Remuneration Committee
1. Purpose
1.1 The Board is responsible to shareholders for ensuring that the Group:
- has coherent remuneration policies and practices which are observed and which enable it to attract and retain executives and Directors
who will create value for shareholders;
- fairly and responsibly rewards executives having regard to the performance of the Group, the performance of the executive and the general pay environment; and
- complies with the provisions of the Combined Code appended to the Listing Rules of the UK Listing Authority, where appropriate.
1.2 The primary purpose of the Committee is to support and advise the Company’s Board in fulfilling these responsibilities to shareholders by:
- determining executive remuneration policy;
- determining the remuneration of executive directors and as appropriate other senior executives; and
- determining the terms of any share options or long term incentive scheme, administering such schemes and making awards thereunder.
2. Composition
2.1 The Committee shall comprise of the non-executive Directors of the Company, who are independent of management and free from any business or other relationship which could interfere with the exercise of their independent judgement.
2.2 The Board shall appoint the Committee Chairman and determine the period for which office shall be held. The Chairman of the Company shall not be eligible to be Chairman of the Committee.
2.3 In the absence of the Committee Chairman, the members shall elect one of their number as Chairman for that meeting.
2.4 The Executive Chairman will normally attend the meetings of the Committee but will not participate in discussions regarding the Executive Chairman’s remuneration package.
3. Quorum
3.1 The quorum necessary for the transaction of business shall be two. 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 or exercisable by the Committee.
4. Frequency of meetings
4.1 The Committee shall meet not less than once a year, in February, 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 summoned by the Chairman of the Committee at the request of any member thereof.
5.2 Unless otherwise agreed, notice of each meeting confirming the venue, time and date together with and agenda of items to be discussed shall be forwarded to each member of the Committee and any other person required to attend in the week prior to the date of the meeting.
6. Minutes of meetings
6.1 The proceedings and resolutions of all Committee meetings, including the names of those present and in attendance, shall be minuted.
6.2 Minutes of Committee meetings shall be circulated to all members of the Committee. Minutes, agenda and supporting papers, will be made available to any Director upon request to the Chairman, providing no conflict of interest exists.
6.3 The Company Secretary shall be the Secretary to the Committee.
7. Annual general meeting
7.1 The Committee Chairman shall attend the annual general meeting prepared to respond to any shareholder questions on the Committee’s activities.
8. Duties and responsibilities
8.1 The Committee shall determine and agree with the Board the framework or broad policy for the Remuneration of the Executive Chairman, the executive Directors and such other members of the executive management as it is designated to consider. The remuneration of non-executive Directors shall be a matter for the Board. No Director or manager shall be involved in any decisions as to his or her own remuneration.
8.2 In determining such policy, the Committee shall take into account all factors which it deems necessary. The objective of such policy shall be to ensure that members of the executive management of the Company are provided with appropriate incentives to encourage enhanced performance and are, in a fair and responsible manner, rewarded for their individual contributions to the success of the Company.
8.3 The Committee, in consultation with the Executive Chairman, shall determine targets for any performance-related pay schemed operated by the Company.
8.4 Within the terms of the agreed policy, the Committee, in consultation with the Executive Chairman, shall determine the total individual remuneration package of each executive Director and, as required, senior manager including, where appropriate, bonuses, incentive payments and share options.
8.5 The Committee, in consultation with the Executive Chairman, will determine the policy for and scope of pension arrangements, service agreements for the executive management team, termination payments and compensation commitments.
8.6 The Committee, in consultation with the Executive Chairman, will review and approve the design of all executive incentive plans and review and approve the total proposed payments for each executive incentive plan.
8.7 1.1In conjunction with the Executive Chairman, CFO and the Trustee the Committee will administer the Long Term Incentive Plan and LTGP in accordance with the rules.
8.8 In determining such packages and arrangements, the Committee will give due regard to the comments and recommendations of the Combined Code as well as the UK Listing Authority’s Listing Rules and associated guidance.
8.9 The Committee, in consultation with the Executive Chairman, will oversee any major changes in employee benefit structures throughout the Group.
8.10 The Committee will ensure that the provisions regarding disclosure of remuneration as listed in Section 12.43A (c) of the Listing Rules and Schedule 7A of Companies Act 1985 are fulfilled and a Directors’ Remuneration Report is incorporated in the Company’s Annual Report.
9. Authority
9.1 The Committee is authorised by the Board to seek any information it requires from any employee of the Group in order to perform its duties.
