All non-executive directors will be appointed for fixed terms of three years. Each director shall be subject to re-election by the company in general meeting at least once every three years up to and including the ninth anniversary of his appointment.
The performance of each director will be appraised by the nomination committee annually and prior to the renewal of a three year term. A more rigorous appraisal will take place prior to the second or subsequent renewal of a three year term.
The directors recognise that independence is not a function of service or age and that experience is an important attribute within the board. The directors may decide to recommend a director with more than nine years service for re-election. In such a case, shareholder approval will be sought annually.
Terms of reference for the nomination committee
Membership
The committee shall comprise all serving members of the board.
A majority of members of the committee shall be directors of the company independent of management.
The chairman of the board of directors shall chair the committee except when the appointment of a new chairman is being considered. In the absence of the committee chairman and/or an appointed deputy, the remaining members present shall elect one of their number to chair the meeting.
Care should be taken to minimise the risk of any conflict of interest and potential conflicts should be disclosed.
Secretary
The company secretary or his/her nominee shall act as the secretary of the committee.
Quorum
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 in or exercisable by the committee.
Frequency of Meetings
The committee shall meet at such times as the chairman of the committee shall require.
Notice of Meetings
Meetings of the committee shall be convened by the secretary of the committee at the request of the chairman of the committee.
Minutes of Meetings
The secretary shall minute the proceedings and resolutions of all committee meetings, including the names of those present and in attendance.
Minutes of committee meetings shall be circulated to all members of the committee.
Duties
The committee shall:
regularly review the structure, size and composition of the board and make recommendations with regard to any adjustments that are deemed necessary;
be responsible for identifying and nominating, for the approval of the board, candidates to fill board vacancies as and when they arise;
undertake an annual performance evaluation of all members of the board.
It shall also make recommendations:
as regards the re-appointment of any non-executive director at the conclusion of his or her specified term of office; especially when they have concluded their second term;
for the continuation (or not) in service of any director who has reached the age of 70;
concerning the re-election by shareholders of any director under the 'retirement by rotation' provisions in the company's articles of association;
concerning any matters relating to the continuation in office as a director of any director at any time;
in connection with items that should be published in the company's annual report relating to the activities of the committee; and
with regard to the membership and chairmanship of the audit committee.
Authority
The committee is authorised to seek any information it requires from any employee of the company in order to perform its duties.
The committee is authorised to obtain, at the company's expense, outside legal or other professional advice on any matters within its terms of reference.
Terms of reference for the remuneration committee
Membership
The committee shall comprise at least three members, each of whom shall be appointed by the board.
All members of the committee shall be directors who are independent of management and free from any business or other relationship which could interfere with the exercise of their independent judgement.
The board will appoint the committee chairman and determine the period for which he/she shall hold office. The chairman of the company shall not be eligible to be appointed as chairman of the committee.
Care should be taken to minimise the risk of any conflict of interest and potential conflicts should be disclosed.
Secretary
The company secretary or his/her nominee shall act as the secretary of the committee.
Quorum
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 in or exercisable by the committee.
Meetings
The committee shall meet not less than once a year and at such other times as the chairman of the committee shall require.
Notice of Meetings
Meetings of the committee shall be convened by the secretary of the committee at the request of any member thereof.
The chief executive shall have the right to address any meeting of the committee; others may be called upon or shall be able to speak by prior arrangement with the chairman of the committee.
Minutes of Meetings
The secretary shall minute the proceedings and resolutions of all committee meetings, including the names of those present and in attendance.
Minutes of committee meetings shall be circulated to all members of the committee and to all members of the board.
Annual General Meeting
The chairman of the committee shall attend the annual general meeting prepared to respond to any shareholder questions on the committee's activities.
Duties
The committee shall:
determine and agree with the board the framework or broad policy for the remuneration of all directors and employees. No employee shall be involved in any decisions as to his or her own remuneration;
in determining such policy, 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. It shall also liaise with the nomination committee to ensure that the remuneration of newly appointed directors and executives is within the company's overall policy;
determine targets for any performance-related pay schemes operated by the company and ask the board, when appropriate, to seek shareholder approval for any long term incentive arrangements;
within the terms of the agreed policy, determine the total individual remuneration package of each employee including, where appropriate, bonuses, incentive payments and share options;
determine the policy for and scope of pension arrangements, service agreements, termination payments and compensation commitments;
in determining such packages and arrangements, 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;
review competitor companies but ensure that automatic increases are not implemented, thereby avoiding the "ratchet" effect;
be aware of and oversee any major changes in employee benefit structures throughout the company or group;
vet the reimbursement of any claims for expenses from the senior management of the company;
ensure that provisions regarding disclosure of remuneration including pensions, as listed in the Directors' Remuneration Report Regulations 2002, are fulfilled; and
produce an annual report of the committee's remuneration policy.
