POL00458461
POL00458461
POST OFFICE LIMITED
(“the Company”)
Terms of Reference of the Remuneration Committee
The Remuneration Committee (the “Committee”) is a Committee of the
Company Board (“the Board”) from which it derives its authority and to which it
reports after each meeting. Its authority is always subject to the powers and
duties of the Board, as set out in the Articles of Association.
A. PURPOSE
1. The purpose of the Committee is to:
i. Ensure that appropriate Group remuneration policies are in place
for the Company and its subsidiaries taking into account all factors
the Committee deems necessary including relevant legal and
regulatory requirements, the provisions and recommendations of
the UK Corporate Governance Code 2024 and associated guidance.
The objective of such policy shall be to attract, retain and motivate
executive management of the quality required to run the Company
and Group subsidiaries successfully without paying more than is
necessary, having regard to views of the shareholder and other
stakeholders;
ii. Design remuneration policies and practices for the Company's
Executive Directors (‘Executive Directors’) and members of the
Strategic Executive Group to support strategy and promote long-
term sustainable success, with executive remuneration aligned to
Company purpose and values, clearly linked to the successful
delivery of the Company’s long-term strategy;
iii. use discretion to override formulaic outcomes and to recover
and/or withhold sums under appropriate specified circumstances
ensuring that any exercise of discretion is clearly documented in
minutes of Committee meetings and reported to the Board (refer
to paragraph 24 below);
iv. Approve for recommendation to the Shareholder the remuneration
for Executive Directors and the fees for Non-Executive Directors for
the Company, aside from the Chair where the Shareholder will
advise the remuneration for the Chair as determined by the
Shareholder;
v. Approve the remuneration packages of individuals who are
members of the Strategic Executive Group and fees for Non-
Executive Directors of the Company’s subsidiaries;
vi. Approve of the introduction of any long- and/or short-term
incentive scheme (LTIP/STIP), the associated performance criteria
and any awards made under such schemes by any Group
Company. In approving such a scheme, the Committee shall
ensure that it is simple, transparent, and clear’;
vii. Review workforce remuneration and related policies and the
alignment of incentives and rewards with culture, taking these into
account when setting the policy for executive director
remuneration;
1 Post Office Management Services Limited (Post Office Insurance) and Payzone Bill Payments Limited.
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POL00458461
POL00458461
Post Office Limited
Terms of Reference of the Remuneration Committee
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viii. During scheme periods, routinely assess progress against STIP and
LTIP metrics, including reviewing the validity of STIP and LTIP
metrics if circumstances change and determining whether changes
to metrics are required noting the need to potentially consult with
the Shareholder on any proposed scheme changes.
DUTIES AND RESPONSIBILITIES
Remuneration Policy for the Company: Executive
Approve for recommendation to the Board the remuneration policy
for the Executive Directors and those individuals who are members of the
Strategic Executive Group.
Remuneration Package: Executive Directors, Members of the
Strategic Executive Group, Group boards
Approve the remuneration package and total remuneration, as well as
the terms and conditions of employment including any variations thereof
for proposed Executive Director, Strategic Executive Group (including any
interim appointments to the Strategic Executive Group), and Subsidiary
board appointments (excluding Group board appointments which are in
addition to an executive’s primary role and where no additional
remuneration applies). This may include, but shall not be restricted to:
i. Base salary
ii. STIP
iii. LTIP
iv.Pension Provision
v. Contractual terms such as notice periods.
The recommendations shall align with the Group Remuneration Policy
approved by the Board, the Public Sector Pay and Terms Guidance
(PSPTG) (subject to any modifications agreed in the Shareholder
Framework Document) and the HMT Senior Pay Guidance (a requirement
for all public corporations).
The Committee must make a recommendation to the Shareholder and
Shareholder approval is required in respect of the remuneration policy
and packages for Executive Directors including any changes to the
remuneration packages and total remuneration for Executive Directors
and no payments to Executive Directors may be made unless prior
Shareholder approval has been provided.
The Committee must make a recommendation to the Shareholder and
Shareholder approval is required in respect of the proposed remuneration
of any person who is a director of a Subsidiary Company who is not an
employee of a member of the Group (unless that company is regulated
by the FCA).
Approve each element of the remuneration package and _ total
remuneration for any new hires, internal promotions and appointments or
remuneration increases for employees below the Strategic Executive
Group which are proposed to carry a salary in excess of £250,000 per
annum.
POL00458461
POL00458461
Post Office Limited
Terms of Reference of the Remuneration Committee
5. Review annually the overall total remuneration of the Senior Group
(defined as Executive Directors, members of the Strategic Executive
Group, and Group board appointments including interim appointments)
compared both with external market comparators and with the
remuneration of other employees in the Group.
