Remuneration Committee
Terms of Reference for the Remuneration Committee
Terms
of Appointment of Compensation Consultants (New Bridge Street)
Terms
of Appointment of Compensation Consultants (Towers Perrin)
Terms
of Reference for the Remuneration Committee
1. Constitution
The
Committee has been established by resolution of the board of directors of the Company (the "Board")
and is to be known as the Remuneration Committee.
2. Membership
2.1
The members of the Remuneration Committee shall be appointed by the Board from amongst the directors
of the Company and shall consist of at least three members, all of whom are independent non-executive
directors.
2.2 The Board shall appoint a chairman of the Remuneration
Committee (the "Chairman") and shall decide his or her period of office. The Chairman shall
be an independent non-executive director and shall not be the chairman of the Company.
2.3
The Board shall regularly review the membership of the Remuneration Committee to ensure that membership
is refreshed and undue reliance is not placed on particular individuals as regards membership of the
Remuneration Committee and other Board committees.
2.4 The Remuneration
Committee may invite the chairman and the chief executive of the Company or any other person to advise
and/or to join meetings of the Remuneration Committee when required notwithstanding that they are not
members of the Remuneration Committee.
2.5 If executive directors or
senior management are involved in advising or supporting the Remuneration Committee, that role should
be clearly separated from their role within the business.
3. Quorum
A
quorum shall be two members. A duly convened meeting of the Remuneration 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 Remuneration Committee.
4. Attendance at Meetings
4.1
No one other than the Remuneration Committee Chairman and members is entitled to attend or vote at a
meeting of the Remuneration Committee.
4.2 The chairman of the Company,
chief executive, Human Resources director and any other executive or member of senior management may
be called upon or shall be able to speak at any meeting of the Remuneration Committee by prior arrangement
with the Chairman.
4.3 No director or senior executive shall be involved
in any decisions as to his or her own remuneration.
5. Secretary
5.1
The Company Secretary shall act as the secretary of the Remuneration Committee and shall keep a record
of:
5.1.1 the membership of and the dates of any changes to the membership
of the Remuneration Committee; and
5.1.2 any person or firm who provides
advice or services to the Remuneration Committee or materially assists the Remuneration Committee on
matters relating to directors' remuneration. If such person or firm is not a director, the Secretary
shall keep a record of the nature of any other services provided by that person to the Company during
the year.
6. Frequency of Meetings
Meetings
shall normally be held at such times as the Committee deems appropriate and in any event shall be held
not less than twice a year.
7. Proceedings
7.1
Unless varied by these terms of reference, meetings and proceedings of the Remuneration Committee will
be governed by the Company's Articles of Association regulating the meetings and proceedings of directors.
7.2
Meetings of the Remuneration Committee shall be summoned by the Secretary of the Remuneration Committee
at the request of the Chairman or any member thereof.
7.3 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 sent to each member of the Remuneration Committee and
any other person required to attend not later than 48 hours prior to the date of the meeting.
7.4
The Secretary of the Remuneration Committee shall record the proceedings and resolutions of the meetings
of the Remuneration Committee and shall circulate the minutes of such meetings to all members of the
Remuneration Committee and, if the Chairman so decides, upon request, to all members of the Board.
8.
Authority
8.1 The Remuneration Committee is authorised by the Board at
the expense of the Company to investigate any matter within its terms of reference. It is authorised
to seek any information it requires from any employee in order to perform its duties and all employees
are directed to co-operate with any requests made by the Remuneration Committee.
8.2
The Remuneration Committee is authorised by the Board at the expense of the Company to obtain external
professional advice and to secure the attendance of third parties with relevant experience and expertise
at meetings of the Remuneration Committee if it considers this necessary.
8.3
The Remuneration Committee is authorised by the Board to appoint external consultants at the Company's
expense in respect of executive directors' remuneration and to set their terms of reference.
8.4
These terms of reference may be amended from time to time as required, subject to approval by the Board.
9.
