ICAP plc ( ICAP ) TERMS OF REFERENCE OF THE REMUNERATION COMMITTEE. (Approved on 22 February 2013)

Transcription

1 ICAP plc ( ICAP ) TERMS OF REFERENCE OF THE REMUNERATION COMMITTEE (Approved on 22 February 2013) Introduction The purpose of the Remuneration Committee is to ensure that ICAP s global salary, discretionary bonus, revenue based bonus plans, long term incentive plans, all other rewards and employee benefits support the business strategy of the Group. Principles Remuneration is designed to attract, retain and motivate employees. Plans and proposals should take account of affordability, competitive market position and acceptability to both the employees and the external market. The Remuneration Committee should: review and approve the overall remuneration policy of ICAP at least every three years (unless there are major changes proposed); ensure that proposals are compliant with both the letter and spirit of any local legislation or regulatory guidelines; and consider implications for risk management. Membership The Remuneration Committee should be composed of at least three non executive directors who are appointed by the ICAP Board of Directors. Where possible the Remuneration Committee should consist exclusively of independent non executive directors. The Chair of the Remuneration Committee, who shall be appointed by the Board, shall have a casting vote in the event of equality of votes. The Company Secretary shall be the secretary of the Committee. Meetings The Remuneration Committee should meet at least four times per annum and more frequently if required. Meetings will be arranged by the Company Secretary, either at the request of the Chair of the Remuneration Committee or at the request of the Group Remuneration Committee (Group RemCo). Where possible, meetings should be timetabled in advance with one meeting in late March to approve the proposals for the annual salary and discretionary bonus review. The committee should meet in person, but may convene by telephone or video conference or approve items by written resolution, if meetings in person are not possible or practical.

2 The Remuneration Committee is exclusively responsible for establishing the selection criteria, selecting, appointing and setting the terms of reference for any remuneration consultants who advise the committee. Other specialist advisors (e.g. legal or other independent professionals either internal or external to ICAP) may be invited to attend meetings, subject to the recommendation of a Remuneration Committee member and approval by the Chair. They should only attend the parts of the meeting for which their advice is sought. The Chair or his/her nominee will convene and chair the meetings. Decisions are made by a majority of those present, one of which must be the Chair or the nominee. Quorum The quorum for meetings is two members, one of whom should be the Chair or their nominee. A duly convened meeting at which a quorum is present is competent to exercise all or any of the authorities, powers and discretions vested in the committee. Annual General Meeting The Chair of the Committee should attend the Company s Annual General Meeting to be available to answer shareholders questions regarding directors remuneration. Proposals and actions All papers for meetings should be circulated to the Remuneration Committee at least 3 days in advance of meetings. The Company Secretary should keep minutes of the meetings to record all decisions and action points. These minutes should be circulated to all Remuneration Committee members. Circulation of minutes to any other attendees is at the discretion of the Chair. All committee resolutions should be notified to the relevant person(s) for action. Progress on all actions should be reported at the next meeting. Committee responsibilities The Remuneration Committee is authorised by the Board to review and approve proposals for: executive compensation and Code Staff including the review and approval of executive level recruitment packages, termination packages and other significant proposals for employee compensation (throughout the year); significant new hires or current staff including total compensation over 750,000, contracts over 3 years and high bonus payments; reward policies e.g. review and approve proposed policy changes to long term employee incentives (as required); and governance and disclosure. The committee should also note the total proposed spend on the discretionary salary and bonus review (annually).

3 Governance framework The Remuneration Committee is supported by an internal advisory committee, the Group RemCo, the purpose of which is to review and discuss all proposals before they are presented to the Remuneration Committee for noting or approval. Members for the Group RemCo are typically drawn from the senior ICAP management team. They sponsor proposals and participate in discussions during the Remuneration Committee meetings. The role of the Remuneration Committee is authorised by the Board to REVIEW, CHALLENGE where appropriate and APPROVE remuneration proposals and to NOTE key decisions or proposals approved by the Group RemCo. These include (but are not limited to) the following: Below these thresholds, the responsibilities are delegated to the Group RemCo or Business Remuneration Committees. Executive compensation Executive Directors, GEMG, and Code Staff Approve the contract of employment (including renewals) and all aspects of remuneration for: Group Chief Executive Officer Group Finance Director Group Executive Director Americas Chairman all GEMG members all Code Staff (currently Group Head of Compliance and Global Head of Risk) Agree and determine with the Board the framework and policy for the remuneration of this group. Investigate and review: remuneration paid to directors of other companies of a similar size in the financial sector (or elsewhere, if relevant) the relative performance of such companies Review and approve: objectives for the next year and determine the level of achievement for the previous year (in Q1 meeting) the design and targets for any annual performance related pay schemes the policy for and scope of pension arrangements for each member of this group the policy for authorising claims for expenses incurred by the Group Chief Executive Officer and Chairman. Review, challenge and approve individual total remuneration proposals (including bonuses, long term incentive payments and share options) for Executive Directors of ICAP plc for: new hires transfers or promotions into this group

