Remuneration Committee

TERMS OF REFERENCE

1. Membership

1.1. Members of the Committee shall be appointed by the Board, on the recommendation of the Nomination Committee and consultation with the Chairman of the Remuneration Committee. The Committee shall be made up of at least 3 members, all of whom shall be independent Non-Executive Directors.

1.2. Only members of the Committee have the right to attend Committee meetings. However, other individuals may be invited to attend for all or part of any meeting, as and when appropriate.

1.3. Appointments to the Committee are made by the Board and shall for a period of up to three years, which may be extended as long as members continue to be independent.

1.4. The Board shall appoint the Committee Chairman who shall be an independent Non-Executive Director. 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.

2. Secretary

2.1. The Company Secretary or his or her nominee shall act as secretary of the Committee.

3. Quorum

3.1. The quorum necessary for the transaction of business shall be 2 members of the Committee. A duly convened meeting of the 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 Committee.

4. Meetings

4.1. The Committee shall meet at least four times a year and at such other times as the Chairman of the Committee shall require.

5. Notice of Meetings

5.1. Meetings of the Committee shall be called by the secretary of the Committee at the request of the Committee Chairman.

5.2 Unless otherwise agreed, notice of each meeting confirming the venue, time and date together with an agenda of items to be discussed shall be forwarded to each member of the Committee, any other person required to attend and all other Non-Executive Directors, normally no later than 3 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.

6. Minutes of Meetings

6.1. The secretary shall minute the proceedings and resolutions of all meetings of the Committee, including a record of the names of those present and in attendance.

6.2. Draft minutes of Committee meetings shall be circulated promptly to all members of the Committee. Once approved, minutes should be circulated to all other members of the Board unless it would be inappropriate to do so.

7. Annual General Meeting

7.1. The Chairman of the Committee shall attend the Annual General Meeting prepared to respond to any shareholder questions on the Committee’s activities.

8. Duties

The Committee should carry out the duties below for the parent company, major subsidiary undertakings and the group as a whole, as appropriate.

The Committee shall:

8.1. determine and agree with the Board the framework or broad policy for the remuneration to include all benefits of the Company’s Chief Executive Officer, Chairman, the Executive Directors, the Company Secretary, the senior management[1] and such other individuals where the package of benefits is greater than £100,000 as it is designated to consider. The remuneration of the Non-Executive Directors shall be a matter for the Chairman and the Executive members of the Board. No Director or manager shall be involved in any decisions as to their own remuneration;

8.2. in determining such policy, take into account all factors which it deems necessary including relevant legal and regulatory requirements, the provisions and recommendations in the UK Corporate Governance 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 appropriate, 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;

8.3. review the ongoing appropriateness and relevance of the remuneration policy;

8.4. approve the design of, and determine targets for, any performance related pay schemes operated by the Company and approve the total annual payments made under such schemes;

8.5. review the design of all share incentive plans for approval by the Board and shareholders. For any such plans, determine each year whether awards will be made and if so, the overall amount of such awards, the individual awards to Executive Directors and other senior management and the performance targets to be used;

8.6. determine the policy for, and scope of, pension arrangements for each Executive Director and other senior management;

8.7. ensure that contractual terms on termination, and any payments made, are fair to the individual, and the Company, that failure is not rewarded and that the duty to mitigate the loss is fully recognised;

8.8. within the terms of the agreed policy and in consultation with the Chairman and/or Chief Executive as appropriate, determine the total individual remuneration package of each Executive Director, Chairman and other senior management including bonuses, incentive payments, LTIPs and other share awards;

8.9. when setting remuneration policy for Directors review and have regard to the remuneration trends across the Company or Group, especially when determining annual salary increases;

8.10. oversee any major changes in employee benefits structures throughout the Company or Group;

8.11. agree the policy for authorising claims for expenses Directors, including the Chief Executive Officer and Chairman;

8.12. ensure that all provisions regarding disclosure of remuneration, including pensions, are fulfilled;

8.13. obtain reliable, up-to-date information about remuneration in other companies. To help 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, within any budgetary restraints imposed by the Board;

8.14. be exclusively responsible for establishing the selection criteria, selecting appointing and setting the terms of reference for any remuneration consultants who advise the Committee; and

8.15. work and liaise as necessary with all other Board committees.

9. Reporting Responsibilities

9.1. The Committee Chairman shall report formally to the Board on its proceedings after each meeting on all matters within its duties and responsibilities.

9.2. The Committee shall make whatever recommendations to the Board it deems appropriate on any area within its remit where action or improvement is needed.

9.3. The Committee shall make a statement in the annual report about the Company’s remuneration policy and practices and ensure each year that it is put to shareholders for approval at the AGM.

10. Other

The Committee shall:

10.1. at least once a year, review its own performance, 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;

10.2. have access to sufficient resources in order to carry out its duties, including access to the company secretariat for assistance as required;

10.3. 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; and

10.4. give due consideration to laws and regulations, and any published guidelines or recommendations regarding the remuneration of Directors of listed companies and formation and operation of share schemes including but not limited to the provisions of the UK Corporate Governance Code, the requirements of the UK Listing Authority’s Listing, Prospectus and Disclosure and Transparency Rules as well as guidance published by the Association of British Insurers and the National Association of Pension Funds and any other applicable Rules, as appropriate.

11. Authority

11.1. In connection with its duties the Committee is authorised by the Board, at the Company’s expense, to obtain any outside legal or other professional advice.

 

[1] Senior management – Roles reporting directly to CEO/FD