Remuneration Committee Terms of Reference
The Remuneration Committee (the “Committee”) is established as a committee of the Board of Directors (the “Board”) of Shire plc (the “Company”).
2.1. The Committee shall consist of not less than three members, each of whom shall be appointed by the Board upon the recommendation of the Nomination Committee in consultation with the Chairman of the Remuneration Committee. The members of the Committee shall be chosen from amongst the independent non-executive directors of the Company and shall be selected on the basis of their knowledge or previous experience of matters relating to compensation.
2.2. Committee members will hold office for an initial period of up to two years, subject to continuing as a director of the Company, and will hold office for such duration as may be determined by the Board.
2.3. The Board shall appoint the Chairman of the Committee and determine the period for which the Chairman is to hold office. If no such Chairman shall have been appointed, or if at any meeting the Chairman is not present within a reasonable time from the time appointed for holding the meeting, the members present shall choose one of their number to act as chairman of the meeting.
2.4. If any member of the Committee is unable to act for any reason, the Chairman of the Committee may appoint any other independent non-executive director of the Company to act as alternate for that member.
The Company Secretary or their nominee shall act as Secretary of the Committee.
The quorum necessary for the transaction of the business of the Committee shall be three members. 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.
5. Frequency of Meetings
5.1. Meetings shall be held not less than four times a year and shall be arranged by the Secretary of the Committee.
5.2. In addition to the routine meetings of the Committee, any member of the Committee may at any time request the Secretary of the Committee to arrange a meeting if he considers that one is necessary.
6. Conduct of Business
The Committee shall conduct its business as it thinks fit. Decisions of the Committee shall be by majority decision. In the case of an equality of votes, the Chairman of the Committee shall have a second or casting vote. Save as otherwise required by these terms of reference or agreed by the Committee, all provisions relating to the conduct of business of the Board in the articles of association from time to time of the Company shall equally apply to the conduct of business of the Committee.
7. Attendance of Meetings
Only members of the Committee shall have the right to attend meetings of the Committee. Other members of the Board, who are not members of the Committee and individuals such as the Head of Human Resources and external advisers may be invited to attend for all or part of any meeting, as and when appropriate.
8.1. The Committee shall:
(a) consider and recommend to the Board the broad policy for the remuneration and incentivisation of the Executive Directors, the Chairman of the Company, members of the Leadership Team and employees of the Company;
(b) determine the policy for the terms of employment of the Executive Directors and the Leadership Team, including the scope of termination payments and pension arrangements;
(c) approve, within the terms of the agreed policy, the total remuneration package of the Chairman and the total remuneration and incentivisation package of the Chief Executive Officer and other Executive Directors. In determining such packages, the Committee shall give due regard to the contents of the UK Corporate Governance Code on corporate governance and other applicable laws and regulations;
(d) in relation to any bonus scheme operated by the Company, determine annual targets and key performance indicators for, and assess performance against targets and key performance indicators by (i) the Company and (ii) individual Executive Directors;
(e) approve the grant of long term incentive awards, such as share appreciation rights and performance shares, including the monitoring of any performance conditions subject to which any long term incentive awards may be granted under any schemes adopted by the Company;
(f) review the design of all share incentive schemes, including the setting of performance conditions, to be put forward for approval by the Board and shareholders;
(g) agree the policy for authorising claims for expenses from the Chief Executive and the Chairman;
(h) ensure that all incentive schemes are aligned to the Company’s risk policies and systems;
(i) review and be satisfied that the Company’s remuneration practices and policies are fairly represented in the Directors’ Remuneration Report in the Company’s Annual Report;
(j) be responsible for selecting and appointing any remuneration consultants who advise the Committee; and
(k) consider such other matters as are referred to the Committee by the Board.
8.2. Non-executive Directors’ Remuneration
The remuneration of the non-executive directors (other than the Chairman) shall be a matter for the Board (subject always to paragraph 8.3).
8.3. Own Remuneration
No director shall be involved in any decisions as to their own remuneration.
8.4. Leadership Team Remuneration
The Chief Executive Officer, within the terms of the agreed policy, shall approve and advise the Committee of the total remuneration package of members of the Leadership Team other than the Executive Directors.
9.1 The Committee Chairman shall report formally to the Board on the Committee’s proceedings after each meeting.
9.2 The Committee shall, once a year, consider its own performance, membership and terms of reference to ensure it is operating at maximum effectiveness and shall recommend any necessary changes to the Board for its approval.
9.3 The Committee shall make any recommendations to the Board it deems appropriate on any areas within its terms of reference where action or improvement is needed.
10.1. The Committee is authorised to seek any information it requires from any employee of the Company in order to perform its duties.
10.2. In connection with the performance of its duties, the Committee is authorised to obtain outside legal or other independent professional advice (including the advice of independent remuneration consultants) and to secure the attendance of external professional advisers at its meetings if it considers this necessary, in each case, at the Company’s expense.
10.3. In order to fulfil its duties, the Committee is authorised by the Board to:
(a) investigate remuneration paid to directors of other companies of a similar size and in a comparable sector; and
(b) to obtain information on the remuneration of any employee of the Company.
11.1 The members of the Committee shall cause minutes to be made of all resolutions and proceedings of the Committee including the names of all those present and in attendance at meetings of the Committee.
11.2 The Secretary of the Committee shall circulate the minutes of meetings of the Committee to all members of the Committee and as requested, or where relevant, once they have been agreed, on the instruction of the Chairman of the Committee, to other members of the Board and to other advisers of the Company.
12. Annual General Meeting
The Chairman of the Committee shall attend the Company’s Annual General Meeting to answer shareholders’ questions about the Committee’s activities.
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