This section of the Directors' Remuneration Report describes the membership of the Remuneration Committee, its advisers and principal activities during the period. It forms part of the Annual Report on Remuneration section of the Directors' Remuneration Report.
The current membership of the Remuneration Committee, together with appointment dates, is set out below.
As required under the terms of reference, the Remuneration Committee has three members, all of whom are independent Non-Executive Directors, and holds a minimum of two meetings a year.
Douglas McCallum Chairman
Remuneration Committee member since 3 October 2011
Number of meetings: 4
Number attended: 4
Remuneration Committee member since 9 March 2010
Number of meetings: 4
Number attended: 4
Remuneration Committee member since 1 March 2016
Number of meetings: 2
Number attended: 2
The biography of each member of the Remuneration Committee is set out in the Board of Directors section.
Other attendees at the Remuneration Committee meetings included the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the People Director and the external adviser to the Remuneration Committee, Deloitte LLP. The Chairman and the Executive Directors and other attendees are not involved in any decisions of the Remuneration Committee and are not present at any discussions regarding their own remuneration. The Deputy Company Secretary is secretary to the Remuneration Committee.
During the year, the Remuneration Committee composition changed as a result of the retirement of David Grigson and the subsequent appointment of Non-Executive Director Andrew Harrison, effective from 1 March 2016. David Grigson attended three meetings during the period, out of a possible three meetings, before his retirement from the Remuneration Committee on 4 May 2016.
During the period, the Remuneration Committee and the Company retained independent external advisers to assist them on various aspects of the Company's remuneration and share schemes as set out below:
|Adviser||Retained by||Services Provided to the Remuneration Committee||Other Services Provided|
|Deloitte LLP||Remuneration Committee||Executive remuneration advice including assisting in a benchmarking review of Executive Director remuneration.||Separate teams engaged by the Company to advise on a range of Company tax, share schemes and accounting matters, including transaction advice.|
See below regarding the auditor tender process.
|Slaughter and May||Company||None||Share schemes, tax and employment law advice as well as general UK legal advice in respect of a number of the Company's remuneration matters, including vesting of the LTIP and the Chairman's Share Matching Award and changes to the LTIP and GIP rules.|
Deloitte LLP Re-appointment Review and Tender Process
The Remuneration Committee considered the re-appointment of Deloitte LLP. This review took into account Deloitte's effectiveness, independence, period of appointment and fees. Deloitte LLP were appointed by the Remuneration Committee in 2012 following a tender process led by the then Remuneration Committee Chairman.
The Remuneration Committee reviewed the performance of Deloitte LLP based on feedback from members of the Remuneration Committee and management. The criteria for assessing their effectiveness included their understanding of business issues and risks, their knowledge and expertise and their ability to manage expectations. The Remuneration Committee concluded that the performance of Deloitte LLP remained effective.
The Remuneration Committee considered the independence and objectivity of Deloitte LLP. Deloitte LLP have provided assurances to the Remuneration Committee that they have effective internal processes in place to ensure that they are able to provide remuneration consultancy services independently and objectively. Deloitte LLP confirmed to the Company that it is a member of the Remuneration Consultants Group and as such operates under the code of conduct in relation to executive remuneration consulting in the UK. The Remuneration Committee is, following its annual review, satisfied that Deloitte LLP has maintained independence and objectivity.
For the period, £25,000 in advisory fees were paid or payable to Deloitte LLP for services provided to the Remuneration Committee.
Following the review by the Remuneration Committee, it was agreed that Deloitte LLP should be re-appointed.
Subsequently, the Remuneration Committee noted the proposed appointment of Deloitte LLP as external auditors of the Company from the 2017 Annual General Meeting (for further information see the Audit Committee Report). Deloitte would not continue as adviser to the Remuneration Committee from then and accordingly the Remuneration Committee agreed to tender the role. The Remuneration Committee agreed a tender process, which is expected to conclude in April 2017.
Other Support for the Remuneration Committee
In addition to the external advice received, the Remuneration Committee consulted and received reports from the Company's Chief Executive Officer, the Chief Financial Officer, the Chairman, the People Director and the Deputy Company Secretary. The Remuneration Committee is mindful of the need to recognise and manage conflicts of interest when receiving views and reports from, or consulting with, the Executive Directors or members of senior management.
Principal Activities of the Remuneration Committee During the Financial Year
The Remuneration Committee has, under its terms of reference, been delegated responsibility for setting remuneration for all of the Executive Directors, the Chairman and the Company Secretary. This is outlined on Statement of Corporate Governance. In line with its terms of reference, the Remuneration Committee's work during the period included the following:
- approving the 2015 Directors' Remuneration Report;
- reviewing performance under the 2015 AIP and consideration of any bonuses payable;
- approving the 2016 AIP performance targets;
- approving the 2016 LTIP awards and performance targets;
- reviewing performance against LTIP awards;
- receiving executive remuneration advice from Deloitte LLP in respect of a range of matters considered by the Remuneration Committee during the year;
- receiving a report on Group-wide and management remuneration for 2016;
- consulting the Chief Executive Officer and the Chairman on performance and remuneration of the Executive Directors;
- receiving reports from Deloitte on senior executive pay, market themes and trends;
- receiving a report on the Group's share schemes and plans for 2017;
- receiving a report on shareholder feedback on the 2015 annual report and 2016 annual general meeting;
- approving a new invitation under the Sharesave scheme for 2017;
- approving amendments to the LTIP rules to allow for holding periods;
- reviewing the Remuneration Committee's performance and terms of reference;
- reviewing the performance of Deloitte LLP; and
- agreeing a process and timetable for a tender of the role of external remuneration consultants.
The Remuneration Committee's work also included monitoring and considering the level and structure of remuneration for the Management Committee. Ultimate decision-making responsibility for the remuneration of the Management Committee lies with the Chief Executive Officer. This approach still gives the Remuneration Committee necessary visibility of senior management remuneration to enable it to formulate appropriate policy and make decisions regarding Executive Director remuneration, but allows the Chief Executive Officer, who is best placed to make remuneration decisions about the management team, the flexibility to do so. The Remuneration Committee believes this practice is beneficial to the Company and supports the Code principle D.2.
The Remuneration Committee carried out a review of its terms of reference during the period, which did not result in any changes.
In addition to the activities of the Remuneration Committee, the Executive Directors and the Chairman reviewed the remuneration arrangements of the Non-Executive Directors.