Duties
9.1 The Remuneration Committee shall be responsible for all elements
of the remuneration of the executive directors and the chairman of the company, including pension rights
and compensation (i.e. damages) payments, and should monitor the level and structure of remuneration
for the senior management of the group. The duties of the Remuneration Committee shall be:
9.2
to determine and agree with the Board the framework and broad policy for the remuneration (including
benefits, pension arrangements and termination payments), of the chairman, chief executive and executive
directors of the Company and the senior management;
9.3 to determine
and agree with the Board the Company's policy on the duration of contracts with executive directors,
and notice periods and termination payments under such contracts, with a view to ensuring that any termination
payments are fair to the individual and the Company, that failure is not rewarded and the duty to mitigate
loss is fully recognised;
9.4 within the terms of the agreed framework
and broad policy, to determine the total individual remuneration package of each executive director,
including, where appropriate, bonuses, incentive payments, share options and pension arrangements;
9.5
having regard to Schedule A of the Code, to advise on and determine all formulae for performance-related
schemes operated by the Company, the methods for assessing whether performance conditions are met and
the eligibility of executive directors for annual bonuses and benefits under long term incentive schemes;
9.6
when appropriate, requesting the Board to seek shareholder approval of all new long term incentive schemes
save in the circumstances permitted by paragraph 13.13A of the Listing Rules;
9.7
to review and recommend to the Board, the remuneration of the Company Secretary;
9.8
to liaise with the Nomination Committee to ensure that the remuneration of newly-appointed executive
directors and senior management is within the Company's overall policy;
9.9
to consider and make recommendations in respect of any other terms of the service contracts of the executives
and any proposed changes to these contracts, and to review the company's standard form contract for
executive directors from time to time;
9.10 to administer all aspects
of any share option scheme operated by or to be established by the Company, (subject always to the rules
of that scheme and any applicable legal and regulatory requirements) including but not limited to:
(A)
the selection of those eligible directors and employees of the Company and its subsidiary companies
to whom options should be granted;
(B) the timing of any grant of options;
(C)
the numbers of shares over which options are to be granted;
(D) the exercise
price at which options are to be granted; and
(E) the imposition of any
objective condition which must be complied with before any option may be exercised;
9.11
to consider any other matters relating to the remuneration of or terms of employment applicable to the
executive directors, chairman and senior management and referred to the Remuneration Committee by the
Board;
9.12 to be aware of and advise on any major changes in employee
benefit structures throughout the group;
9.13 to have regard, in the
performance of the duties set out in this clause, to the Code, the Listing Rules and to any published
guidelines or recommendations regarding the remuneration of directors of listed companies and the formation
and operation of share option schemes (in particular the guidelines published by the Association of
British Insurers and National Association of Pension Funds) which the Remuneration Committee considers
relevant or appropriate;
9.14 to establish the selection criteria, select,
appoint and set the terms of reference for any remuneration consultants that the committee deems it
necessary to receive advice from;
9.15 in conjunction with the Board,
to draft the annual directors' remuneration report, having regard to the provisions of Listing Rule
12.43A(c), the Code and Schedule 7A of the Companies Act 1985;
9.16 to
ensure that the items that should be published in the Company's Annual Report relating to the activities
of the Remuneration Committee, are included in that report;
9.17 to agree
the policy for authorising claims for expenses of the chief executive and the chairman of the Company;
and
9.18 to review and, where necessary, update these terms of reference
(subject to the approval of the Board) and make them publicly available.
10.
Exclusions
10.1 The terms
of reference
of the Remuneration Committee do not encompass decisions to employ or dismiss executives. The Remuneration
Committee does not have responsibilities for nominations to the Board.
10.2
The remuneration of non-executive directors shall be a matter for the executive members of the Board
(subject to the Articles of Association of the Company). The Board may, however, delegate this responsibility
to a smaller sub-committee of executive directors, which may include the chief executive.
11.
Annual General Meeting
The Chairman shall be available at the Annual
General Meeting to answer questions arising from the directors' remuneration report and generally on
remuneration principles and practice and the activities of the Remuneration Committee. He or she should
also ensure that the Company maintains good contact with shareholders about remuneration in the same
way as for other matters.
