of, and recommendations in respect of, the fees payable to the non-executive directors;
that the Committee Chairman reports formally to the Board on its proceedings after each meeting on all matters within its duties and responsibilities.
that the committee's terms of reference are made publicly available.

To review;
regularly the detailed terms of the Executive Directors' contracts and, in any event, at least every three years and ensure that the contractual terms of termination and any payments due and payable thereunder are fair to the individual and the Company but so that failure is not rewarded and that a duty to mitigate loss is fully recognised
the ongoing appropriateness and relevance of the remuneration framework and broad policy.
the design of, and the targets for, any performance related pay schemes operated by the company
the design of all share incentive plans for approval by the Board and shareholders.
to review reliable, up to date reports on remuneration paid to directors of other companies of a similar size in a comparable industry sector in the UK;
the trends, including pay and employment conditions elsewhere in the Company, when determining annual salary increases;
at least annually the committee's terms of reference and the effectiveness of the committee and to report to the Board in respect thereof, including any recommendations.

To approve;
the policy on ancillary employment issues, including but not limited
- to any requirement for Executive Directors to have personal holdings of Company shares
- and the retention by them of any financial reward from any external directorships or similar appointments.
the policy for authorising claims for expenses from the Chief Executive, the Chairman.
the terms of any proposed letter of appointment or contract or termination arrangements relating to any Executive Director, the Chairman, the Company Secretary and other executive managers 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.
annually the appropriateness of any performance conditions and for any such performance related share award 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.
the Remuneration Report for inclusion in the Annual Report and Accounts, including within the frequency of, and attendance by members at, committee meetings ensuring that the components required to be audited are prepared in such a way that they will receive audit approval and comply with the provisions regarding disclosure of remuneration, as set out in the Directors' Remuneration Report Regulations 2002 and The Combined Code (as may be amended from time to time).

To recommend to the Board;
within the terms of the agreed framework or broad policy and in consultation with the Chairman and/or Chief Executive, as appropriate, the total individual remuneration package (including but not limited to salary, bonuses, incentive payments, LTIPs and share options or other share awards) of each Executive Director, the Company Secretary and other executive managers and, in that regard, consider;
- the contents of the Combined Code on Corporate Governance and the UK Listing Authority's Listing Rules and associated guidance (as may be amended from time to time).
- any other appropriate guidance or recommendations published by the ABI, NAPF and similar representative bodies or institutions of good standing;
- the need for clear linkages between both the Company's and the individual's performances and remuneration and the interests of shareholders;
- the policy and scope of pension arrangements for each Executive Director;
- that the performance-related elements of the remuneration package form an appropriate and significant proportion of the remuneration package and that the targets and/or performance conditions are set at realistic but challenging levels and that achievement against such targets/performance conditions are clearly monitored.
the design of all proposed new share incentive plans for approval by the Board and shareholders.