4 Review any proposed compensation arrangements for involuntary leavers that: include termination or other payments and any negotiated terms, e.g. pension contributions are in excess of previously approved internal guidelines include the buying out of the balance of a fixed term contract or the advance payment of a guaranteed minimum bonus (GMB). The Remuneration Committee should: ensure that contractual terms and any termination payments are fair to both the individual and the Company, but do not reward failure; and ensure that any payments recognise the duty to mitigate losses and ensure any claw back conditions are applied. No individual should be involved in discussions regarding their own remuneration. New hires Review and approve any proposed offer of employment: that includes a notice period of 12 months or more; where the total compensation (including annual discretionary bonus) will be 750,000 per annum or more, including proposed variable compensation arrangements; that includes a sign on bonus or guaranteed bonus (GMB) of 500,000 or more; and where the base salary will be 200,000 or more. Client facing employees only: Review and approve all brokers and revenue earning employees on fixed term contracts and/or revenue or commission based payments, including the set up of new desks, where: the proposed contract of employment has a term of three years or longer; the total annual payout to the individual (fixed plus variable) is more than 50% of the individual or desk projected annual revenue; the total annual payout to the desk (fixed plus variable) is more than 50% of the desks projected annual revenue; the total annual revenue or commission based payout to the individual is projected to exceed 600,000 per annum or 150,000 per quarter. Infrastructure employees only: Review and approve all non client facing employees and any others on discretionary contracts, including Core Infrastructure and support functions within businesses where: any discretionary bonus is expected to be over 100% of base salary. NOTE any other significant new hires at the recommendation of the Group RemCo. Current employees Review and approve any amendment to a contract of employment (e.g. following a job change or

5 promotion) where: the proposed contract of employment has a term of three years or longer; and total fixed compensation (as above) is more than 750,000 per annum, including proposed changes to variable compensation arrangements. Client facing only (as above) Review and approve any renewal or amendment to a contract of employment (e.g. following a job change or promotion): that has a term of three years or longer; and where the total annual compensation for individual or desk (fixed plus variable) is more than 50% of the individual or desk projected annual revenue. Infrastructure only (as above) Review and approve the annual salary and discretionary bonus proposals (including off cycle payments) for: any annual discretionary bonus where total annual compensation will exceed 750,000 per annum; and any discretionary bonus that exceeds 100% of base salary. The Remuneration Committee should NOTE the overall spend and consolidated (summary) proposals for remaining staff, by business or country if appropriate, reviewing year on year cost impact of both salary and bonus proposals (approval is at Group RemCo level). Reward policies The Remuneration Committee should encourage the development of employment policies which provide clear guidelines and consistent treatment of employees. Review and Approve: the overall remuneration policy of ICAP at least every three years (unless there are major changes proposed); and the design, eligibility for and targets for any new long term performance related pay schemes or changes to existing scheme(s), including LTIPs and EBTs. Review performance against targets and proposed individual payments or grants. The Remuneration Committee should also select and appoint independent remuneration consultants to provide advice and guidance to the Committee.

6 Governance and disclosure The Remuneration Committee should: agree the delegated authorities to the Group RemCo and the policies and principles under which they operate; ensure that all proposals are within the terms of any local or regional legal or regulatory requirements, e.g. in the UK, the FSA Remuneration Code, the UK s Corporate Governance Code ( the Code ) as well as the UK Listing Authority s Listing, Prospectus and Disclosure and Transparency Rules, plus any legislation or guidelines that are introduced; and ensure that provisions regarding the disclosure of remuneration (including pensions) are fulfilled in each location, e.g. in the UK, to FSA, Companies Act 2006 and Code and Listing Rules. The secretary of the Remuneration Committee also has specific responsibility to: report the frequency of Remuneration Committee meetings and attendance at them in the Annual Report; and make the Remuneration Committee Terms of Reference available upon request (e.g. to FSA). Plus any other matters referred to the Remuneration Committee by the Board.