Long Term Incentive Scheme (LTIP)
6. Approve the proposed design of, changes to, and outturn against LTIPS
for the Executive Directors, members of the Strategic Executive Group
and senior managers eligible to be invited to participate in the Company’s
LTIP. LTIP scheme metrics, weightings and targets that are proposed for
Executive Directors must be approved by the Shareholder.
7. Review periodically progress against LTIP metrics, including reviewing
the validity of LTIP metrics if circumstances change and determining
whether changes to metrics are required noting the need to potentially
consult with the Shareholder on any proposed scheme changes.
8. Document the data that has been reviewed to determine whether LTIP
metrics have been achieved noting this in the minutes of Committee
meetings.
9. Review annually the criteria for and outturn against the LTIP for the
Executive Directors, members of the Strategic Executive Group and
senior managers eligible to be invited to participate in the Company's
LTIP.
10. Where final LTIP outturns are in line with Shareholder approval obtained
under paragraph 7 above, Inform DBT and UKGI officials in respect of
the final outturn amounts for performance related LTIP for Executive
Directors. Where final LTIP outturns proposed for Executive Directors are
not in line with Shareholder approval, additional Shareholder approval
must be obtained prior to award.
Short Term Incentive Scheme (STIP)
11. Approve the criteria for, changes to, and outturn against the STIP for
Executive Directors and members of the Strategic Executive Group. STIP
scheme metrics, weightings and targets that are proposed for Executive
Directors must be approved by the Shareholder.
12. Review periodically progress against STIP metrics, including reviewing
the validity of STIP metrics if circumstances change and determining
whether changes to metrics are required noting the need to potentially
consult with the Shareholder on any proposed scheme changes.
13. Review annually the criteria for and outturn against agreed Plan of short-
term performance related pay arrangements for Executive Directors and
members of the Strategic Executive Group.
14. Document the data that has been reviewed to determine whether
metrics have been achieved noting this in the minutes of Committee
meetings.
15. Where final STIP outturns are in line with Shareholder approval obtained
under paragraph 10 above, Inform DBT and UKGI officials in respect of
the final outturn amounts for performance related STIP for Executive
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POL00458461
POL00458461
Post Office Limited
Terms of Reference of the Remuneration Committee
Directors. Where final STIP outturns proposed for Executive Directors are
not in line with Shareholder approval, additional Shareholder approval
must be obtained prior to award.
16. Receive information on the total outturn of performance related pay
arrangements across the business for information.
Exit Packages
17. Where any exit package for any Executive Director or Strategic Executive
Group Member is in excess of contractual obligations, the exit package
must be approved by the Committee for recommendation to the
Shareholder.
Remuneration Policy for the Company
Non-Executive Directors
18. Approve for recommendation to the Shareholder the fees for Non-
Executive Directors of the Company aside from the Chair where the
Shareholder will advise the remuneration for the Chair as determined by
the Shareholder.
Group
19. Approve for recommendation to the Board the Group Remuneration
Policy. The Committee notes the responsibilities of the Group Chief
Executive as the Accountable Officer to observe the principles set out by
HM Treasury in Managing Public Money and the responsibility of the
Company to have regard to relevant sections of HM Treasury Guidance
for approval of Senior Pay (June 2023) and will take these into account,
as well as the items listed in Appendix 5 of the Shareholder Relationship
Framework Agreement (March 2020), when making recommendations
regarding the Group Remuneration Policy and its application to the
Executive Directors and members of the Strategic Executive Group.
c. REPORTING RESPONSIBILITIES
20. The Committee Chair shall report to the Board after each meeting on the
nature and content of its discussion, recommendations and action to be
taken.
21. Report to the Board on decisions where the Committee has exercised
discretion as well as whatever recommendations it deems appropriate on
any area within its remit where action or improvement is needed, and
adequate time should be available for Board discussion when necessary.
22. Report on its activities in the Company’s annual report which should
describe the work of the Committee in line with the requirements of the
UK Corporate Governance Code and include detail relating to any exercise
of discretion by the Committee.
23. Identify in the annual report any consultants appointed as remuneration
consultants, alongside a statement about any other connection they have
with the Company or individual directors.
D. AUTHORITY
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POL00458461
POL00458461
Post Office Limited
Terms of Reference of the Remuneration Committee
24. The Committee is authorised by the Board to obtain, at the Company’s
expense, outside legal or other professional advice on any matters within
its terms of reference.
25. The Committee shall be authorised to seek any information it requires
from any employee of the Company in order to perform its duties.
26. The Committee shall have full authority to appoint remuneration
consultants and to commission or purchase any reports, surveys or
information which it deems necessary at the expense of the Company.
