Contents:
K3 Business Technology Group plc Renumeration Committee Terms of Reference
K3 Business Technology Group plc Nominations Committe Terms of Reference
K3 Business Technology Group Audit Committee - Terms of Reference
K3 Business Technolog Group plc Renumeration Committee Terms of Reference
Constitution
The Board hereby resolves to establish a Committee of the Board to be known as the Remuneration Committee. This constitution replaces all previous constitutions of the Committee.
Membership and Chairman
Members of the Committee shall be appointed by the Board on the recommendation of the Nominations Committee. The Committee shall comprise of the independent non-executive directors and the Chairman of the Board. The Committee shall consist of not less than 2 members.
Only members of the Committee have the right to attend Committee meetings. Other individuals, and external advisers, may be invited to attend for all or part of any meeting as and when appropriate.
The Board shall appoint the Committee Chairman, who shall be an independent non-executive director. In the absence of the Chairman, the remaining members present shall elect one of themselves to chair any duly convened meeting. The quorum necessary for the transaction of the business shall be two.
Secretary
The secretary of the Committee shall be the Chief Executive.
Frequency of Meetings
The Committee shall meet at least once a year. In order to approve the remuneration report, one of the meetings shall be held immediately before the submission of the Company's annual report and accounts to the Board for approval. The Chairman shall call a meeting of the Committee if so requested by any Committee member or by the Board.
Notice of Meetings
Meetings of the Committee shall be summoned by the Secretary of the Committee at the request of its members.
Minutes of Meetings
The Secretary shall minute the proceedings and resolutions of all Committee meetings, including the names of those present and in attendance. Minutes of the Committee meetings shall be circulated promptly to all members of the Committee and to the Board.
Annual General Meeting
The Chairman shall attend the Annual General Meeting prepared to respond to any shareholder questions on the Committee's activities.
Duties
The Committee shall:
Determine and agree with the Board the framework or broad policy for the remuneration of the company's Chairman, Chief Executive and executive directors. The remuneration of non-executive directors shall be a matter for the Chairman of the Board, the Chief Executive and executive directors. No director or manager shall be involved in any decision as to their own remuneration;
In determining such framework or policy, take into account all factors which it deems necessary. The objective shall be to ensure that members of the executive management of the company are provided with appropriate incentives to encourage enhanced performance and are, in a fair and responsible manner, rewarded for their individual contributions to the success of the company;
Review the ongoing appropriateness and relevant of the remuneration policy;
Approve the design of, and determine targets for, any performance related pay schemes operated by the company and approve the total annual payment made under such schemes; Review the design of all share incentive plans requiring approval by the Board and shareholders. For any such plans, the Committee shall determine each year whether awards will be made and, if so, the amount of such awards, the individual awards to executive directors and the performance targets to be used;
Determine the policy for, and scope of, pension arrangements for each executive director; 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 recognised;
Within the terms of the agreed policy, and in consultation with the Chairman of the Board and/or Chief Executive as appropriate, determine the total individual remuneration package of each executive director, including bonuses, incentive payments and share options or other share awards;
In determining such remuneration packages and arrangements, give due regard to any relevant legal requirements, the provisions and recommendations in the Combined Code and the UK Listing Authority's Listing Rules and associated guidance;
Review and note annually remuneration and other benefit structures across the company or group;
Ensure that all provisions regarding disclosure of remuneration (including pensions), as set out in legislation and the Combined Code are fulfilled; and
Be exclusively responsible for:
- Establishing the selection criteria, for any remuneration consultants to advise the Committee
- Selecting, appointing and setting the terms of reference for any such remuneration consultants.
- Obtaining reliable, up-to-date information about remuneration in other companies.
The Committee shall have full authority to commission any reports or surveys that it deems necessary to help it fulfil its obligations. The Committee shall, at least once a year, review its own performance, 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.
The Committee is authorised by the Board to seek any information it requires from any employee of the company in order to perform its duties.
Reporting Responsibilities
The Chairman shall report formally to the Board on its proceedings after each meeting on all matters within its duties and responsibilities.
The Committee shall make whatever recommendations to the Board it deems appropriate on any area within its remit where action or improvement is needed.
The Committee shall produce an annual report of the company's remuneration policy and practices for approval by the Board. The report will form part of the company's Annual Report and be put to shareholders for approval at the AGM.
In connection with its duties the Committee is authorised by the Board to obtain, at the company's expense, any outside legal or other professional advice.
K3 Business Technology Group plc Nominations Committee Terms of Reference
Constitution
The Board hereby resolves to establish a Committee of the Board to be known as the Nominations Committee. This constitution replaces all previous constitutions of the Committee.
