Remuneration Committee

Remuneration Committee: Terms of Reference

AS APPROVED BY the REMUNERATION COMMITTEE on 26 July 2017

Constitution

The Board of Directors has established, in line with the UK Corporate Governance Code 2016 (the “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 Code.

Membership

Members of the Committee shall be appointed by the Board on the recommendation of the Nomination 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 and will ensure that the Committee receives information and papers in a timely manner to enable full and proper consideration to be given to the issues.

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 that 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 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 Officer, 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, including the names of those present and in attendance. . Minutes of the meetings shall be circulated promptly to all members of the Committee, unless a conflict of interest arises.

Annual General Meeting

The Chairman of the Committee, or in his/her absence, an appointed deputy, shall attend the Annual General Meeting prepared to respond to any shareholder’s question 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 his/her role in providing such advice and assistance is clearly separated from his/her role within the business.

Independent Advice and Resources

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

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

The appointment and performance of the advisors shall be reviewed by the Committee on a regular basis and in any event, 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:

  1. that a framework or broad policy is determined and agreed for the remuneration of the Company’s Chief Executive Officer, the Chairman, other Executive Directors and, in consultation with the Chief Executive Officer, Executive Managers (such term meaning any direct report of the Chief Executive Officer or any other colleague with an annual base salary in excess of £200,000 but expressly excluding any Executive Director) and the Company Secretary, ensuring that levels of remuneration will promote the long-term success of the Company. The objective shall be to ensure that Executive Directors and Executive Managers 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;
  2. that no Director or Executive Manager should be involved in any decisions as to their own remuneration;
  3. 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;
  4. that the Chief Executive Officer will bring to the Board every two years a review of, and recommendations in respect of, the fees payable to the Non-executive Directors;
  5. that the Committee Chairman reports formally to the Board on its proceedings after each meeting on all matters within its duties and responsibilities; and
  6. that the Committee’s Terms of Reference are made publicly available.

To review:

  1. 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;
  2. the ongoing appropriateness and relevance of the remuneration framework and broad policy;
  3. the design of, and the targets for, any performance related pay schemes operated by the Company for the benefit of any Executive Director and/or any Executive Manager, being mindful of the design and targets of any other any performance related pay scheme operated by the Company for the benefit of colleagues other than Executive Directors and/or Executive Managers;
  4. the design of all share incentive plans for approval by the Board and shareholders;
  5. up to date reliable reports on remuneration paid to Directors of other companies of a similar size in a comparable industry sector in the UK;
  6. the trends, including pay and employment conditions elsewhere in the Company, when determining annual salary increases; and
  7. at least annually, the Committee’s Terms of Reference and the effectiveness of the Committee and report to the Board in respect thereof, including any recommendations.                                                                            

To approve:

  1. the policy on ancillary employment issues, including but not limited:
    1. any guideline for Executive Directors to have personal holdings of Company shares; and

    2. the retention by them of any financial reward from any external directorships or similar appointments;

  2. the policy for authorising claims for expenses from the Chief Executive Officer and the Chairman;
  3. the terms of any proposed:
    1. letter of appointment or contract or relating to any Executive Director, the Chairman, the Company Secretary or any Executive Manager, 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

    2. termination arrangements relating to: (a) any Executive Director, the Chairman or the Company Secretary; and (b) any Executive Manager but only where those arrangements are in excess of his/her contractual entitlement. The Committee should be advised of the termination arrangements for any Executive Manager that are within his/her contractual entitlement but the Committee's approval is not required;

  4. a proposal from the Chief Executive Officer on the remuneration by way of salary or fee of the Chairman;
  5. annually, whether awards should be made under any of the Company’s employee and executive share plans, and if so, the overall amounts of such awards, to consider whether the Executive Directors, Executive Managers, Company Secretary and any other senior executives should be eligible for awards under such incentive schemes and the performance targets, if any, to be used;
  6. annually whether the performance conditions and for any such performance related share award plans have been reached;
  7. the Remuneration Report for inclusion in the Annual Report and Accounts, ensuring the inclusion of the frequency of, and attendance by members at, Committee meetings, and further 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 Code (as may be amended from time to time); and
  8. major changes to any of the Group’s pension schemes.

To recommend to the Board:

  1. within the terms of the agreed framework or broad policy and in consultation with the Chairman and/or Chief Executive Officer, as appropriate, the total individual remuneration package (including but not limited to salary, bonuses, incentive payments, PSPs and share options or other share awards) of each Executive Director, the Company Secretary and Executive Managers and, in that regard, consider:
    1. the contents of the Code and the UK Listing Authority’s Listing Rules and associated guidance (as may be amended from time to time);

    2. any other appropriate guidance or recommendations published by the Investment Association, NAPF and similar representative bodies or institutions of good standing;

    3. the need for clear linkages between both the Company’s and the individual’s performances and remuneration and the interests of shareholders;

    4. the policy and scope of pension arrangements for each Executive Director; and

  2. the design of all proposed new share incentive plans for approval by the Board and shareholders; and
  3. following a recommendation from the Chief Executive Officer, the fees of the Non-executive Directors.
    1. 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;