1.1
The Committee shall be appointed by the Board from amongst the non-executive Directors of the Company and shall consist of not less than two members for so long as there are two or more non-executive directors. At least one member of the Audit Committee shall have recent relevant financial knowledge. A quorum shall be two members for so long as there are two or more non-executive Directors. The Board will determine which Directors are independent non-executive Directors.
1.2
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.
1.3
The Chair of the Committee shall be an independent non-executive director and shall be appointed by the Board. The Chair of the Audit Committee cannot be the Chairman of the Board.
1.4
At least once a year the Committee shall meet with the external auditors without executive Board members present.
1.5
The Committee may invite such other directors to attend its meetings (except for the meeting referred to in paragraph 1.4 above) as it considers necessary for its effective operation - but the invitees have no right of attendance.
1.6
The Company Secretary or their nominee will act as the Secretary of the Audit Committee subject to exclusion from the meeting referred to at paragraph 1.4 above, if also an executive director of the Company.
2. Frequency of Meetings
2.1
A meeting shall be held at least twice a year in conjunction with the Company's external auditors at the planning stage prior to the annual audit and post audit at the reporting stages and at any other time.
3. Notice of Meetings
3.1
Meetings of the Committee shall be summoned by the Secretary of the Committee at the request of any member thereof or at the request of the Company's auditors.
3.2
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 fewer than 5 working days prior to the date of the meeting.
4. Minutes of Meetings
4.1
The Secretary shall minute the proceedings and resolutions of all meetings of the Committee, including recording the names of those present and in attendance.
4.2
The Secretary should ascertain, at the beginning of each meeting, the existence of any conflicts of interest and Minute them accordingly.
4.3
Minutes of Committee meetings shall be circulated promptly to all members of the Committee and to the Chairman and all members of the Board.
5. Annual General Meeting
5.1
The Chair of the Committee shall attend the Annual General Meeting prepared to respond to any shareholder questions on the Committee's activities.
6. Authority
6.1
The Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to seek any information it requires from any employee and all employees are directed to co-operate with any request made by the Committee.
6.2
The Committee is authorised by the Board to obtain outside legal or other independent professional advice at the Company's expense and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary.
7. Duties
The duties of the Audit Committee are:
7.1
To 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.
7.2
To consider the requirement for an internal audit function annually and establish the terms of reference of such a function.
7.3
To keep under review the scope and results of the audit and its cost effectiveness and the independence and objectivity of the auditors.
7.4
To keep the nature and extent of substantial volumes of non-audit services provided (if any) under review, seeking to balance the maintenance of objectivity and value for money.
7.5
To consider the appointment and re-appointment of the external auditor, the audit fee, and any issues involving the resignation or dismissal of the auditor.
7.6
To discuss with the external auditor the nature and scope of the audit before the audit commences.
7.7
To keep under review the consistency of accounting policies both on a year-to-year basis and across the company/group.
7.8
To review the interim and annual financial statements, and discuss with the Board its findings and make known whether it recommends to the Board the inclusion of the financial statements in the Annual Report, and to give independent endorsement to all statements and forecasts made in a prospectus at the time of a rights issue, an acquisition or a bid defence document.
7.9
To discuss problems and reservations arising from the interim and final audits as well as any matters the auditor may wish to raise (in the absence of executive management where necessary).
7.10
To review the external auditor's management letter and management's response to it, and discuss any concerns the external auditors may have.
7.11
To review the Company's statement on internal control systems prior to endorsement by the Board.
7.12
To meet formally with the Board of directors once a year to discuss such matters as the Annual Report and the relationship with the external auditors.
7.13
To make whatever recommendations to the Board it deems appropriate and to compile a report to shareholders to be included in the company's Annual Report and Accounts.
7.14
To give due consideration to the requirements of the UK Listing Authority's Listing Rules.
7.15
To oversee any investigation of activities that are within its terms of reference and act as a court of the last resort.
7.16
To review, on a regular basis, its own performance, constitution and terms of reference to ensure it is operating at maximum effectiveness.
7.17
To consider other topics, as requested by the Board.
1.
Membership
The members of the Remuneration Committee shall be appointed by the Board from amongst the directors of the Company and shall consist of not less than two members. The members shall be independent, non-executive directors of the Company who are independent of management and free from any business or other relationship which could materially interfere with the exercise of their independent judgment. The members of the Remuneration Committee should be listed each year in the Board's Remuneration Report to shareholders.
2.
Quorum
The quorum for decisions of the Remuneration Committee shall be any two members.
3.
Members
Members of the Remuneration Committee are Jonathan Freeman (Chair) and Lisa Arnold. In addition Dr William Potter is an adviser to the committee but does not vote.