Membership and Chairman
The Committee shall comprise of the non-executive directors and the Chairman of the Board. Only members of the Committee have the right to attend Committee meetings. Other individuals may be invited to attend for all or part of any meetings, as and when appropriate. The Chairman of the Committee shall be appointed by the Board. In the absence of the Chairman, the remaining members present at any meeting shall elect one of their number to chair any duly convened meeting. The Chairman of the Board shall not chair the Committee when it is considering succession to chairmanship of the Board. The quorum for meetings of the Committee shall be two members comprising at least two non-executive directors.
Secretary
The secretary of the Committee shall be the Chief Executive.
Frequency of Meetings
The Committee shall meet not less than once a year.
Minutes of Meetings
The Secretary shall minute the proceedings and resolutions of all Committee meetings, including the names of those present and in attendance.
Minutes of the Committee meetings shall be circulated promptly to all members of the Committee and to the Board.
Annual General Meeting
The Chairman shall attend the Annual General Meeting prepared to respond to any shareholder questions on the Committee's activities.
Duties
The Committee shall:
Review at regular intervals the structure, size and composition (including the skills, knowledge and experience) required of the Board compared to its current composition and make recommendations to the Board with regard to any changes;
Fully consider succession planning for directors and other senior executives in the course of its work, taking into account the challenges and opportunities facing the company, and what skills and expertise are needed on the Board in the future;
Identify and nominate for the approval of the Board candidates to fill Board vacancies as and when they arise;
Evaluate the balance of skills, knowledge and experience on the Board and, in light of that evaluation, prepare a description of the role and capabilities required for a particular appointment. In identifying suitable candidates the Committee shall:
- use open advertising or the services of external advisers
- consider candidates from a wide range of backgrounds; and
- consider candidates on merit and against objective criteria, taking care (in the case of non-executive appointments) that appointees are able to commit enough time to devote to the position;
Keep under review the leadership needs of the organisation, both executive and non-executive, with a view to ensuring the continued ability of the organisation to compete effectively in the marketplace;
Keep up to date and fully informed about strategic issues and commercial changes affecting the company and the market in which it operates;
Recommend to the Board procedures for formal and rigorous annual evaluation of performance of the Board, its committees and individual directors;
Review regularly the time commitments required from non-executive directors. Evaluate the performance of non-executive directors to ensure that they are committing sufficient time to fulfil their duties; and
Ensure that on appointment to the Board, non-executive directors receive a formal letter of appointment setting out clearly what is expected of them in terms of time commitment, committee service and involvement outside board meetings.
The Committee shall also make recommendations to the Board concerning:
- succession plans for both executive and non-executive directors and in particular for the key roles of Chairman of the Board and Chief Executive;
- suitable candidates for the role of senior independent director;
- membership of the Audit and Remuneration Committees, in consultation with the chairmen of those committees;
- re-appointment of any non-executive director at the conclusion of their specified term of office having given due regard to their performance and ability to continue to contribute to the Board in the light of the knowledge, skills and experience required;
- continuation (or not) in service of any director who has reached the age of 70;
- re-election by shareholders of any director under the 'retirement by rotation' provisions in the company's articles of association having due regard to their performance and ability to continue to contribute to the Board in the light of the knowledge, skills and experience required;
- matters relating to the continuation in office of any director at any time including the suspension or termination of service of an executive director as an employee of the company subject to the provisions of the law and their service contract; and
- appointment of any director to executive or other office other than to the positions of Chairman of the Board and Chief Executive, the recommendation for which would be considered at a meeting of the full Board.
Review, at least once a year, its own performance, 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.
Seek any information it requires from any employee of the company in order to perform its duties.
Obtain, at the company's expense, outside legal or other professional advice on any matters within its terms of reference.
Reporting Responsibilities
The Chairman shall report formally to the Board on its proceedings after each meeting on all matters within its duties and responsibilities. The Committee shall make whatever recommendations to the Board it deems appropriate on any area within its remit where action or improvement is needed.
K3 Business Technology Group Audit Committee - Terms of Reference
Constitution
- The board hereby resolves to establish a Committee of the board to be known as the Audit Committee. This constitution replaces all previous constitutions of the Committee.
Membership
- The Committee shall be appointed by the board on the recommendation of the Nominations Committee. The Committee shall comprise of the non executive directors and the Chairman of the Board. A quorum shall be two members;
- The chairman of the Committee shall be appointed by the board from amongst the independent non executive directors. In the absence of the chairman, the remaining members present shall elect one of themselves to chair the meeting;
Secretary
- The secretary of the Committee shall be nominated by the members of the Committee.
Attendance at meetings - No one other than the Audit Committee members shall be entitled to attend Audit Committee meetings;
- The CEO, finance director, a representative of the external auditors, or other persons shall attend meetings at the invitation of the Committee;
- There should be at least one meeting a year, or part thereof, where the Audit Committee meets the external auditors without executive board members present.
