REMUNERATION COMMITTEE TERMS OF REFERENCE
(Amended January 2017)
1. COMPOSITION AND AUTHORITIES
1.1 The membership of the Remuneration Committee (“the Committee”) shall be as appointed by the Board on the recommendation of the Nomination Committee and in consultation with the Chairman of the Committee. Appointment to the Committee shall be for a period of up to three years which may be extended for two further periods of up to three years each provided the member continues to meet the criteria for membership of the Committee.
1.2 The Committee shall comprise at least two directors of the Company, none of whom shall hold executive responsibility in the Company and all of whom shall be independent as determined by the Board.
1.3 The Board shall appoint the Chairman of the Committee who shall not hold executive responsibility and shall not be the Chairman of the Company. In the absence of the Chairman of the Committee, 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, provided that it is not the Chairman of the Company.
1.4 The Secretary or his nominee shall act as the secretary of the Committee.
1.5 The quorum necessary for the transaction of business shall be two members. A duly convened meeting of the Committee at which a quorum is present shall be authorised to exercise all or any of the powers and discretions vested in or exercisable by the Committee.
1.6 The Committee shall meet at least twice a year and at such other times as the Chairman of the Committee shall require.
1.7 Other executives of the Company may be invited by the Committee to attend for all or part of any meeting of the Committee but shall not be involved in any decisions relating to their own remuneration.
1.8 The Committee may appoint and instruct suitably experienced and qualified persons to act as advisers to the Committee who may attend such meetings as the Committee shall decide on matters within the Committee’s terms of reference. The Company shall meet the expense of such advice.
1.9 The Committee is authorised by the Board to seek any information it requires from any employee of the Company in order to perform its duties and may request that the Secretary obtain this information on their behalf.
2.1 The responsibilities of the Committee shall be to:
(a) Review the ongoing appropriateness and relevance of the Remuneration policy taking into account the objective of the policy 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 the views of shareholders and other stakeholders. The Remuneration policy shall have regard to the risk appetite of the Company and alignment to the Company’s strategic long-term 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.
(b) Make recommendations to the full Board of directors on the strategy and policy for the remuneration of the Chairman of the Company, the executive directors, the Secretary and such other members of the senior management team as it is designated to consider.
(c) In consultation with the Chairman of the Company or the Chief Executive Officer, as appropriate, determine the total remuneration package, including bonuses, incentive payments and share options or other share awards of the Chairman of the Company, the executive directors, the Secretary and such other members of the senior management team as it is designated to cover. The remuneration of non-executive directors shall be a matter for the Chairman of the Company and the executive members of the Board.
(d) Consider, in carrying out the duties at b) and c) in consultation with the Chairman of the Company, or the Chief Executive Officer as appropriate, proposals on the strategy and policy for the remuneration of the executive directors having regard to the remuneration trends across the Company.
(e) Approve the design of and determine the conditions and coverage of any annual incentive schemes for the executive directors, the Secretary and such other members of the senior management team as it is designated to cover.
(f) Review the design of any share incentive plans for approval by the Board subject to the agreement, as required, by shareholders in general meeting. For any such plans, determine each year whether awards will be made, and if so, the overall amount of such awards, including the individual awards to the executive directors, the Secretary and such other members of the senior management team as it is designated to cover and the performance targets to be used.
(g) Determine the policy for and scope of pension arrangements for each executive director and the Secretary.
(h) Approve the design of and determine the targets for any performance related pay schemes operated by the Company for the benefit of executive directors, the Secretary and such other members of the senior management team as it is designated to cover and approve annual payments made under such schemes.
(i) Determine the scope and content of the service contracts (or letters of appointment) of the Chairman of the Company, the executive directors and the Secretary.
(j) Determine the extent of any compensation in the event of the termination of the service contract of the executive directors and the Secretary to ensure the compensation payment is fair to the individual and the Company, that failure is not rewarded and the duty to mitigate loss is recognised.
(k) Agree the policy for authorising claims for expenses from the directors.
(l) Approve the employment of former executive directors by the Company as consultants.
(m) Obtain reliable, up-to-date information about remuneration in other companies of comparable scale and complexity. To help it fulfill its obligations the Committee shall have authority to appoint remuneration consultants and to commission or purchase such reports, surveys or information which it deems necessary, within any budgetary restraints imposed by the Board. The Committee shall be responsible for selecting, appointing and setting the terms of reference for any remuneration consultant appointed to advise the Committee.
(n) Oversee any major changes to employee benefit structures throughout the Company.
(o) Work and liaise as necessary with all other board committees.
2.2 In carrying out its responsibilities, the Committee shall give due consideration to all applicable laws and regulations, the guidance on remuneration principles and practice as set out in The UK Corporate Governance Code(“the Code”) and the UK Listing Authority’s Listing, Prospectus and Disclosure and Transparency Rules and any other relevant guidance.
3.1 The Committee Chairman shall report to the Board after each meeting of the Committee on those matters within its duties and responsibilities.
3.2 The Committee Chairman will make a statement in the Directors’ Remuneration Report for inclusion in the Company’s Annual Report and Accounts, summarising, for the relevant financial year, a) any major decisions taken with regard to Directors’ remuneration; b) any substantial changes to Directors’ remuneration and c) the context in which the changes occurred and the decision was taken.
3.3 The Committee shall ensure that the provisions regarding disclosure of information, as set out in the Large and Medium Sized Companies and Groups (Accounts and Reports) Regulations 2008 and the Code, are fulfilled and a report of the Company’s Remuneration policy and practices is produced and included in the Company’s Annual Report and Accounts for approval by the shareholders at the annual general meeting of the company.
3.4 The Chairman of the Committee shall be available to respond to any shareholders’ questions at the annual general meeting of the Company.
3.5 The Committee shall annually review its terms of reference and its own effectiveness and recommend any changes to the Board.
4. DUTIES OF THE SECRETARY
4.1 Meetings of the Committee shall be called by the Secretary at the request of the Chairman of the Committee.
4.2 Unless otherwise agreed, notice of each meeting confirming the venue, time and date together with an agenda of items to be discussed, shall be sent to each member of the Committee, any other person required to attend and all other non-executive directors, five working days before the meeting. Supporting papers will be sent to Committee members and other attendees, as appropriate, at the same time or shortly thereafter.
4.3 The Secretary shall be required to keep a proper and timely record of meetings of the Committee and circulate draft minutes to all members of the Committee. Once approved minutes should be circulated to all other members of the Board unless in the opinion of the Committee it would be inappropriate to do so. Such records should also be made available for inspection by the Company’s external auditors on request.
4.4 The Secretary shall be required to make available to the Committee such full and relevant information as the Committee may require to inform its decisions.
4.5 The Secretary shall ensure that the Committee is properly constituted in accordance with these terms of reference. Any actual or anticipated variance of these terms shall be brought to the attention of the Chairman of both the Committee and the Nomination Committee and the Chairman of the Company, as appropriate.
4.6 The Secretary shall ensure that these terms of reference are publically available.
5. OTHER MATTERS
5.1 The Committee shall:
(a) Have access to sufficient resources in order to carry out its duties, including access to the Secretary for assistance when required.
(b) Be 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.