Authority
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.
In connection with its duties the committee is required by the board to select, set the terms of reference of, and appoint remuneration consultants, at the company's expense.
Although the committee can seek the advice and assistance of any of the company's executives, it needs to ensure that this role is clearly separated from their role within the business.
Terms of reference for the audit committee
Membership and attendance
The committee shall be appointed by the board, on the recommendation of the nomination committee, and shall comprise a chairman who is not the chairman of the company and at least two other members.
All members of the committee shall be directors independent of the management. At least one member of the committee should have recent relevant financial knowledge.
Care should be taken to minimise the risk of any conflict of interest and potential conflicts should be disclosed.
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 their number present to chair the meeting.
The committee may ask the chairman, other members of the board and any relevant senior management to attend meetings either regularly or by invitation, but the invitees have no right of attendance.
The committee may ask a representative of the external auditors to attend all meetings. The committee should have at least one meeting each year with the external auditor without management being present.
Secretary
The company secretary or his/her nominee shall act as the secretary of the committee.
Quorum
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 in or exercisable by the committee.
Frequency of Meetings
The Committee shall meet not less than three times per year and at such other times as the chairman of the committee shall require.
Meetings will be arranged to tie in with the publication of the company's financial statements.
Meetings can be requested by the external auditors if they consider one is necessary.
Notice of Meetings
Meetings of the committee shall be convened by the secretary of the committee at the request of any member thereof.
Minutes of Meetings
The secretary shall minute the proceedings and resolutions of all meetings of the committee, including recording the names of those present and in attendance.
The secretary should ascertain, at the beginning of each meeting, the existence of any conflicts of interest and minute them accordingly.
Minutes of committee meetings shall be circulated promptly to all members of the committee and to the chairman and all members of the board.
Annual General Meeting
The chairman of the committee shall attend the annual general meeting prepared to respond to any shareholder questions on the committee's activities.
Duties:
Internal Control and Risk Assessment
The committee shall keep under review the effectiveness of the company's financial reporting and internal control policies and procedures for the identification, assessment and reporting of risks.
Internal Audit
The committee shall review the need for an internal audit function at least once each year.
External Audit
The committee shall consider and make recommendations to the board as regards the appointment and re-appointment of the company's external auditors, and shall ensure that key partners within the appointed firm are rotated from time to time.
The committee or its chairman shall meet with the external auditors at least twice each year, once at the planning stage, where the scope of the audit will be considered, and once post audit at the reporting stage, and shall ensure that any auditor's management letters and management's responses are reviewed.
The committee shall keep under review the relationship with external auditors including (but not limited to):
the independence and objectivity of the external auditors;
the consideration of audit fees which should be paid as well as any other fees which are payable to auditors in respect of non-audit activities; and
discussions with the external auditors concerning such issues as compliance with accounting standards.
Financial Statements
The committee shall keep under review the consistency of accounting policies both on a year to year basis and across the company/group.
The committee shall review and challenge where necessary the company's financial statements taking into account:
decisions requiring a major element of judgement;
the extent to which the financial statements are affected by any unusual transactions;
the clarity of disclosures;
significant adjustments resulting from the audit;
the going concern assumption;
compliance with accounting standards;
compliance with stock exchange and other legal requirements; and
shall review the company's statement on internal control systems prior to endorsement by the board and review the policies and process for identifying and assessing business risks and the management of those risks by the company.
The committee shall review the annual financial statements of the pension funds where not reviewed by the board as a whole.
Reporting Responsibilities
The committee or its chairman shall meet formally with the board of directors at least once a year to discuss such matters as the annual report and the relationship with the external auditors.
In the light of its other duties, the committee shall make whatever recommendations to the board it deems appropriate and shall compile a report to shareholders to be included in the company's annual report and accounts.
Other Matters
The committee shall give due consideration to the requirements of the UK Listing Authority's Listing Rules.
The committee shall review the company's procedures for handling allegations from whistleblowers.
The committee shall oversee any investigation of activities which are within its terms of reference and act as a court of the last resort.
The committee should, on a regular basis, review its own performance, constitution and terms of reference to ensure it is operating at maximum effectiveness.
Authority
The committee is authorised:
to seek any information it requires from any employee of the company in order to perform its duties;
to obtain, at the company's expense, outside legal or other professional advice on any matters within its terms of reference; and
to call any member of staff to be questioned at a meeting of the committee as and when required.
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