NEX Group plc Remuneration Committee: Governance Framework terms of reference plc Remuneration Committee responsibilities delegated authorities committee memberships Approved by the Governance Committee of NEX Group plc on 5 December 2016 1
Introduction NEX Group plc Remuneration Committee Terms of Reference The purpose of the NEX Group plc Remuneration Committee (the committee) is to ensure that NEX Group s global salary policy, discretionary and revenue-based bonus plans, long term incentive plans, employee benefits and all other reward programmes and policies support the business strategy of the Group. Principles Remuneration policies and practices have a key role to play in ensuring that all employees are effectively incentivised to promote the long-term success of the company and that the company s risks are effectively managed. The committee: reviews and approves the overall remuneration policy of NEX Group at least every three years (unless there are major changes proposed); ensures that proposals are compliant with both the letter and spirit of any local legislation or regulatory guidelines; and considers implications for risk management. NEX Group s remuneration policy provides a framework based on the following key objectives: to drive the longer term success of the company to reinforce the company s corporate values and key business objectives: and to be affordable and flexible while remaining easy to understand and operate. This policy is important in promoting NEX Group s fundamental values and principles. Membership The committee is composed of at least three non-executive directors who are appointed by the NEX Group s Board of Directors. The committee will consist exclusively of independent non-executive directors. The chair of the committee, who is appointed by the Board, has a casting vote in the event of equality of votes. The company secretary is the secretary of the committee. Meetings The committee normally meets at least four times per annum and more frequently if required. Meetings are arranged by the Group Company Secretary, at the request of the chair of the committee Where possible, meetings are timetabled in advance with one meeting in late March to approve the proposals for the annual salary and discretionary bonus review. The committee normally meets 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. The committee is responsible for establishing the selection criteria, selecting, appointing and setting the terms of reference for any remuneration consultants who advise the committee independently. Other specialist advisors (e.g. legal or other professionals either internal or external to NEX Group) may be invited to attend meetings, subject to the recommendation of a committee member and approval by the chair. They should only attend the parts of the meeting for which their advice is sought. 2
The chair or their nominee convenes and chairs the meetings. Decisions are made by a majority of those present, one of which must be the chair or their 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 (AGM) to be available to answer shareholders questions regarding directors remuneration. Proposals and actions All papers for meetings should be circulated to the committee at least three days in advance of meetings. The Group Company Secretary keeps minutes of the meetings to record all decisions and action points. These minutes are circulated to all 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 is reported at the next meeting. Remuneration Committee responsibilities The committee is authorised by the board to review and approve remuneration proposals for: Executive directors, members of the GEMG and those employees holding independent oversight functions (on the recommendation of the business); new hires and current staff above certain limits; reward policies e.g. changes to long-term employee incentives; and governance and disclosure. The committee should also note the total proposed spend on the annual discretionary salary and bonus review. Details of the full responsibilities of the committee are shown in Attachment 1. Delegated responsibilities to the Executive Business Heads are outlined in Attachment 2. Governance Framework The committee is supported by to the Group Head of Human Resources and the Global Head of Reward who will review and discuss all proposals with relevant stakeholders before they are presented to the committee for noting or approval. During meetings, members should leave the room if and when their own compensation is discussed. The membership of the committee is shown in Attachment 3. 3
Attachment 1 NEX Group plc Remuneration Committee responsibilities The plc Remuneration Committee (the committee) is authorised by the Board to REVIEW, CHALLENGE where appropriate and APPROVE remuneration proposals and to NOTE key decisions or proposals approved by company management. These include (but are not limited to) the following: (below these thresholds, the responsibilities are delegated to the Executive Business Head). Executive directors, GEMG and those in an independent oversight function Review and approve the contracts of employment (including new hires, transfers or promotions to this group and contract renewals) and all aspects of remuneration (including bonuses, long term incentive payments and share options). Agree & determine with the board the framework and policy for the remuneration of this group in order to promote the long-term success of the company. The policy for executive directors is included in the annual report and approved by shareholders. Investigate and review: remuneration paid to directors of other companies of a similar size in the financial sector (or elsewhere, if relevant) Review and approve: objectives for the next year and the level of achievement for the previous year, ensuring that performance-related elements are