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Terms of reference for the Remuneration committee
- Constitution
The Committee has been established by resolution of the Board held in January 1995 and is to be known as the Remuneration Committee. These terms of reference were adopted by the Board on 29 October 2003 and may be amended from time to time, subject to the approval of the Board.
- Membership
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2.1
The members of the Remuneration Committee shall be appointed by the Board from amongst the directors of the Company and shall consist of not less than three members. The majority of the Remuneration Committee shall be independent non-executive directors.
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2.2
A quorum shall be two members present and voting on the matter for decision. A duly convened meeting of the Remuneration Committee at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested in or exercisable by the Remuneration Committee.
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2.3
The Board shall appoint the chairman of the Remuneration Committee and shall decide his or her period of office. In the absence of the Remuneration Committee chairman and/or an appointed deputy, the remaining members present shall elect one of the members present to chair the meeting.
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2.4
The Company Secretary shall act as the secretary of the Remuneration Committee.
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2.4
If executive directors or senior management are involved in advising or supporting the Remuneration Committee, that role should be clearly separated from their role within the business.
- Attendance at meetings
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3.1
No one other than the Remuneration Committee Chairman and members is entitled to attend or vote at a meeting of the Remuneration Committee.
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3.2
The chairman of the Remuneration Committee may invite any other director and any other executive or member of senior management to advise, join meetings and/or to speak at any meeting of the Remuneration Committee by prior arrangement with the chairman of the Remuneration Committee notwithstanding that they are not members of the Remuneration Committee.
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3.3
No director or senior executive shall be involved in any decisions as to his or her own remuneration.
- Secretary
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4.1
The Company Secretary acting as the secretary of the Remuneration Committee shall keep a record of:
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4.2
The Company Secretary acting as the secretary of the Remuneration Committee shall keep a record of:
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4.3
the membership of and the dates of any changes to the membership of the Remuneration Committee;
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4.4
any person who provides advice or services to the Remuneration Committee or materially assists the Remuneration Committee on matters relating to directors' remuneration. If such person is not a director, the Secretary shall keep a record of the nature of any other services provided by that person to the Company during the year.
- Frequency of meetings
Meetings shall normally be held at such times as the Remuneration Committee deems appropriate and in any event shall be held at least once a year. The chairman of the Company may request a meeting if he/she reasonably considers that one is necessary.
- Authority
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6.1
The Remuneration Committee is authorised by the Board at the expense of the Company to investigate any matter within its terms of reference. It is authorised to seek any information it requires from any employee to perform its duties and all employees are directed to co-operate with any requests made by the Remuneration Committee.
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6.2
The Remuneration Committee is authorised by the Board at the expense of the Company to obtain outside professional advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary. It is envisaged that in obtaining outside advice the Remuneration Committee will act in conjunction with the chairman of the Company.
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6.3
The Remuneration Committee is authorised by the Board to appoint external consultants at the Company's expense in respect of remuneration and to set their terms of reference.
- Purpose
The purpose of the Remuneration Committee is:
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7.1
to ensure that the Board Executive Directors, the Company Secretary, and the Chairman of the Company (together "the Executives") and other senior managers in the group are fairly, but responsibly, rewarded for their individual contribution to the overall performance of the Company;
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7.2
to demonstrate to the shareholders of the Company that the remuneration of the Executives is set by a committee of the Board whose members have no personal interest in the outcome of its decisions and who will have due regard to the interests of shareholders and who will monitor the level and structure of remuneration for other senior managers in the group;
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7.3
to make recommendations to the Board on the Company's framework of remuneration for Executives; and
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7.4
to ensure that the Company complies with Listing Rule 12.43A (c).