Terms
of Appointment of Compensation Consultants (New Bridge Street)
Mr
John Lee
New Bridge Street Consultants LLP
London, EC1A 7DH
Dear
Mr Lee
I am writing to confirm the appointment of New Bridge Street Consultants
LLP as advisers to the Remuneration Committee of G4S plc, with effect from 1st September
2004. While the appointment is for your firm, we look to you personally to act as our lead adviser.
As
Chairman of the Committee, I would serve as your primary contact, although it will be appropriate for
you to meet with and advise other Committee members as well. At our request, you may be asked to attend
certain meetings of the Remuneration Committee. In addition to specific project-related work, we expect
that you would meet with the Committee at least once a year to provide an update of trends in pay and
government and regulatory issues.
We anticipate the major areas for consultation
to be:
advising the Committee as to G4S’s policy for Executive
Directors’ remuneration;
determining competitive levels and forms of pay for the Executive
Directors and reviewing that of their direct reports;
reviewing proposals for incentive
plans affecting the same group;
reviewing all stock-based and long-term incentive plans;
and
advising the Committee of developments and best practices in the areas of both remuneration
and applicable, corporate governance requirements.
In order to have appropriate access
to data and to understand the structure and operations of the business, you should keep contact with
the Group Human Resource Director. However, I want to emphasise the importance that we place on your
independent advice and therefore ask that before you provide any consulting services to G4S’s
management group, you submit proposals to my, and if necessary, the Committee’s review and approval.
We
propose to mention your name as advisors to the Remuneration Committee in the report of directors’ remuneration
in G4S’s next annual report and accounts. I assume that you are agreeable to this, provided
you have had an opportunity to review the context in which you are referred to before the document is
finalised.
Your appointment as adviser to the Committee will be on a
non-exclusive basis and either side would be able to terminate the arrangement without notice, should
it wish to do so.
We acknowledge that, unless otherwise agreed, you will
charge for your services on the basis of time spent and in accordance with your Terms of Business. Invoices
for work undertaken on behalf of the Committee should be sent to the Group HR Director.
Yours
sincerely
Alf Duch-Pedersen
Chairman –
Remuneration Committee
Terms
of Appointment of Compensation Consultants (Towers Perrin)
Mr
Mark Reid
Towers Perrin
71 High Holborn
London
WC1V
6TP
Dear Mr Reid
I am writing to confirm
the appointment of Towers Perrin as advisers to the Remuneration Committee of G4S plc,
with effect from 6th October 2006. While the appointment is for your firm, we look to you personally
to act as our lead adviser.
As Chairman of the Committee, I would serve
as your primary contact, although it will be appropriate for you to meet with and advise other Committee
members as well. At our request, you may be asked to attend certain meetings of the Remuneration Committee.
In addition to specific project-related work, we expect that you would meet with the Committee at least
once a year to provide an update of trends in pay and government and regulatory issues.
We
anticipate the major areas for consultation to be:
- advising the Committee
as to G4S’s policy for Executive Directors’ remuneration;
- determining competitive
levels and forms of pay for the Executive Directors and reviewing that of their direct reports;
-
reviewing proposals for incentive plans affecting the same group;
- reviewing all stock-based
and long-term incentive plans; and
- advising the Committee of developments and best
practices in the areas of both remuneration and applicable, corporate governance requirements.
In
order to have appropriate access to data and to understand the structure and operations of the business,
you should keep contact with the Group Human Resource Director and the Head of Compensation & Benefits.
However, I want to emphasise the importance that we place on your independent advice and therefore ask
that before you provide any significant consulting services to G4S’s management group, you submit proposals
to my, and if necessary, the Committee’s review and approval.
We propose
to mention your name as advisors to the Remuneration Committee in the report of directors’ remuneration
in G4S’s 2006 annual report and accounts. I assume that you are agreeable to this, provided you have
had an opportunity to review the context in which you are referred to before the document is finalised.
Your
appointment as adviser to the Committee will be on a non-exclusive basis and either side would be able
to terminate the arrangement without notice, should it wish to do so.
We
acknowledge that, unless otherwise agreed, you will charge for your services on the basis of time spent
and in accordance with your Terms of Business. Invoices for work undertaken on behalf of the Committee
should be sent to the Head of Compensation & Benefits.
Yours sincerely
Lord
Condon
Chairman – Remuneration Committee