9.2. In connection with its duties the Committee is authorised by the Board to obtain, at the Company’s expense, any outside legal or other professional advice including the advice of independent remuneration consultants, to secure the attendance of external advisers at its meetings if it considers this necessary, and to obtain reliable, up-to-date information about remuneration in other companies. The Committee shall have full authority to commission any reports or surveys that it deems necessary to help it fulfil its obligations.
These terms of reference will be subject to review by the Board of Directors and can only be changed by the Board of Directors.
January 2009
Audit Committee
Overall Objective
The Audit Committee will assist the Board to fulfill its corporate governance responsibilities. In doing this the Committee will review the financial reporting process, the system of control and risk management, and the processes for monitoring compliance with laws and regulations.
Authority
The Board authorises the Audit Committee to:
- Seek any information it requires from:
- any employee ( and all employees are directed to co-operate with any request made by the Audit Committee )
- external bodies
- Obtain external professional advice, as appropriate.
- Request the attendance of officers of the Group, as appropriate.
Organisation
Membership
The Audit Committee will comprise three members appointed by the Board, all of which will be Non Executive Directors.
The chairman of the Audit Committee will be nominated by the Board from time to time.
Members will normally be appointed for the period of which they hold office as Directors.
A quorum for any meeting will be two members.
The secretary of the Audit Committee will be the Company Secretary, or such other person as nominated by the Board.
Meetings
The Audit Committee may invite such other persons to it’s meetings as it deems necessary and members of the Group Board may attend meetings if they so wish.
Meetings shall be held not less than three times a year. Special meetings may be convened as required.
The Head of Internal Audit and Partner In Charge of the external audit may request a meeting with the Audit Committee at any time.
The proceedings of all meetings will be minuted.
Roles and Responsibilities
The Audit Committee will undertake, on behalf of the Board, responsibility for the oversight of financial reporting, internal control, and compliance
with laws and regulations. The Committee therefore, will undertake the following.
1. Financial Reporting
1.1 General
- Review the Group’s systems of internal control, and in particular the systems of internal financial control and risk management.
- Consider any fraud, illegal acts, deficiencies in internal control and other similar issues.
- Review significant accounting and reporting issues, including current professional and regulatory pronouncements, and understand their impact on the financial statements.
- Review any legal matters which could significantly impact the financial statements.
- Review the going concern assumption.
1.2 Financial Statements
- Review the financial statements of the Group, and any other formal announcements relating to the Group’s financial performance and consider whether they are complete and consistent with the information known to the members.
- Review any complex and/or unusual transactions and balances, and those major areas requiring judgment e.g. those involving the valuation of assets and liabilities; changes in accounting policies; warranties, product or environmental liability; litigation reserves; and other commitments and contingencies.
- Meet with management and the external auditors to review the financial statements and the results of the audit.
2. Internal Controls
2.1 Internal Audit
- Assist management to set an appropriate control culture within the Group by emphasising the importance of internal control and the management of risk within the Group.
- Assess whether internal control recommendations made by internal auditors have been implemented by management.
- Review the activities and organisational structure and effectiveness of the internal audit function and ensure that no unjustified restrictions or limitations are made.
- Review the adequacy of the internal audit resources and ensure that personnel are suitably qualified.
- If requested meet separately with the Head of Internal Audit to discuss any matters that the Committee or auditors believe should be discussed privately.
2.2 External Audit
- Review the external auditors’ proposed audit scope and approach, taking into account UK professional and regulatory requirements, and ensure that no unjustified restrictions or limitations have been placed on the scope of their work.
- Assess whether internal control recommendations made by external auditors have been implemented by management.
- Review the effectiveness of the external auditors.
- Review the independence, and objectivity of the external auditors.
- Consider the policy on the engagement of the external auditor to supply non audit services, after due consideration of current ethical guidance.
- Recommend to the Board the appointment, re-appointment and removal of the external auditors and to approve the remuneration and the terms of engagement of the external auditor.
- If requested meet separately with the external auditors to discuss any matters that the Committee or auditors believe should be discussed privately.
3. Compliance Matters
3.1 Laws and Regulations
- Review the effectiveness of the system for monitoring compliance with laws, regulations, Codes and best practice and the results of management’s investigation and follow up (including disciplinary action) of any fraudulent acts or non compliance.
- Obtain regular updates from management and the Group’s legal advisors regarding compliance matters.
- Be satisfied that all regulatory compliance matters have been considered in the preparation of the financial statements.
- Review the findings of any examinations by regulatory agencies.
3.2 Code of Ethics
- Ensure that all employees are aware of the Code and have access to it.
- Review the process for monitoring compliance with the Code of Ethics.
