a. The committee shall be constituted as a sub-committee of the board of the company. It shall consist of a minimum of three members, membership being confined to independent non-executive directors. The members of the committee will be appointed by the board of the company from time to time.
b. The chairman of the committee shall be appointed by the board of the company. In the absence of the committee chairman and/or an appointed deputy, the remaining members present shall elect one of themselves to chair the meeting who would qualify under these terms of reference to be appointed to that position by the board. The chairman of the board shall not be chairman of the committee.
c. Appointments to the committee shall be for a period of up to three years, which may be extended for further three-year periods, provided the director still meets the criteria for membership.
The company secretary or his or her nominee shall act as the secretary of 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.
a. The quorum for decisions of the committee shall be any two members. Attendance may be in person or by video conference call or telephone, provided that all persons participating in the meeting are able to hear and speak to each other throughout such meeting.
b. Where the chairman of the committee considers it appropriate, decisions may be taken by email. Copies of the decisions taken by email will be maintained by the secretary.
a. Meetings of the committee shall be held as and when appropriate, but at least twice a year, usually immediately before or after regular meetings of the full board but formal meetings may be held on other occasions as required.
b. At least five days’ notice of a meeting of the committee shall be given although such notice period may be waived or shortened with the consent of all the members of the committee for the time being.
c. Only members of the committee have the right to attend committee meetings. However, other individuals such as the chairman of the board, the chief executive, other executive and non-executive directors or external advisors may be invited to attend all or part of any meeting as and when deemed appropriate. The committee shall take care to recognise and manage conflicts of interest when receiving views from executive directors or senior management or consulting with the chief executive about its proposals.
d. No executive director shall be involved in any decisions as to their own remuneration.
e. The secretary shall minute the proceedings and decisions of meetings of the committee, including recording the names of those present and in attendance..
f. Draft minutes of committee meetings shall be circulated promptly to members of the committee.
5. Annual General Meeting
The members of the committee should attend the annual general meeting and the chairman of the committee should assist in answering any shareholder questions on the committee’s activities.
6. Role and Responsibilities
The responsibilities of the committee are to:
a. Have responsibility for setting the remuneration policy for all executive directors and the company’s chairman, including pension rights and any compensation payments. The board itself or, where required by the articles of association, the shareholders should determine the remuneration of the non-executive directors within the limits set in the articles of association.
b. In determining such policy, take into account factors which it deems necessary including relevant legal and regulatory requirements, the provisions and recommendations of the UK Corporate Governance Code (Code) and associated guidance. The objective of such policy shall be to attract, retain and motivate executive management of the quality required to run the company successfully without paying more than is necessary, having regard to views of shareholders and other stakeholders. The remuneration policy should have regard to the risk appetite of the company and alignment to the company’s long-term strategic goals. A significant proportion of remuneration should be structured so as to link rewards to corporate and individual performance and designed to promote the long-term success of the company.
c. When setting the remuneration policy for directors, the committee shall review and have regard to pay and employment conditions across the company or group, especially when determining annual salary increases.
d. Review the on-going appropriateness and relevance of the remuneration policy.
e. Within the terms of the approved remuneration policy and in consultation with the chairman and/or chief executive, as appropriate, determine the total individual remuneration package of each executive director, the company chairman and other designated senior executives, including bonuses, incentive payments and share options or other share awards.
f. Recommend and monitor the level and structure of remuneration for senior management.
g. Obtain reliable, up-to-date information about remuneration in other companies of comparable scale and complexity. To help it fulfil its obligations the committee shall have full authority to appoint remuneration consultants and to commission or purchase any reports, surveys or information which it deems necessary at the expense of the company but within budgetary restraints imposed by the board.
h. Be responsible for establishing the selection criteria, selecting, appointing and setting the terms of reference for remuneration consultants who advise the committee.
i. Approve the design of, and determine targets for, performance-related pay schemes operated by the company and approve the total annual payments made under such schemes (in accordance with the provisions in Schedule A of the Code).
j. Review the design of share incentive plans for approval by the board and shareholders. For such plans, determine during each year whether awards will be made, and if so, the overall amount of such awards, the individual awards to executive directors and other designated senior executives and the performance targets to be used.
k. Determine the policy for, and scope of, pension arrangements for each executive director and other designated senior executives.
l. Ensure that contractual terms on termination, and payments made, are fair to the individual and the company, that failure is not rewarded and that the duty to mitigate loss is fully recognised.
m. Oversee major changes in employee benefits structures throughout the company or group.
7. Reporting Responsibilities
a. The committee chairman shall report to the board on its proceedings after each meeting on matters within its duties and responsibilities.
b. The committee shall make whatever recommendations to the board it deems appropriate on any area within its remit.
c. The committee shall ensure that provisions regarding disclosure of information, including pensions, as set out in the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 and the Code, are fulfilled and produce a report of the company’s remuneration policy and practices to be included in the company’s annual report and ensure each year that it is put to shareholders for approval at the annual general meeting. If the committee has appointed remuneration consultants, the annual report of the company’s remuneration policy should identify such consultants and state whether they have any other connection with the company.
d. Through the chairman of the board, ensure that the company maintains contact as required with its principal shareholders about remuneration.
8. Other Matters
The committee shall:
a. Have access to sufficient resources in order to carry out its duties, including access to the company secretariat for assistance as required.
b. Be provided with appropriate and timely training, both in the form of an induction programme for new members and on an on-going basis for all members.
c. Give due consideration to laws, regulations and guidelines or recommendations regarding the remuneration of directors of listed/non listed companies and formation and operation of share schemes, including, but not limited to, the provisions of the Code, the requirements of the UK Listing Authority’s Listing, Prospectus and Disclosure and Transparency Rules and other applicable rules, as appropriate.
d. Arrange for periodic reviews of its own performance and, at least annually, review its constitution and terms of reference to ensure it is operating at maximum effectiveness and recommend any changes it considers necessary to the board for approval.
The committee is authorised by the board to obtain, at the company’s expense, outside legal or other professional advice on matters within its terms of reference.