However, the Committee should avoid designing pay structures based
solely on benchmarking to the market or on the advice of remuneration
consultants and should ensure pay structures are simple, transparent,
and clear.
E. COMPOSITION AND GOVERNANCE
Membership
27. The Committee Chair and members of the Committee will be appointed
by the Board, acting on the recommendation of the Nominations
Committee and in consultation with the Chair of the Remuneration
Committee and shall be appointed for a period coinciding with their term
of appointment as directors of the Company, which may be extended for
an additional three-year period, provided the director still meets the
criteria for membership of the Committee and is otherwise approved for
re-appointment as a director of the Company.
28. The Committee Chair shall be an independent Non-Executive Director
who should have served on a remuneration committee for at least 12
months.
29. In the absence of the Committee Chair at any meeting, the Committee
members present shall determine who shall chair the Committee.
30. The Committee shall include within it’s membership the Shareholder Non-
Executive Director and at least two independent Non-Executive
Directors. If considered independent at the time of appointment, the
Chair of the Company may be a member of the Committee, but shall not
chair it.
31. Only Non-Executive Directors shall be eligible to be members of the
Committee, such that no individual shall be involved in determining their
own remuneration.
Quorum
32. Quorum shall be two members.
Committee Secretary
33. The Group Company Secretary, or his or her nominee, shall act as
Secretary to the Committee and shall attend all meetings to keep
minutes and record actions.
Frequency
34. The Committee shall meet as often as required but at least [three] times
per year.
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POL00458461
POL00458461
Post Office Limited
Terms of Reference of the Remuneration Committee
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Governance
Meetings may be held in person or by telephone or other electronic
means, so long as all participants can contribute to the meeting
simultaneously.
Notice of each meeting shall be given to all those entitled to participate at
least three working days before the meeting.
Meetings for the Committee may be convened by the Secretary in
consultation with the Chair, or by any member of the Committee, at any
time. The Secretary will be responsible for setting the venue date and
time of meetings in conjunction with the Chair. All papers supporting the
meeting will be issued in good time, one week in advance of the meeting
date.
The Chair will report regularly to the Board. Minutes of each Committee
meeting will be circulated to all members of the Committee and, once
agreed, to those members of the Board who have no personal interest in
the matters discussed. Where a conflict of interest exists, the Company
Secretary will provide sufficient information to the full Board to provide
an understanding of the matter(s) considered.
The Secretary shall provide current and new Committee members with
any training, briefings or induction required under the supervision of the
Chair.
Only members of the Committee have the right to attend Committee
meetings. The Group Chief Executive, the Group Chief People Officer (or
the holder of any equivalent position), Group Reward Director, and
external advisers shall be informed of the date of each meeting and may
be invited by the Chair to attend all or part of any meeting, as and when
appropriate.
The Committee shall have access to sufficient executive time and
resources in order to carry on its duties, including access to the Company
Secretary and members of the People/Human Resources team.
The Committee shall be exclusively responsible for establishing the
selection criteria, selecting, appointing and setting terms of reference of
remuneration consultants and have authority to appoint remuneration
consultants and to obtain, at the Company’s expense, legal or other
professional advice on matters within its terms of reference as required,
up to a financial limit determined by the Board.
If there should be disagreement between the Remuneration Committee
and the full Board, the Chair of the Board shall make time available for
discussion of the issue so that the matter may be resolved. Where any
such disagreement cannot be resolved, the Remuneration Committee
shall report the issue as part of any annual report on its activities
required by the Shareholder.
Process to obtain Shareholder approval
44,
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Where within these terms of reference there is a requirement to obtain
the approval of the Shareholder, the process shall be as described in
Article 8.3 of the Company’s Articles of Association.
POL00458461
POL00458461
Post Office Limited
Terms of Reference of the Remuneration Committee
F. ANNUAL REVIEW AND APPROVAL
45. The Committee will undertake an annual review of its performance and
the Terms of Reference. The outcome of these review will be
recommended to the Board for approval (notwithstanding amendments
approved by the Committee whenever so required).
Approved by: Date: Version: Effective from:
Post Office Limited Board 25/03/2015 11 25/03/2015
Post Office Limited Board 25/11/2015 1.2 25/11/2015
Post Office Limited Board 30/10/2018 1.3 30/10/2018
Post Office Limited Board 20/07/2019 1.4 30/07/2019
Post Office Limited Board 08/04/2020 2.0 09/04/2020
Post Office Limited Board 03/06/2021 2.0 04/06/2021
(no changes)
Post Office Limited Board 28/03/2023 3.0 29/03/2023
Post Office Limited Board 28/11/2023 4.0 29/11/2023
Post Office Limited Board 01/03/2024 5.0 02/03/2024
Post Office Limited Board 04/06/2024 6.0 04/06/2024
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