- Obtain regular updates from management regarding compliance.
- Ensue that appropriate arrangements are in place by which employees may raise concerns, in confidence, regarding any suspected breaches of the Group’s Code of Ethics.
4. Reporting Responsibilities
- Regularly update the Board on Committee activities and circulate the minutes of all meetings to the Board.
- Ensure that the Board is aware of any matters which may significantly
impact the financial condition or affairs of the business.
5. Other Responsibilities
- Perform other oversight functions as requested by the Board. These currently include a review of directors expenses and other benefits, and the Return On Capital Employed analysis.
- If necessary, institute special investigations and, if appropriate, take legal advice or hire experts to assist.
- Review and update the Terms of Reference and submit changes to the Board for approval.
- Evaluate the Committee’s own performance on a regular basis.
Nomination Committee
1. Purpose
1.1 The primary purpose of the Nominations Committee is to support and advise the Board in fulfilling their responsibilities to shareholders in ensuring that the Boards are comprised of individuals who are best able to discharge the responsibilities of Directors having regard to the law and the highest standards of governance.
2. Composition
2.1 The Committee shall be appointed by the Board and shall comprise of the Executive Chairman of the Company and all non-executive Directors.
2.2 A majority of members of the Committee shall be non-executive Directors.
2.3 The Chairman of the Board will be the Chairman of the Committee. In the absence of the Committee Chairman the remaining members present shall elect one of their number to chair the meeting.
2.4 If a regular member is unable to act due to absence, illness or any other cause, the Committee Chairman may appoint another Director of the Company to serve as an alternative member having due regard to maintaining the required balance of non-executive members.
2.5 The Committee may invite any executive management team members or other individuals to attend meetings of the Committee, as they consider appropriate.
3. Quorum and voting
3.1 The quorum necessary for the transaction of business shall be three of who at least two must be non-executive Directors. 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 or exercisable by the Committee.
3.2 Each member shall have one vote.
3.3 The Chairman of the Committee shall not have a second or casting vote.
4. Frequency of meetings
4.1 Meetings shall be held as appropriate, but not less than once a year.
5. Notice of meetings
5.1 Meetings of the Committee shall be summoned by the Chairman of the Committee at the request of any member thereof.
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 Committee member in the week prior to the date of the meeting.
6. Minutes of meetings
6.1 The proceedings and resolutions of all Committee meetings, including the names of those present and in attendance, shall be minuted.
6.2 Minutes of Committee Meetings shall be circulated to all members of the Committee. Minutes, agenda and supporting papers, will be made available to any Director upon request to the Chairman, providing no conflict of interest exists.
7. Annual general meeting
7.1 The Committee Chairman shall attend the annual general meeting prepared to respond to any shareholder questions on the Committee’s activities.
8. Duties and responsibilities
8.1 The Committee shall:
8.1.1 regularly review the structure, size and composition of the Board and make recommendations to the Board with regard to any adjustments that are deemed necessary;
8.1.2 responsible for identifying and nominating for approval of the Board, candidates to fill board vacancies as and when they arise;
8.1.3 keep under review the leadership needs of the organisation with a view to ensuring the continued ability to compete effectively in the organisation’s marketplace; and
8.1.4 keep up to date and fully au fait with strategic issues and commercial changes affecting the Group and the markets in which it operates.
8.2 It shall also make recommendations to the Board:
8.2.1 as regards plans for succession, in particular of the Executive Chairman;
8.2.2 as regards the re-appointment of any non-executive Director at the conclusion of his or her specified term of office;
8.2.3 for the continuation (or not) in service of any director who has reached the age of sixty-five;
8.2.4 concerning the re-election by shareholders of any director under the ‘retirement by rotation’ provisions in the Company’s articles of association;
8.2.5 concerning any matters in relation to the continuation in office as a Director of any Director at any time; and
8.2.6 concerning the appointment of any director to executive or other office other than to the position of Chairman, the recommendation for which would be considered at a meeting of all the Directors.
8.3 In carrying out all of its functions the Committee will have due regard to the provisions of the Combined Code (Principles of Good Governance and Code of Best Practice) of the United Kingdom with a view to ensuring that the Group seeks to adhere to the highest standards of corporate governance.
9. Authority
9.1 The Committee is authorised to seek any information it requires from any employee of the Group in order to perform its duties.
9.2 9.2The Committee is authorised to obtain, at the Company’s expense, outside legal or other professional advice on any matters within its terms of reference.
These terms of reference will be subject to review by the Board of Directors and can only be changed by the Board of Directors.