Advantage House Poplar Way Rotherham S60 5TR Tel 0114 349 3131 Harworth Group plc (the Company ) Remuneration Committee Terms of Reference 1. Membership 1.1 The committee shall comprise not less than two members. A majority of the members of the committee shall be independent non-executive directors. Members of the committee shall be appointed by the board on the recommendation of the nomination committee in consultation with the chairman of the nomination committee. 1.2 The chairman of the board may also be a member of, but not chair, the committee if he or she was considered independent on appointment as chairman. 1.3 Appointment to the committee shall be for a period of up to three years extendable by no more than two additional three year periods provided that at all times the majority of the committee comprises independent non-executive directors, taking account of any directors who have ceased to be independent. 1.4 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 at a meeting of the committee, the remaining members present shall elect one of their own to chair the meeting who would qualify under these terms of reference to be appointed to that position. 2. Secretary 3. Quorum The company secretary, or his or her nominee, shall act as the secretary to the committee and will ensure that the committee receives information and papers in a timely manner to enable full and proper consideration to be given to issues. The quorum necessary for the transaction of business shall be two independent non-executive directors. 4. Attendance at meetings 4.1 Only members of the committee have the right to attend committee meetings. However, other individuals such as the chief executive, the group HR manager and external advisers may be invited to attend for all or part of any meeting, as and when deemed appropriate by the committee chairman. 4.2 The chairman, if he or she is not a member of the committee, and the chief executive shall have the right to address any meeting of the committee. 4.3 No individual may participate in deliberations in which their remuneration is being directly discussed or in decisions which directly affect their remuneration.
5. Frequency of meetings The committee shall meet at least twice a year and otherwise as the committee chairman shall require. 6. Notice of Meetings 6.1 Meetings of the committee shall be convened by the secretary of the committee at the request of the committee chairman. 6.2 Unless otherwise agreed, notice of each meeting, confirming the venue, date and time, together with an agenda of items to be discussed and supporting papers, shall be circulated to each member of the committee, any other person required to attend and all other non-executive directors, no later than five working days before the date of the meeting. 7. Minutes of meetings 7.1 The secretary shall minute the proceedings and decisions of all meetings of the committee, including recording the names of those present and in attendance. 7.2 Draft minutes of committee meetings shall be agreed with the committee chairman and then circulated to all members of the committee prior to the next committee meeting, unless it would be inappropriate to do so in the opinion of the committee chairman. Once approved, minutes should be circulated to all other members of the Board. 7.3 A resolution in writing signed by all committee members will be as effective as a resolution passed at a committee meeting. 8. Responsibilities 8.1 The role of the committee is to assist the board to fulfill its responsibility to shareholders to ensure the remuneration policy and practices of the company reward fairly and responsibly, with a clear link to corporate and individual performance, having regard to statutory and regulatory requirements and associated guidance. 8.2 In particular, the committee shall: 8.2.1 determine and agree with the board the remuneration policy for the executive directors, other members of the executive committee and the chairman; 8.2.2 in determining the remuneration policy, take into account all factors which it deems necessary including relevant legal and regulatory requirements from time to time, the views of shareholders either communicated to the committee directly or at general meetings of the company, the provisions and recommendations of the UK Corporate Governance Code, the FCA s Listing and Disclosure and Transparency Rules and associated guidance; 8.2.3 in determining the remuneration policy, and when determining the annual remuneration of the executive directors, other members of the executive committee and the chairman, ensure that it:
8.2.3.1 is designed to achieve an appropriate balance between (i) fixed and performance-related remuneration, and (ii) immediate and deferred remuneration; 8.2.3.2 is designed to incentivize, attract, retain and motivate individuals of the quality required to promote the long-term success of the business; 8.2.3.3 rewards executive directors and other members of the executive committee in a fair and reasonable manner for their individual contributions to the success of the company, linking rewards to corporate and individual performance; 8.2.3.4 has regard to the views of shareholders; 8.2.3.5 is linked to the company s strategy and its long-term strategic goals; and 8.2.3.6 is aligned with the company s risk appetite, risk management strategy, risk policies and systems, without paying more than is necessary. 8.3 In determining the company s remuneration policy, the committee shall obtain and have regard to reliable, up-to-date information about remuneration in other companies of comparable scale and complexity. 8.4 The committee shall be responsible for ensuring that the remuneration policy is submitted to shareholders in general meeting at intervals not exceeding three years, and for periodically reviewing its ongoing appropriateness and relevance. 