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Terms of Reference

As approved by the Remuneration Committee on [12 June 2025]

Constitution

The Board of Directors of Halfords Group plc (the “Company”) has established, in line with the UK Corporate Governance Code 2018 (the “Code”), a committee of the Board, henceforth known as the Remuneration Committee (the “Committee”). The Company’s Board shall appoint the Committee Chair, who will be an independent Director as defined by the Code. Before appointment as Committee Chair, the appointee will normally have served on a remuneration committee (either at the Company or another company) for at least 12 months.

Membership

Members of the Committee shall be appointed by the Board on the recommendation of the Nomination Committee in consultation with the Chair 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. The Chair of the Board shall not be a member of the Committee.

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.

The Chair, alongside the Company Secretary shall ensure that the Committee is provided with appropriate and timely training, both in the form of an induction programme for new members and on an ongoing basis for all members.

Quorum

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

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 Chair of the Committee.

In the absence of the Chair of the Committee the members attending will elect one of their number to chair the meeting who would qualify under these terms of reference to be appointed to that position by the Board.

Meetings

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

Prior to the commencement of each calendar year, the Chair 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 Chair of the Committee.

No one other than a Committee member is entitled to attend meetings of the Committee. The Chair of the Board, 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.

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 and any other person required to attend no later than seven working days before the date of the meeting. Supporting papers shall be sent to Committee members and to other attendees, as appropriate, at the same time.

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.

Once approved, minutes should be circulated to all other members of the Board and the Company Secretary unless, exceptionally, it would be inappropriate to do so.

Engagement with Shareholders

The Chair of the Committee, or in their absence, an appointed deputy, shall attend the Annual General Meeting prepared to respond to any shareholder’s question on the Committee’s activities. In addition, the Committee Chair should seek engagement with shareholders on significant matters related to the Committee’s areas of responsibility.

Authority

The Committee is authorised by the Company’s Board to determine Company’s remuneration 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.

The Committee may sub-delegate any or all of its powers and authority as it sees fit, including, without limitation, the establishment of sub-committees to analyse particular issues and to report back to the Committee.

The Committee should have oversight of the Group as a whole and, unless required otherwise by regulation, carry out the duties below for the parent company, major subsidiary undertakings and the Group as a whole, as appropriate.

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 shall exercise independent judgement when considering any external advice received.

The Committee has full authority to appoint remuneration advisors and to commission or purchase any reports, surveys or information which it deems necessary at the expense of the Company. 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 Chair of the Committee shall have a casting vote in the event of equality of voting.

Terms of Reference

The Committee shall have regard to the Principles and Provisions of the Code as well as the UK Listing Authority's Listing, Prospectus and Disclosure and Transparency Rules and associated guidance, in carrying out the following duties:

  1. that a framework or broad policy is determined and agreed for the remuneration of the Company’s Chief Executive Officer, the Chair of the Board, 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 £250,000 but expressly excluding any Executive Director) and the Company Secretary. The objective shall be to ensure that Executive Directors and Executive Managers are provided with appropriate remuneration. In doing so giving due regard to all factors necessary including but not limited to:

  • the business strategy of the Company and how the policy reflects and supports the business strategy and promotes long-term sustainable success;

  • relevant legal and regulatory requirements;

  • the need to attract, retain and motivate executive management of the quality required to run the Company successfully;

  • the need for remuneration arrangements to be transparent and promote effective engagement with shareholders and employees;

  • that remuneration structures should avoid complexity and their rationale and operation be easy to understand;

  • the need to mitigate the risks associated with excessive rewards and the behavioural risks that can arise from target based incentive plans;

  • the risk appetite of the Company and alignment to the Company’s long-term strategic goals;

  • the Company’s culture, purpose and values and the alignment of remuneration, incentives and rewards to this culture and purpose and these values; and

  • remuneration, incentives and rewards elsewhere in the Company and taking these into account when determining remuneration;

  1. that the Company operates remuneration schemes that promote long-term shareholding by Executive Directors and support alignment with long-term shareholder interests with share awards subject to a total vesting and holding period of at least five years, and a formal policy for post-employment shareholding requirements encompassing both unvested and vested shares;

