Terms of Reference for the Remuneration Committee of British Business Bank plc

1. Constitution

  1. The Committee is a Committee of the Board appointed in accordance with the company’s articles of association.

2. Membership

  1. The Committee shall comprise at least three members. At least one member of the Committee shall be a shareholder representative who is a director of the company.  The Chair of the board may also serve on the Committee as a member if he or she was considered independent on appointment as chair.  All other 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 and in consultation with the Chair of the Remuneration Committee.
  2. Only members of the Committee and the Chair of the Board have the right to attend Committee meetings. However, other individuals such as the Chief Executive, other directors, the Head of Human Resources and external advisers may be invited to attend for all or part of any meeting, as and when appropriate and necessary and at the Committee Chair’s discretion. 
  3. Appointments to the Committee shall be for a period of up to three years, which may be extended for a further period of up to three years, provided the director still meets the criteria for membership of the Committee. Any appointment beyond six years should be subject to rigorous review by the Nomination Committee.
  4. The Board shall appoint the Committee Chair who shall be an independent non-executive director who has served on a Remuneration Committee for at least 12 months. In the absence of the Committee Chair and/or an appointed deputy, the remaining members present shall elect one of themselves to chair the meeting who would qualify under these terms of reference to be appointed to that position by the Board.
  5. The quorum for the transaction of business shall be two, one of whom must be an independent non-executive director.

3. Secretary

  1. The company secretary or his or her nominee shall act as the secretary of the Committee.
  2. Frequency, Notice and Minutes of Meetings
  3. The Committee shall meet at least twice a year and otherwise as required. 
  4. Meetings of the Committee shall be called by the secretary of the Committee at the request of the Committee Chair.
  5. The secretary shall minute the proceedings and resolutions of all committee meetings, including the names of those present and in attendance.

4. Frequency, Notice and Minutes of Meetings

  1. The Committee shall meet at least twice a year and otherwise as required.
  2. Meetings of the Committee shall be called by the secretary of the Committee at the request of the Committee Chair.
  3. The secretary shall minute the proceedings and resolutions of all committee meetings, including the names of those present and in attendance.

5. Annual general meeting

  1. The committee chair should attend the annual general meeting to answer any shareholder questions on the committee’s activities. 

6. Duties

  1. The Committee shall carry out the duties detailed below for the company, major subsidiary undertakings and the group as a whole, as appropriate in light of the obligations set out by the shareholder.  More specifically, the committee shall:
  2. have responsibility for setting the remuneration policy for the company’s Chair and all employees, including pension rights and any compensation payments.  The Board itself or, where required by the articles of association of the company, the shareholder should determine the remuneration of the non-executive directors within the limits set in the articles of association.  No director or senior manager shall be involved in any decisions as to their own remuneration.  The Committee may seek the views of the company’s Chief Executive in respect of the remuneration policy for senior management and executive directors (other than the chief executive himself or herself);
  3. in determining such policy, take into account all factors that it deems necessary including relevant legal and regulatory requirements, the provisions and recommendations of the UK Corporate Governance Code (the “Code”) and associated guidance, and the provisions contained within the Shareholder Relationship Framework Document. The objective of such policy shall be to attract, retain and motivate executive management of the quality required to run the company successfully without paying more than is necessary, subject to approval by the company’s shareholder. 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;
  4. when setting remuneration policy for directors, review and have regard to pay and employment conditions across the group, especially when determining annual salary increases;
  5. review the on-going appropriateness and relevance of the remuneration policy;
  6. within the terms of the agreed policy and in consultation with the Chair and/or Chief Executive, as appropriate, determine the total individual remuneration package of the company chair, each executive director, and all other members of the executive committee, including the company secretary, including bonuses, incentive payments and share options or other share awards;
  7. obtain reliable, up-to-date information about remuneration in other companies of comparable scale and complexity.  To help it fulfil 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 but within any budgetary restraints imposed by the board;
  8. be exclusively responsible for establishing the selection criteria, selecting, appointing and setting the terms of reference for any remuneration consultants who advise the committee;
  9. following the determination of the corporate performance of the business by the Board, consider and make recommendations to the Board for the performance ratings for the corporate elements of performance-related pay schemes operated by the company;
  10. subject to shareholder approval, 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 the Code);
  11. determine the policy for, and scope of, pension arrangements for employees;
  12. ensure, taking into account the principles of Managing Public Money, 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 recognised;
  13. oversee any major changes in employee benefits structures;
  14. agree the policy for authorising claims for expenses from the directors;
  15. work and liaise as necessary with all other Board committees;
  16. report annually to the Shareholder on the matters set out in the Shareholder Relationship Framework Document.

7. Reporting responsibilities

  1. The Committee Chair shall report to the board on its proceedings after each meeting on all matters within its duties and responsibilities.
  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.
  3. The Committee shall ensure that provisions regarding disclosure of information, including pensions, as set out in the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 and the Code, are fulfilled and produce a report of the company’s remuneration policy and practices to be included in the company’s annual report and ensure each year that it is put to the shareholder for approval at the annual general meeting of the company. 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.
  4. Through the Chair of the Committee, ensure that the company maintains contact with the shareholder, and provides all information requested by the shareholder to the shareholder in respect of remuneration.

8. Other matters

The Committee shall:

  1. where relevant, act in accordance with article 67 of the company’s articles of association and the remaining provisions of the company’s constitution;
  2. have access to sufficient resources in order to carry out its duties, including access to the company secretariat for assistance as required;
  3. be provided with appropriate and timely training, both in the form of an induction programme for new members and on an on-going basis for all members;
  4. give due consideration to laws, regulations and any published guidelines or recommendations regarding the remuneration of directors of listed and non-listed companies including but not limited to the provisions of the Code as well as guidelines published by the Association of British Insurers and the National Association of Pension Funds and any other applicable rules, as appropriate;
  5. 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; and
  6. require that the remuneration, of whatsoever nature, of all the directors, senior management and employees of the company and other members of the group is paid or made to the relevant individual personally and not to a service company or other vehicle, and that all applicable tax and national insurance contributions are paid in respect of such remuneration.

9. Authority

  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.

Approved by the Board: 4 March 2021

Previous version approved by the Board: 19 March 2019