4.
Secretary
The Company Secretary or their nominees shall act as the secretary of the Committee.
5.
Frequency of Meetings
Meetings of the Remuneration Committee shall be held as and when appropriate. The Chairman of the Company may request a meeting if he or she considers one is necessary.
6.
Purpose
The purpose of the Remuneration Committee is to:
6.1
ensure that the Executive Directors and other Senior Executives are fairly rewarded for their individual contribution to the overall performance of the Company; and
6.2
demonstrate to the shareholders that the remuneration of the Executive Directors of the Company is set by a Committee of the Board whose members have no personal interest in the outcome of the decisions of the Committee and who will have due regard to the interests of the shareholders; and
6.3
assist the Board in drafting the explanation of how it applies the principles of Section B of the Combined Code in the Annual Report Remuneration Report Section. The necessary principles are:
- to attract and retain the Director's needed to run the Company successfully by sufficient levels of remuneration, but avoid paying more than is necessary for this purpose;
- to judge where to position their Company relative to other companies. They should be aware of what comparable companies are paying and should take account of relative performance. Caution should be exercised when using such comparisons, in view of the risk that they can result in an upward ratchet of remuneration levels with no corresponding improvement in performance;
- to be sensitive to the wider scene, including pay and employment conditions elsewhere in the Group, especially when determining annual salary increases;
- to not offer executives share options at a discount save as permitted by paragraphs 13.30 and 13.31 of the Listing Rules;
- to include performance - related elements of remuneration as set out in Schedule A to the Combined Code;
6.4
to make recommendations to the Board on the Company's framework of executive remuneration and its costs;
6.5
to ensure that the Company complies with Listing Rule 12.43A(c); and
6.6
to assist the Board in drafting the remuneration report in accordance with Schedule B of the Combined Code.
7.
Duties
Without prejudice to the generality of the terms of the Remuneration Committee set out above, the Remuneration Committee will:
- operate the Company's share option schemes, administering the following:
- the selection of those eligible directors and employees of the Company to whom options should be granted;
- the timing of any Grant;
- the numbers of shares over which options are to be granted;
- the exercise price at which options are to be granted;
- the imposition of any objective condition which must be complied with before any option may be exercised;
- review the terms of Executive Directors' service agreements;
- in reviewing specific remuneration packages for Executive Directors consider basic salary, any benefits in kind, any annual bonuses, participation in any long term incentive plans and any pension entitlements;
- have regard to Schedule A of the Combined Code, to advise on and determine all performance related formulae to the remuneration of the directors of the Company and to consider the eligibility of directors for annual bonuses and benefits under long term incentive scheme;
- liaise with the Board in relation to disclosure of detail of remuneration to packages and structures in addition to those required by law;
- consider what compensation commitments (including pension contributions), would entail in the event of any termination. The Combined Code specifies that consideration should be given to providing explicitly in the initial contract for such compensation commitments except in the case of removal for misconduct.
- consider other benefits granted to executives and any recommendations of the Chair for changes in those benefits;
- consider the pension arrangements applicable to the executives;
- consider and make recommendations in respect of any other terms of the service contracts of the Executive Directors and any proposed changes in these contracts;
- consider other matters referred to the Remuneration Committee by the Board.
- have regard to any published guidelines or recommendations regarding the remuneration of directors (in particular those published by the Association of British Insurers and National Association of Pension Funds) which the Committee considers appropriate;
8.
Reporting Procedures
The Secretary shall circulate the Minutes of the Meetings of the Remuneration Committee to all members of the Board.
9.
Authority
The Board authorises the Remuneration Committee:
9.1
to investigate any matter within its terms of reference and seek any information it requires from any employee (all employees being directed to co-operate with any such request by the Committee); and
9.2
to obtain outside legal or other independent professional advice at the cost of the Company, in accordance with the guidelines set out in Schedule 1 of this Memorandum, and to secure the attendance of outsiders with relevant experience and expertise if the Remuneration Committee considers this necessary.
SCHEDULE 1
GUIDELINES WHEN SEEKING INDEPENDENT PROFESSIONAL ADVICE
1.
A Director shall give prior notice to the Chairman and the Company Secretary of his intention to seek independent professional advice under this procedure and shall provide the name(s) of any professional advisers he proposes to instruct, together with a brief summary of the subject matter.
2.
The Company Secretary shall provide a written acknowledgement of receipt of the notification which shall state whether the fees for the professional advice sought are payable by the Company under these procedures. A Director shall obtain the prior approval of the Chairman where the fees of independent professional advisers are likely to exceed £1,000.
3.
"Independent professional advice" for the purpose of these Guidelines shall include legal advice and advice of accountants and other professional financial advisors.
