Terms of Reference for the Remuneration and Management Development Committee
Policy & Guidelines
Purpose
The Remuneration Committee is constituted by the Board and is responsible for making recommendations to the Board in relation to the company’s policy for Executive Director Remuneration, to assist the Board in ensuring that remuneration practices are transparent, fair and responsible, and for determining the remuneration of the Executive Directors, Chair and senior management.
1. Membership
1.1 The committee shall comprise at least three members, all of whom shall be independent non-executive directors.
1.2 Appointments to the committee are made by the board on the recommendation of the nomination committee and in consultation with the chair of the remuneration committee and shall be for a period of up to three years which may be extended provided members continue to be independent.
1.3 Only members of the committee have the right to attend committee meetings. However, other individuals such as the Board Chair, CEO, other Board members, the People & Culture Director and external advisers may be invited to attend for all or part of any meeting, as and when appropriate.
1.4 The board shall appoint the committee chair who shall be an independent non-executive director who should have served on a remuneration committee for at least 12 months. In the absence of the committee chair 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 chair of the board shall not be chair of the committee.
2. Secretary
The company secretary or their 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.
3. Quorum
The quorum necessary for the transaction of business shall be three members.
4. Frequency of meetings
The committee shall meet at least twice a year and otherwise as required.
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 chair or any of its members.
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 and any other person required to attend no later than three 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.
6. Minutes of meetings
6.1 The secretary shall minute the proceedings and resolutions of all committee meetings, including the names of those present and in attendance.
6.2 Draft minutes of committee meetings shall be circulated to all members of the committee. 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.
7. Engagement with shareholders
The committee chair should attend the annual general meeting to answer any shareholder questions 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.
8. Duties
The committee should carry out the duties detailed below for the parent company, major subsidiary undertakings and the group as a whole, as appropriate.
8.1 The committee shall:
8.1.1 Have delegated responsibility for determining the policy for directors’ remuneration and setting remuneration for the company’s chair and executive directors and senior management, including the company secretary, ensuring that such arrangements:
- 8.1.1.1 promote long-term shareholding by executive directors that support alignment with long-term shareholder interests;
- 8.1.1.2 promote long-term sustainable success, align with company purpose and values and are clearly linked to delivery of the company’s long-term strategy; and
- 8.1.1.3 enable the use of discretion to override formulaic outcomes and to recover and/or withhold sums or share awards under appropriate specified circumstances.
8.1.2 When determining executive director remuneration policy and practices, consider the importance of clarity, simplicity, risk mitigation, predictability, proportionality and alignment to culture.
8.1.3 No director or senior manager shall be involved in any decisions as to their own remuneration outcome. The remuneration of the non-executive directors shall be a matter for the Chair and Executive Directors.
8.1.4 In determining remuneration policy, take into account all other factors which it deems necessary including relevant legal and regulatory requirements, the provisions and recommendations under the applicable reporting code or associated guidance, and best practice. 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.
8.1.5 Review the ongoing appropriateness and relevance of the remuneration policy.
8.1.6 Within the terms of the agreed policy and in consultation with the chair and/or chief executive, as appropriate, determine the total individual remuneration package of each executive director, the company chair and senior managers including bonuses, incentive payments and share options or other share awards. The choice of financial, non-financial and strategic measures is important, as is the exercise of independent judgement and discretion when determining remuneration awards, taking account of company and individual performance, and wider circumstances.
8.1.7 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. However the committee should avoid designing pay structures based solely on benchmarking to the market or on the advice of remuneration consultants.
8.1.8 Review the design of all share incentive plans for approval by the board and, where required, 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 for executive directors and senior managers, and the performance targets to be used.
8.1.9 Review wider workforce remuneration arrangements.
8.1.10 Determine the policy for authorising the expenses of the Directors.
8.1.11 Work and liaise as necessary with other board committees, ensuring the interaction between committees and with the board is reviewed regularly.
9. Reporting responsibilities
9.1 The committee chair shall report to the board after each meeting on the nature and content of its discussion, recommendations and action to be taken.
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, and adequate time should be available for board discussion when necessary.
9.3 The committee shall provide a description of the Company’s remuneration policy for Directors, and of its work during the year in question, in the annual report.
9.4 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, (as amended) and the adopted code, are fulfilled (so far as they are appropriate for the Company) 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 an advisory vote at the Annual General Meeting.
9.5 If the committee has appointed remuneration consultants, the consultant should be identified in the annual report alongside a statement about any other connection it has with the company or individual directors.
10. Other matters
The committee shall:
10.1 Have access to sufficient resources in order to carry out its duties, including access to the company secretariat for advice and assistance as required.
10.2 The committee is authorised by the board to obtain, at the company’s expense, outside legal or other professional advice on any matters within its terms of reference.
10.3 Give due consideration to all relevant laws and regulations, the provisions of the Code and published guidelines or recommendations regarding the remuneration of company directors and the formation and operation of share incentive plans, the requirements of the FCA’s Listing Rules, Prospectus Rules, Disclosure Guidance and Transparency Rules sourcebook, and any other applicable rules, as appropriate.
10.4 Ensure that a periodic evaluation of the committee’s own performance is carried out.
11. Authority
The committee is authorised by the board to obtain, at the company’s expense, outside legal or other professional advice on any matters within its terms of reference.
Approved: 8 November 2023