  2. that there is consideration of equal pay across all gender and ethnic backgrounds and liaise with other Committees as appropriate where their involvement is required to help address any pay gap identified, in line with the requirements of the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017;

  3. that no Director or Executive Manager should be involved in any decisions as to their own remuneration;

  4. 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 Chair of the Board in that regard;

  5. that the Chief Executive Officer will bring to the Board at least every two years a review of, and recommendations in respect of, the fees payable to the Non-executive Directors;

  6. remuneration for all Non-Executive Directors should not include share options or other performance-related elements;

  7. that the Committee Chair reports formally to the Board on its proceedings after each meeting on all matters within its duties and responsibilities;

  8. that the Committee’s Terms of Reference are made publicly available;

  9. that there is a description of the work of the Committee in the Annual Report including an explanation of the strategic rationale for Executive Directors’ remuneration policies in line with the requirements of the Code;

  10. that provisions regarding disclosure of information as set out in The Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 201932 and the Code are fulfilled, and that a report on the Directors’ Remuneration Policy and practices is included in the Company’s Annual Report and Accounts and put to shareholders for approval at the Company’s Annual General Meeting as necessary;

  11. that if the Committee has appointed remuneration consultants, the consultant should be identified in the Annual Report and Accounts alongside a statement about any other connection it has with the Company or individual Directors;

  12. that the annual report on remuneration includes a description of the Group’s malus and clawback provisions, including:

    1. the circumstances in which malus and clawback provisions could be used;

    2. a description of the period for malus and clawback and why the selected period is best suited to the organisation; and

    3. whether the provisions were used in the last reporting period. If so, a clear explanation of the reason should be provided in the annual report.

  13. that a periodic evaluation of the Committee’s performance is carried out.

  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. The contracts must also include provisions relating to malus and clawback provisions that would enable the company to recover and/or withhold sums or share awards, and specify the circumstances in which it would be appropriate to do so

  2. the ongoing appropriateness and relevance of the remuneration framework and broad policy (including its level and structure) and to consult with significant shareholders and other stakeholders as appropriate);

  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. such performance related pay schemes and ensure they enable the use of discretion to override formulaic outturns, and the Committee shall exercise independent judgement and discretion when authorising remuneration outcomes, taking into account of Company and individual performance, and wider circumstances including the terms of any malus or clawback arrangements;

  5. clarity of remuneration arrangements, when determining the remuneration policy, and the risk areas that may arise from excessive behavioural risks;

  6. the design of all share incentive plans for approval by the Board and shareholders;

  7. 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;

  8. wider workforce remuneration and related policies and the alignment of incentives and reward with culture and to take this into account when determining remuneration policy; and

  9. 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.

  1. the design of (seeking final approval by shareholders where applicable), and oversee the administration of, the all-employee share scheme operated by or to be established by the Company in accordance with any requirements of HMRC or any other local tax requirements;

  2. the policy on ancillary employment issues, including but not limited:

    1. any guideline for Executive Directors to have personal holdings of Company shares;

    2. whether any post vesting holding period shall apply to long-term incentive awards; and

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

  3. the policy for authorising claims for expenses from the Chief Executive Officer and the Chair of the Board;

  4. the terms of any proposed:

    1. letter of appointment or contract or relating to any Executive Director, the Chair of the Board, 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 any Executive Director, Executive Manager, the Chair of the Board or the Company Secretary;

  5. a proposal from the Chief Executive Officer on the remuneration by way of salary or fee of the Chair of the Board;

  6. 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;

  7. annually whether the performance conditions and for any such performance related share award plans have been reached;

  8. 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);

  9. major changes to any of the Group’s pension schemes or to any trustee(s) thereof;

  10. change in colleague benefits;

  11. change in employee terms and conditions;

  12. the Company car policy;

  13. the Annual Gender Pay Gap review;

  14. the CEO Pay Ratio: and

  15. any other reports required to be published by law disclosing Company pay ratios.

  1. within the terms of the agreed framework or broad policy and in consultation with the Chair of the Board 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, PLSA 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

    5. 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;

  2. the design of all proposed new share incentive plans for approval by the Board and shareholders;

  3. following a recommendation from the Chief Executive Officer, the fees of the Non-executive Directors; and

  4. any other recommendations the Committee deems appropriate on any area with its remit where action or improvement is necessary.