4.
Any advice received shall be made available to other members of the Board, if the Board so requests.
1.1
Members of the Committee shall be appointed by the board and shall be made up of at least 2 members, the majority of whom should be independent non-executive directors. Members of the Nominations Committee are Lisa Arnold (Chair) and Jonathan Freeman. In addition Dr William Potter is an adviser to the committee but does not vote.
1.2
Only members of the Committee have the right to attend Committee meetings. However, other individuals and external advisers may be invited to attend for all or part of any meeting, as and when appropriate.
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 that the majority of the Committee members remain independent.
1.4
The board shall appoint the Committee Chair who should be an independent non-executive director. In the absence of the Committee Chair and/or an appointed deputy, the remaining members present shall elect one of their number to chair the meeting. The Chairman of the board shall not chair the Committee when it is dealing with the matter of succession to the chairmanship.
2. Secretary
2.1
The Company Secretary or their nominee shall act as the secretary of the Committee.
3. Quorum
3.1
The quorum for decisions of the Nominations Committee shall be any two members.
4. Frequency of Meetings
4.1
The Committee shall meet at least once a year and at such other times as the Chair of the Committee shall require.
5. Notice of Meetings
5.1
Meetings of the Committee shall be summoned by the secretary of the Committee at the request of the Chair of the Committee.
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 2 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
Minutes of Committee meetings shall be circulated promptly to all members of the Committee and the Chairman of the board and, once agreed, to all other members of the board, unless a conflict of interest exists.
7. Annual General Meeting
7.1
The Chair of the Committee shall attend the Annual General Meeting prepared to respond to any shareholder questions on the Committee's activities.
8. Duties
8.1
The Committee shall:
8.1.1
regularly review the structure, size and composition (including the skills, knowledge and experience) required of the board compared to its current position and make recommendations to the board with regard to any changes;
8.1.2
give full consideration to succession planning for directors and other senior executives in the course of its work, taking into account the challenges and opportunities facing the company, and what skills and expertise are therefore needed on the board in the future;
8.1.3
be responsible for identifying and nominating for the approval of the board, candidates to fill board vacancies as and when they arise;
8.1.4
before appointment is made by the board, evaluate the balance of skills, knowledge and experience on the board, and, in the light of this evaluation prepare a description of the role and capabilities required for a particular appointment. In identifying suitable candidates the Committee shall:
- 8.1.4.1 use open advertising or the services of external advisers to facilitate the search;
- 8.1.4.2 consider candidates from a wide range of backgrounds; and
- 8.1.4.3 consider candidates on merit and against objective criteria, taking care that appointees have enough time available to devote to the position;
8.1.5
keep under review the leadership needs of the organisation, both executive and non-executive, with a view to ensuring the continued ability of the organisation to compete effectively in the marketplace;
8.1.6
keep up to date and fully informed about strategic issues and commercial changes affecting the company and the market in which it operates;
8.1.7
review annually the time required from non-executive directors. Performance evaluation should be used to assess whether the non-executive directors are spending enough time to fulfill their duties; and
8.1.8
ensure that on appointment to the board, non-executive directors receive a formal letter of appointment setting out clearly what is expected of them in terms of time commitment, committee service and involvement outside board meetings.
8.2
The Committee shall also make recommendations to the board concerning:
8.2.1
formulating plans for succession for both executive and non-executive directors and in particular for the key roles of Chairman and Chief Executive (but see 8.2.8 below);
8.2.2
suitable candidates for the role of senior independent director;
8.2.3
membership of the Audit and Remuneration Committees, in consultation with the Chairmen of those committees;
8.2.4
the re-appointment of any non-executive director at the conclusion of their specified term of office having given due regard to their performance and ability to continue to contribute to the board in the light of the knowledge, skills and experience required;
8.2.5
the continuation (or not) in service of any director who has reached the age of 60;
8.2.6
the re-election by shareholders of any director under the 'retirement by rotation' provisions in the company's articles of association having due regard to their performance and ability to continue to contribute to the board in the light of the knowledge, skills and experience required;
8.2.7
any matters relating to the continuation in office of any director at any time including the suspension or termination of service of an executive director as an employee of the company subject to the provisions of the law and their service contract; and
8.2.8
the appointment of any director to executive or other office other than to the positions of Chairman and Chief Executive, the recommendation for which would be considered at a meeting of the full board.
9. Reporting Responsibilities
9.1
The Committee Chair 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 its activities, the process used to make appointments and explain if external advice or open advertising has not been used.
10. Other
10.1
The Committee shall, 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
11.1
The Committee is authorised to seek any information it requires from any employee of the company in order to perform its duties.
11.2
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.