Howden Joinery Group Plc

Terms of Reference of the Remuneration Committee

Last approved: 19 January 2017

1.

Membership

1.1. Members of the Committee shall be appointed by the Board, on the recommendation of the Nominations Committee and in consultation with the Chairman of the Remuneration Committee.
1.2 The Committee shall be made up of at least 3 members. Each Committee member shall be an independent non-executive director as determined by the Board (in accordance with the principles of the UK Corporate Governance Code).
1.3 The Chairman of the Board may also serve on the Remuneration Committee as an additional member provided he or she was considered independent on appointment as Chairman.
1.4 Only members of the Committee have the right to attend Committee meetings. However, other individuals, including, but not limited to, the Chairman, Chief Executive, other Board members and external advisers may be invited to attend for all or part of any meeting as and when appropriate.
1.5 Appointments to the Committee shall be for a period of up to three years, which may be extended, provided the director continues to be independent.
1.6 The Board shall appoint the Committee Chairman who shall be an independent non-executive director. In the absence of the Committee Chairman the remaining members present shall elect one of themselves to chair the meeting.   The Chairman of the Board shall not be the Chairman of the committee.
1.7 The Board shall regularly review the membership of the Committee to ensure an appropriate balance of experience, skills and knowledge is maintained and to ensure that undue reliance is not placed on particular individuals.

2.

Secretary

2.1. The Company Secretary shall be the Secretary to the Committee and shall advise and support the Committee in its work.

3.

Quorum

3.1. The quorum necessary for the transaction of business shall be two members, present in person or by electronic communication (where he or she is able to speak and to be heard by all those deemed to be present simultaneously). 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

4.1. The Committee shall meet at least twice a year and at such other times as the Chairman of the Committee shall require.

5.

Notice of Meetings

5.1. Meetings of the Committee shall be summoned by the Secretary of the Committee at the request of the Committee chairman.
5.2. 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

6.1. The Secretary shall minute the proceedings and resolutions of all Committee meetings, including the names of those present and in attendance.
6.2. Minutes of Committee meetings shall be circulated to all members of the Committee.

7.

Annual General Meeting

7.1. The Chairman of the Committee shall attend the Annual General Meeting (AGM) to respond to any shareholder questions on the Committee's activities.

8.

Duties

The Committee should carry out the duties below for the parent company, major subsidiary undertakings and the Group as a whole, as appropriate.
The Committee shall:
8.1 have responsibility for setting the remuneration policy for all executive directors and the Company's Chairman, including pension rights and any compensation payments. The board itself or, where required by the Articles of Association, the shareholders should determine the remuneration of the non-executive directors within the limits set in the Articles of Association. No director or executive shall be involved in any decisions as to their own remuneration;
8.2 recommend and monitor the level and structure of remuneration for senior management;
8.3 in determining such policy, take into account all factors which it deems necessary including relevant legal and regulatory requirements, the provision and recommendations of the UK Corporate Governance Code and associated guidance.  The objective of such policy shall be to reward executive directors fairly and responsibly, with a clear link to corporate and individual performance, having regard to the views of shareholders and other stakeholders.  The remuneration policy should have regard to the risk appetite of the Company and alignment to the Company's long strategic term goals. A significant proportion of remuneration should be structured so as to link rewards to corporate and individual performance and designed to promote the long-term success of the Company;
8.4 when setting remuneration policy for directors, review and note annually the remuneration trends across the Company or Group especially when determining annual salary increases;
8.5 exercise any discretion or judgment on remuneration issues in accordance with the remuneration policy;
8.6 review the ongoing appropriateness and relevance of the remuneration policy for executive directors and consult with significant shareholders as appropriate with a view to obtaining approval of the policy by the shareholders at the Annual General Meeting:
  8.6.1 At least every three years; or
  8.6.2 In any year in which there is a change to the policy; or
  8.6.3 If majority shareholder approval was not secured when last put forward for approval.
8.7 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, the Company Chairman and other designated senior executives including bonuses, incentive payments and share options or other share awards;
8.8 obtain reliable, up-to-date information about remuneration in other companies of comparable scale and complexity. To help it fulfill its obligations 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, within any budgetary restraints imposed by the board;
8.9 be exclusively responsible for establishing the selection criteria, selecting, appointing and setting the terms of reference for any remuneration consultants who advise the Committee;
8.10 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 (in accordance with the provisions in Schedule A of the UK Corporate Governance Code);
8.11   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, Company Secretary and other senior executives and the performance targets to be used;
8.12 Design and invoke agreed safeguards, such as clawback provisions, to protect against rewards for failure through appropriate risk management of incentive arrangements to ensure that any performance-related payments reflect actual achievements;
8.13 determine the policy for, and scope of, pension arrangements for each executive director and other senior executives;
8.14 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 if fully recognised.;
8.15 understand any major changes in employee benefits structures throughout the Company or Group;
8.16 agree the policy for authorising claims for expenses from the directors; and
8.17 work and liaise as necessary with all other Board committees.

9.

Reporting Responsibilities

9.1. The Committee Chairman shall, where appropriate, report to the Board on its proceedings.
9.2. The Committee shall make whatever recommendations to the Board it deems appropriate on any area within its remit where action or improvement is needed.
9.3. The Committee shall ensure that provisions regarding disclosure of information, including pensions, as set out in the relevant legislation and the UK Corporate Governance Code, are fulfilled and produce a report of the Company's remuneration practices to be included in the Company's annual report and ensure each year that it is put to shareholders for approval at the AGM. If the Committee has appointed remuneration consultants, the annual report of the Company's remuneration policy should identify such consultants and state whether they have any other connection with the Company.
9.4 Through the Chairman of the Board, ensure that the Company maintains contact as required with its principal shareholders about remuneration.

10.

Other Matters

The Committee shall
10.1. have access to sufficient resources in order to carry out its duties, including access to the company secretariat and management for assistance as required.
10.2. be provided with appropriate and timely training, both in the form of an induction programme for new members and on an ongoing basis for all members.
10.3. give due consideration to laws, regulations and and any published guidelines or recommendations regarding the remuneration of directors of listed/non listed companies and formation and operation of share schemes including but not limited to the provisions of the UK Corporate Governance Code, the requirements of the Listing, Prospectus and Disclosure and Transparency Rules as well as guidelines published by the Investment Management Association and the National Association of Pension Funds and any other applicable rules, as appropriate.
10.4 arrange for periodic reviews of 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 for approval.

11.

Authority

11.1. 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.