8.5 The committee shall ensure that all payments or proposed payments to executive directors and other members of the executive committee are consistent with the latest remuneration policy approved by shareholders from time to time. 8.6 The committee shall: 8.6.1 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, ensuring that such performance-related elements are transparent, stretching, rigorously applied and promote the long-term success of the company; 8.6.2 review and recommend the design of all long-term incentive plans for approval by the board and shareholders; determine each year whether awards will be made, and if so, the overall amount of such awards, the individual awards under such plan and the performance targets to be used; 8.6.3 design agreed safeguards, for example, clawback to protect against rewarding failure, and adopt appropriate risk management of incentive arrangements to ensure performancerelated payments reflect actual achievement; 8.6.4 determine the policy for, and scope of, pension arrangements for each executive director and member of the executive committee and the level of contributions by the company, taking into account any impact of base salary increases or other pension and benefit changes;
8.6.5 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 recognized; 8.6.6 within the terms of the company s remuneration policy, determine the total individual remuneration package of each executive director and each member of the executive committee including base salary, bonuses, incentive payments and share options or other share or share-based awards; 8.6.7 review and have regard to pay and employment conditions across the group, especially when determining annual salary increases; 8.6.8 oversee any major changes to group-wide employee benefits; 8.6.9 review and approve the policy for authorising expenses claims by directors. 8.7 The committee shall be exclusively responsible for establishing the selection criteria, selecting, appointing and setting the terms of reference for any remuneration consultants who advise the committee. 8.8 The remuneration of the non-executive directors (other than the chairman) is a matter for the Board. 9. Reporting responsibilities 9.1 The committee chairman shall report to the board after each meeting on all matters within its terms of reference and on how it has discharged its responsibilities. 9.2 The committee shall make whatever recommendations to the board it deems appropriate on any area within its terms of reference where action or improvement is needed. 9.3 The committee shall ensure proper disclosure of remuneration as set out in the Large and Mediumsized Companies and Groups (Accounts and Reports) (Amendments) Regulations 2013 and the Companies Act 2006 and any other relevant regulations which may come into force from time to time. 9.4 The committee shall report annually on the company s remuneration policy and practices which will form part of the company s annual report and financial statements for submission as appropriate to shareholders at the annual general meeting. The report shall be prepared having regard to, and shall include such information as may be required by, the Companies Act 2006, the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendments) Regulations 2013, the UK Corporate Governance Code, the FCA s Listing and Disclosure and Transparency Rules and any other statutory, regulatory or governance code applicable to the company from time to time together with guidance issued by bodies representing institutional investors. 9.5 If the committee has remuneration consultants, the company s annual remuneration report should identify such consultants and state whether they have any other connections with the company. 9.6 Through the chairman, the committee shall ensure that the company maintains contact as required with its shareholders in relation to remuneration matters.
9.7 The committee chairman should attend the annual general meeting to answer shareholder questions on the committee s activities. 10. Authority 10.1 The committee has delegated authority from the board in respect of the functions and powers set out in these terms of reference. 10.2 In discharging its responsibilities, the committee may: 10.2.1 take such internal and external advice and commission or purchase any reports, surveys and/or information as it considers appropriate to determine any aspect of remuneration, terms of service and incentives, at the expense of the company, but within the budgetary restraints imposed by the board; and 10.2.2 sub-delegate any or all of its powers and authority as it thinks fit to one or more of its members or the Secretary, including, without limitation, the establishment of subcommittees which are to report back to the Committee. 10.3 The committee shall give due consideration to laws, regulations and any published guidelines or recommendations regarding the remuneration of directors and formation and operation of share schemes including relevant the provisions of the Companies Act 2006, the Large and Medium-Sized Companies and Groups (Accounts and Reports) (Amendments) Regulations 2013, the UK Corporate Governance Code, the FCA s Listing and Disclosure and Transparency Rules and any other statutory, regulatory or governance code applicable to the company from time to time, together with guidance issued by bodies representing institutional investors. 11. Other matters 11.1 The committee shall be provided with appropriate and timely training, both in the form of an induction programme to new members and on an on-going basis for all members. 11.2 The committee shall have access to sufficient resources to discharge its responsibilities, including access to the company secretary for assistance as required. 11.3 The Committee will work and liaise as necessary with all other board committees. 11.4 The committee shall review, on a regular basis, its own performance and, at least annually, review its constitution and terms of reference to ensure it is operating at maximum effectiveness and recommend any changes it considers necessary to the board. Last reviewed and updated by the Board on 15 December 2017