- Duties
Subject to paragraph 7 above and to the policy for remuneration determined by the Board, and to section B of the Combined Code, the Remuneration Committee shall be responsible for all elements of the remuneration of the Executives, and shall monitor the level and structure of remuneration for other senior management of the group as defined by the Board, and the duties of the Remuneration Committee shall be:
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8.1
to determine and agree with the Board the framework or broad policy for the remuneration of the Executives of the Company;
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8.2
to determine and agree with the Board the Company's policy on the duration of contracts with the Executives, and notice periods and termination payments under such contracts, with a view to ensuring that any termination payments are fair to the individual and the Company, that failure is not rewarded and the duty to mitigate loss is fully recognised;
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8.3
within the terms of the agreed framework and broad policy, to determine the total individual remuneration package of each of the Executives, including, where appropriate, bonuses, incentive payments, share options and pension arrangements;
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8.4
to consider the basic salary paid to the Executives and any recommendations made by the chairman of the Company for changes to that basic salary;
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8.5
to consider any bonuses to be paid to the Executives and, in respect of any element of remuneration of an Executive which is performance-related, to formulate suitable performance-related criteria and targets and monitor their operation, and to consider any recommendations of the chairman of the Company regarding bonuses or performance-related remuneration;
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8.6
having regard to Schedule A of the Combined Code, to advise on and determine all performance-related formulae relevant to the remuneration of the Executives and to consider the eligibility of the Executives for annual bonuses and benefits under long term incentive schemes;
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8.7
to administer all aspects of any share option scheme operated by or to be established by the Company, (subject always to the rules of that scheme and any applicable legal and stock exchange requirements) including, but not limited to:
- the selection of those eligible directors and employees of the Company and its subsidiary companies to whom options should be granted;
- the timing of any grant;
- the numbers of shares over which options are to be granted;
- the exercise price at which options are to be granted;
- the imposition of any objective condition which must be complied with before any option may be exercised;
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8.8
to have regard, in the performance of the duties set out in this clause, to any published guidelines or recommendations regarding the remuneration of directors of listed companies and the formation and operation of share option schemes (in particular the guidelines published by the Association of British Insurers and National Association of Pension Funds) which the Remuneration Committee considers relevant or appropriate;
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8.9
to consider and make recommendations to the directors of the Company concerning disclosure of the detail of remuneration packages and structures in addition to those required by law or by the Listing Rules;
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8.10
to consider other benefits granted to the Executives and any recommendations of the chairman for changes in those benefits and to be aware of any major changes in employee benefit structure throughout the group;
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8.11
to consider the pension arrangements applicable to the Executives;
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8.12
to consider and make recommendations in respect of any other terms of the service contracts of the Executives and any proposed changes to these contracts;
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8.13
to scrutinise, authorise and review the policy for the reimbursement of any claim for expenses of the chief executive and the chairman of the Company, which currently provides that the expenses of the chief executive are approved by the chairman and vice versa;
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8.14
to consider other matters relating to the remuneration of or terms of employment applicable to the Executives and referred to the Remuneration Committee by the Board;
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8.15
to assist the Board in drafting an annual report of the Company's remuneration policy which will form part of the Company's annual report and accounts and in conjunction with the Board, to draft the annual directors' remuneration report, having regard to the provisions of Listing Rule 12.43A(c), the Combined Code and Schedule 7A of the Companies Act 1985, and for inclusion in such annual report, to report the frequency of any attendance by members at Remuneration Committee meetings;
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8.16
to assist the Board in drafting the explanation of how it applies the Principles of section B (Remuneration) of the Combined Code in the directors' remuneration report;
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8.17
generally to ensure that the items that should be published in the Company's Annual Report relating to the activities of the Remuneration Committee, are included in that report;
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8.18
to communicate and consult with the chairman and/or chief executive of the Company about their proposals relating to the remuneration of other Executives.
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8.19
to review and, where necessary, update these terms of reference annually and make them publicly available.
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8.20
No director or manager shall be present whilst his or her own remuneration is being discussed or be involved in deciding his or her own remuneration.
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8.21
The chairman of the Remuneration Committee shall agree with the Remuneration Committee the information needed for the Committee to carry out its duties and shall ensure that it is obtained and circulated to the members of the Remuneration Committee in a timely manner.
- Exclusions
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9.1
The terms of reference of the Remuneration Committee do not encompass decisions to employ or dismiss executives. The Remuneration Committee does not have responsibilities for nominations to the Board.
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9.2
The remuneration of non-executive directors, other than the Chairman, shall be a matter for the executive members of the Board. The Board may, however, delegate this responsibility to a smaller sub-committee, which may include the chief executive.
- Annual General meeting
The chairman of the Remuneration Committee shall be available at the Annual General Meeting to answer questions arising from the annual report remuneration report section and generally on remuneration principles and practice. He or she should also ensure that the Company maintains good contact with shareholders about remuneration in the same way as for other matters.
- Proceedings
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11.1
Unless varied by these terms of reference, meetings and proceedings of the Remuneration Committee will be governed by the Company's Articles of Association regulating the meetings and proceedings of directors.
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11.2
Except under exceptional circumstances, at least 48 hours notice will be given of a meeting of the Remuneration Committee. Such notice will include the agenda and any supporting papers.
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11.3
The Company Secretary shall circulate the minutes of the meetings of the Remuneration Committee to all members of the Committee and, if the chairman so decides, to all members of the Board.
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11.4
The Company Secretary shall summon Remuneration Committee meetings at the request of the chairman of the Company or as otherwise provided by these terms of reference.
October 2003
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