transparent, stretching and rigorously applied; the design and targets for any annual and longer term performance-related pay schemes, to include upper limits; determine an appropriate balance between fixed and variable remuneration and between immediate and deferred remuneration; the policy for and scope of pension arrangements for each member of this group; and the policy for authorising claims for expenses incurred by the Group CEO and Chairman. Review and approve any proposed compensation arrangements for leavers including: termination or other payments and any negotiated terms, e.g. pension contributions that go beyond the terms of the existing contract; buying out of the balance of a fixed term contract or accelerated payment of a guaranteed bonus, sign-on or buy-out arrangement, above certain limits; vesting (either at the time or at a future date) of any deferred incentive awards beyond the terms of any approved plan; post-termination consultancy arrangements and any other post-employment payments. The committee should ensure that: 4
contractual terms and any termination payments are fair to both the individual and the company and do not reward failure; and any payments recognise the duty to mitigate losses and ensure that the company can recover sums paid or withhold the payment of any sum; and specify the circumstances under which it would consider it appropriate to apply any claw-back conditions. No individual should be involved in discussions regarding their own remuneration and the committee should take care to recognise and manage conflicts of interest when receiving views from senior executives about its proposals. New hires and current employees Review and approve any offer of employment, remuneration structure, contract change and/or any individual element of remuneration with: a notice period of 12 months or more; a fixed term contract of three years or more; salary of 500,000 or more; total remuneration (including salary, bonus, long term incentive, any other variable remuneration and benefits) is or is likely to be 750,000 per annum or more; a buy-out of foregone remuneration or sign-on bonus for a new hire of 500,000 or more; guarantee, up-front or retention payments of 500,000 or more; any equity (whether real or phantom) or deferred cash (or equivalent) grant or payment. Note any other significant appointments at the recommendation of company management. Leavers Review and approve any proposed compensation arrangements for leavers 500,000 including: termination or other payments and any negotiated terms, e.g. pension contributions that go beyond the terms of the existing contract; buying out of the balance of a fixed term contract or accelerated payment of a guaranteed bonus, sign-on or buy-out arrangement; vesting (either at the time or at a future date) of any deferred incentive awards beyond the terms of any approved plan; post-termination consultancy arrangements and any other post-employment payments. The committee should ensure that: contractual terms and any termination payments are fair to both the individual and the company and do not reward failure; and any payments recognise the duty to mitigate losses and ensure any claw-back conditions are applied. 5
Reward policies The committee expects remuneration policies to provide clear guidelines and support consistent treatment of employees. Review and Approve: the overall remuneration policy of NEX Group at least every 3 years (unless there are major changes proposed); and o the design, eligibility for and targets for any new long term pay plans (more than one year) or changes to existing plan(s); and review and determine performance against targets for any performance-based plans with a performance period of more than one year. Governance and disclosure The committee: agrees the delegated authorities to Company Management and the Executive Business Heads and the policies and principles under which it operates; ensures that all proposals are within the terms of any local or regional legal or regulatory requirements, e.g. in the UK, the FCA Remuneration Code (for regulated entities within the group), the UK s Corporate Governance Code ( the Code ), the UK Listing Authority s Listing, prospectus and Disclosure and Transparency Rules, plus any legislation or guidelines that are introduced; and ensures that provisions regarding the disclosure of remuneration (including pensions) are fulfilled in each location, e.g. in the UK, FCA (for regulated entities within the group), Companies Act 2006 and Code & Listing Rules. The secretary of the committee has specific responsibility to: report the frequency of committee meetings and attendance at them in the Annual Report; and make the committee terms of reference available on request. Plus any other matters referred to the committee by the Board. NOTE; Salary and bonus amounts are shown in UK pounds. The equivalent in local currency should be determined by reference to the FYTD average as issued by Finance. 6
Attachment 2 Delegated responsibilities Company Management The role of the Company Management is to REVIEW and CHALLENGE remuneration recommendations prior to submission to the plc Remuneration Committee for approval. Executive Business Heads may also APPROVE remuneration proposals within guidelines delegated by the committee. 7
Attachment 3 Committee membership NEX GROUP plc Remuneration Committee Name Position Role Rob Standing Independent NED Chair John Sievwright Independent NED Member Ivan Ritossa Independent NED Member Deborah Abrehart Group Company Secretary Secretary Company Management Name Position Role Deborah Abrehart Group Company Secretary Advisor & Secretary Michael Spencer Group CEO Member Stuart Bridges Chief Financial Officer Member Any other relevant senior key stakeholder in decision Member manager Vanessa Cruwys Group Head of HR Member Nicola Nairn Global Head of Reward Advisor 8