Remuneration Committee Terms of Reference
1 Membership
a. 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 3 members, all of whom are independent non-executive directors who meet the definition of “independence” as set out in the Combined Code and by the New York Stock Exchange.
b. Only members of the Committee have the right to attend Committee meetings. However, other individuals such as the Chief executive, the head of human resources and external advisers may be invited to attend for all or part of any meeting as and when appropriate.
c. Appointments to the Committee shall be for a period of up to one year, which may be renewed annually, provided the director remains independent.
d. 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.
2 Secretary
a. The Company Secretary or their nominee shall act as the Secretary of the Committee.
3 Quorum
a. The quorum necessary for the transaction of business shall be 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.
4 Meetings
a. The Committee shall meet at least three times a year and at such other times as the Chairman of the Committee shall require.
5 Notice of Meetings
a. Meetings of the Committee shall be summoned by the Secretary of the Committee at the request of any of its members.
b. 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 5 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
a. The Secretary shall minute the proceedings and resolutions of all Committee meetings, including the names of those present and in attendance.
b. Minutes of Committee meetings shall be circulated to all non-executive directors other than
those non-executive directors that have an interest in the business of that meeting.
7 Annual General Meeting
a. 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:
a. determine and agree with the Board the framework or broad policy for the remuneration of the company’s Group Chief Executive, Chairman, the executive directors, the company secretary and such other members of the executive management as it is designated to consider (see appendix A). The remuneration of non-executive directors shall be a matter for the Chairman and the executive members of the Board. No director or manager shall be involved in any decisions as to their own remuneration;
b. in determining such policy, take into account all factors which it deems necessary. 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 after taking due consideration of the interests of shareholders;
c. the policy, will be based on sound, clearly stated principles which recognise the long term interests of the Group, its shareholders and employees. The principles which, are reviewed from time to time, are set out below:
(i) Results which should consistently outperform the average of the industry sector.
(ii) It is recognised that to consistently deliver above industry average performance Signet will need to retain, and where necessary attract, executives of well above industry average ability and Leadership potential.
(iii) It is also recognised that retaining, and where necessary recruiting, senior executives of this calibre will require that the Group provide above industry-average total remuneration.
(iv) Therefore, Signet’s executive directors and other senior executives should be remunerated in a range beginning with the 51st and ending with the 75th percentiles of industry total remuneration, based on current surveys of relevant companies appropriate to the executive’s position and geographic location. The remuneration of each executive within this range will be based on performance (both of the Group and the individual executive), potential (i.e. the executive’s potential to grow in responsibility and performance), and scarcity (i.e. the availability of candidates to replace the executive should he/she leave the Group).
(v) Total remuneration for executive directors and other senior executives should be highly geared towards performance with the proportion of “at risk” pay increasing disproportionately according to: a) the level of performance achieved and b) the seniority of the executives and their ability to influence results. Excluding pension contributions, the provision of a company car and private health insurance, there should be only one element of guaranteed remuneration; base salary. The performance related portion of total remuneration should reward short term and long term performance separately, with the potential level of payment being heavily weighted in favour of the latter. Short term achievement should be recognised through the annual bonus plan with long term achievement being rewarded through executive share option awards and participation in long term incentive plans.
(vi) Surveys will be undertaken on a regular basis to ensure that total remuneration packages remain in the percentile range described in (iv) above. Recognising that some 70% of Signet’s sales and profits are generated in the US and that significant differences in remuneration practices exist between the US and the UK, separate surveys will be conducted in each country;
d. review the ongoing appropriateness and relevance of the remuneration policy;
e. 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;
f. 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;
g. determine the policy for, and scope of, pension arrangements for each executive director and other senior executives;
h. 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;
i. 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 each executive director and other senior executives including bonuses, incentive payments and share options or other share awards;
j. in determining such packages and arrangements, give due regard to any relevant legal requirements, the provisions and recommendations in the Combined Code and the UK Listing Authority’s Listing Rules and associated guidance;
k. review and note annually the remuneration trends across the company or group;
l. oversee any major changes in employee benefits structures throughout the company or group;
m. ensure that all provisions regarding disclosure of remuneration including pensions, as set out in the Directors’ Remuneration Report Regulations 2002 and the Combined Code are fulfilled; and
n. 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 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
a. The Committee shall make whatever recommendations to the Board it deems appropriate on any area within its remit where action or improvement is needed.
b. 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
a. 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
a. 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.
b. 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.
Appendix A
1 Group
Investor Relations Director
Group Financial Controller
2 UK Jewellery
UK Executive Committee
3 Sterling
US Executive Committee
Reviewed February 2006