Remuneration Committee

Terms of Reference

References to 'the Committee' shall mean the Remuneration Committee.

References to 'the Board' shall mean the Board of Directors.

1 Membership Back to top

1.1 Members of the Committee shall be appointed by the Board, on the recommendation of the Nomination Committee in consultation with the Chairman of the Remuneration Committee. The Committee shall be made up of 4 members.

1.2 Only members of the Committee have the right to attend Committee meetings. However, other individuals such as the Chief Executive, the Head of Human Resources, the Chief Risk Officer, the Head of Compliance and external advisers may be invited to attend for all or part of any meeting as and when appropriate, provided that no director or manager shall be present when his own remuneration is being discussed.

1.3 Appointments to the Committee shall be for a period of up to three years, which may be extended for two further three-year periods, provided the director remains independent.

1.4 The Board shall appoint the Committee Chairman. 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.

2 Secretary Back to top

2.1 The Company Secretary or their nominee shall act as the Secretary of the Committee.

3 Quorum Back to top

3.1 The quorum necessary for the transaction of business shall be 2, one of whom shall be an independent non-executive director. 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 Back to top

4.1 The Committee shall meet at least once a year at such time as the Chairman of the Committee shall require.

5 Notice of Meetings Back to top

5.1 Meetings of the Committee shall be summoned by the Secretary of the Committee at the request of 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, any other person required to attend and all other non-executive directors, no later than 5 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 Back to top

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 Minutes of Committee meetings shall be circulated promptly to all members of the Committee and, once agreed, to all members of the Board, unless a conflict of interest exists.

7 Annual General Meeting Back to top

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 Back to top

The Committee shall:

8.1 determine and review periodically for adequacy and effectiveness (not less than annually) a remuneration policy that is consistent with effective risk management across the firm as a whole and to consider the implications of those remuneration policies on risk and risk management (the “Remuneration Policy”). In determining and reviewing the Remuneration Policy where appropriate invite input from the Head of Compliance and the Chief Risk Officer;

8.2 determine and agree with the Board the framework or broad policy for the remuneration of the company’s Chief Executive, Chairman and executive directors. The remuneration of 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 (the “Executive Director Remuneration Policy”);

8.3 in determining the Executive Director Remuneration Policy, take into account all factors which it deems necessary including the pay and employment conditions across the group. 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 subject to and consistent with compliance with the risk management policies of the firm’s Remuneration Policy;

8.4 review the ongoing appropriateness and relevance of the Executive Director Remuneration Policy;

8.5 approve the design of, and determine targets for, any performance related pay schemes operated by the company, monitor their operation and approve the total annual payments made under such schemes;

8.6 review the design of all share incentive plans for approval by the Board and shareholders. For any such plans, monitor their operation and determine each year whether awards will be made, and if so, the overall amount of such awards, the individual awards to executive directors and the performance targets to be used;

8.7 be able to demonstrate that its decisions are consistent with a reasonable assessment of the firm’s financial situation and future prospects;

8.8 receive and review reports twice yearly directly from the risk management function “on the implications of the Remuneration Policy for risk and risk management”

8.9 determine the policy for, and scope of, pension arrangements for each executive director;

8.10  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 loss is fully recognised;

8.11  within the terms of the agreed Executive Director Remuneration Policy and in consultation with the Chairman and/or Chief Executive as appropriate, determine the total individual remuneration package of each executive director including bonuses, incentive payments and share options or other share awards;

8.12 in determining such packages and arrangements, give due regard to any relevant legal requirements, the provisions and recommendations in the Combined Code, the FSA’s Remuneration Code and the UK Listing Authority’s Listing Rules and associated guidance;

8.13 review and note annually the remuneration trends across the company or group;

8.14 oversee any major changes in employee benefits structures throughout the company or group;

8.15 agree the policy for authorising claims for expenses from the Chief Executive and Chairman;

8.16 ensure that all provisions regarding disclosure of remuneration including pensions, as set out in Schedules 5 and 8 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 and the Combined Code are fulfilled;

8.17 review annually the total remuneration of the heads of control functions within the group, namely the Head of Compliance, Head of Audit and the Chief Risk Officer;

8.18 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 to obtain reliable, up-to-date information about remuneration developments, industry guidance and benchmarking remuneration with other companies. The Committee shall have full authority to commission any reports or surveys which it deems necessary to help it fulfil its obligations; and

8.19 review the non-financial performance metrics that form a part of the performance assessment process for the executives and/or other employees.

9 Reporting Responsibilities Back to top

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 produce an annual report of the company's Executive Director Remuneration Policy and practices which should include, inter alia, the information on directors' remuneration required by relevant legislation. If required by the Combined Code the Committee shall produce a statement on the Remuneration Policy. This will form part of the company's Annual Report and ensure each year that it is put to shareholders for approval at the AGM. Membership of the Committee and attendance shall also be noted in the Annual Report.

10 Other Back to top

10.1 The Committee shall, 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.

11 Authority Back to top

11.1 The Committee is authorised by the Board to investigate any activity within its terms of reference and to seek any information it requires from any employee of the company in order to perform its duties. The Committee shall have access to all records of the company and any internal or external reports relating thereto.

11.2 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.