THE VITEC GROUP PLC
Remuneration Committee - Terms of Reference
(adopted by the Board on 18 December 2003
And last updated on 1 March 2011)
Directors’ duties
It is the duty of the Company’s Directors to promote the success of the Company. Directors must have regard to the section 172 of the Companies Act 2006 principle of promoting the success of the Company for the benefit of members as a whole. In doing so Directors must have regard, amongst other things, to the following:-
a. the likely consequences of any decision in the long term;
b. the interests of the Company’s employees;
c. the need to foster business relationships;
d. the impact of the Company’s operations on community and environment;
e. the desirability of the Company maintaining reputation for high standards of business and conduct; and
f. the need to act fairly as between members.
1. Membership
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 at least three members, all of whom shall be independent non-executive directors.
1.2. Only members of the Committee have the right to attend Committee meetings. However, other individuals such as the Chairman, Chief Executive, Group Head of HR, Group Company Secretary 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 are made by the Board and 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 who shall be an independent non-executive director. 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. The Chairman of the Board shall not be Chairman of the Committee.
2. Secretary
2.1. The Company Secretary shall act as the Secretary of the Committee.
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 in or exercisable by the Committee.
4. Meetings
4.1. The Committee shall meet at least twice a year 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 called by the Secretary of the Committee at the request of the Committee Chairman.
5.2. Unless otherwise agreed, notice of each meeting confirming the venue, time and date together with an agenda of items to be discussed and supporting papers, shall be forwarded to each member of the Committee, any other person required to attend and all other non-executive directors, no later than five working days before the date of the meeting.
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, once agreed, to all members of the Board, unless a conflict of interest exists.
7. Annual General Meeting
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
The Committee shall:
8.1. determine and agree with the Board the framework or broad policy for the remuneration of the company’s Chief Executive, Chairman, the executive directors, the company secretary 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 Chairman and the Executive Directors. No director or manager shall be involved in any decisions as to their own remuneration;
8.2. in determining such policy, take into account all factors which it deems necessary, including relevant legal and regulatory requirements, the provisions and recommendations of the UK Corporate Governance Code and associated guidance. 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. when setting remuneration policy for directors, review and have regard to the remuneration trends across the company or group;
8.4. review the ongoing appropriateness and relevance of the remuneration policy;
8.5. approve the design of, and determine targets for, any performance related pay schemes operated by the company and approve the total annual payments made under such schemes. The Committee shall ensure that any performance related pay schemes are structured to drive executive management to deliver sustainable long-term growth in shareholder value;
8.6. review the design of all share incentive plans for approval by the Board and 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 to executive directors and other senior executives and the performance targets to be used. The Committee shall ensure that awards are merited particularly given the context of ongoing business performance to ensure that they are not disproportionate and potentially viewed as rewarding failure;
8.7. determine the policy for, and scope of, pension arrangements for each executive director and other senior executives;
8.8. 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;
8.9. within the terms of the agreed policy and in consultation with the Chairman and/or Chief Executive as appropriate, determine the total individual remuneration package of the Chairman, each executive director and other senior executives including bonuses, incentive payments and share options or other share awards;
8.10. in determining such packages and arrangements, give due regard to any relevant legal requirements, the provisions and recommendations in the UK Corporate Governance Code and the UK Listing Authority’s Listing Rules and associated guidance;
8.11. oversee any major changes in employee benefits structures throughout the Company or Group;
8.12. agree the policy for authorising claims for expenses from the Chairman, Chief Executive and other directors of the Company;
8.13. ensure that all provisions regarding disclosure of remuneration including pensions, as set out in the Directors’ Remuneration Report Regulations 2002 and the UK Corporate Governance Code are fulfilled;
8.14. 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
8.15. to obtain reliable, up-to-date information about remuneration in other companies. The Committee shall have full authority to commission any reports or surveys which it deems necessary to help it fulfil its obligations.
9. Reporting Responsibilities
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 remuneration policy and practices which will form part of the Company’s Annual Report and ensure each year that it is put to shareholders for approval at the AGM.
10. Other
10.1. The Committee shall have access to sufficient resources in order to carry out its duties, including access to the Company Secretariat for assistance as required.
10.2. The Committee shall be provided with appropriate and timely training, both in the form of an induction programme for new members and on an ongoing basis for all members.
10.3. The Committee shall give due consideration to the laws and regulations, the provisions of the Code and the requirements of the UK Listing Authority’s Listing, Prospectus and Disclosure and Transparency Rules and any other applicable Rules, as appropriate.
10.4. 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
11.1. 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.
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.