Frequency of meetings
- Meetings shall be held not less than twice a year to coincide with key dates in the company's financial reporting cycle;
- External auditors or the Chairman of the Audit Committee may request a meeting if they consider that one is necessary.
Authority
- The Committee is authorised by the board to:
- investigate any activity within its terms of reference;
- Seek any information that it requires from any employee of the company and all the employees are directed to cooperate with any request made by the Committee;
- Obtain outside legal or independent professional advice and secure the attendance of outsiders with relevant experience and expertise if it considers this necessary.
Duties
The duties of the Committee shall be:
- Internal financial control and risk management
- to monitor the integrity of the company's internal financial controls;
- to assess the scope and effectiveness of the systems established by the Executive and management to identify, assess, manage and monitor financial and non financial risks;
- to review management's report on the effectiveness of the systems for internal financial control, financial reporting and risk management;
Internal audit
- to monitor and assess the requirement for an internal audit function in the overall context of the company's risk management system;
External audit - process
- to consider, and make recommendations on the appointment, reappointment and removal of the external auditor;
- to recommend to the Board the terms of engagement and the remuneration to be paid to the external auditor in respect of audit services provided;
- to assess the qualification, expertise and resources, effectiveness and independence of the external auditor every five years;
- to devise procedures to ensure the independence and objectivity of the external auditor annually, taking into consideration relevant professional and regulatory requirements;
- to seek reassurance that the auditors and their staff have no family, financial, employment, investment or business relationship with the company other than in the normal course of business;
- to seek from the audit firm, on an annual basis, information about policies and processes for maintaining independence and monitoring compliance with relevant requirements, including current requirements regarding the rotation of partners and staff;
- to monitor the external audit firm's compliance with applicable ethical guidance relating to the rotation of the audit partners, the level of fees that the company pays in proportion to the overall fee income of the firm, office and partner and other relation regulatory requirements;
- to agree with the board and monitor the company's policy for the employment of former employees of the external auditor;
- to consider the criteria which govern the compensation of the individuals performing the audit;
- following a briefing with the Executive, the Audit Committee will discuss with the external auditor, before the audit commences, the nature and scope of the audit;
- to review with the external auditors, the findings of their work including any major issues that arose during the course of the audit and have subsequently been resolved and those issues that have been left unresolved; key accounting and audit judgements; levels of errors identified during the audit, obtaining explanations from management and, where necessary the external auditors, as to why certain errors might remain unadjusted;
- to review the audit representation letters before signature by management and give particular consideration to matters where representation has been requested that relate to non-standard issues;
- to assess, at the end of the audit cycle, the effectiveness of the audit process by:
- review whether the auditor has met the agreed audit plan and understand the reasons for any changes, including changes in perceived audit risks and the work undertaken by the external auditors to address those risks;
- consideration of the robustness and perceptiveness of the auditors in their handling of the key accounting and audit judgements identified and in responding to questions from the Audit Committees, and in their commentary, where appropriate, on the systems of internal control;
- obtaining feedback about the conduct of the audit from key people involved;
- to review and monitor the content of the external auditor's management letter, in order to assess whether it is based on a good understanding of the company's business and establish whether recommendations have been acted upon and, if not, the reasons why they have not been acted upon;
External audit - non audit
- to ensure compliance of the board's policy in relation to the provision of non-audit services by the auditor and ensure that the provision of such services does not impair the external auditor's independence or objectivity;
- to consider whether the skills and experience of the audit firm make it a suitable supplier of the non-audit services;
- to consider whether there are safeguards in place to ensure that there is no threat to objectivity and independence in the conduct of the audit resulting from the provision of such services by the external auditor;
- to consider the nature of the non-audit services, the related fee levels and the fee levels individually and in aggregate relative to the audit fee;
- to set and apply a formal policy specifying the types of non-audit work: from which the external auditors are excluded, for which the external auditors can be engaged without referral to the audit Committee, and for which a case-by-case decision is necessary.
Relationship with the Board
- to review, and challenge where necessary, the actions and judgements of management, in relation to the company's financial statements, operating and financial review, interim reports, preliminary announcements and related formal statements before submission to the auditors and board, paying particular attention to:
- critical accounting policies and practices, and any changes in them;
- decisions requiring a significant element of judgement;
- the extent to which the financial statements are affected by any unusual transactions in the year and how they are disclosed;
- the clarity of disclosures;
- significant adjustments resulting from the audit;
- the going concern assumption;
- compliance with the accounting standards;
- compliance with stock exchange and other legal requirements;
- reviewing the company's statements on internal control and risk management;
- to consider other topics, as defined by the board
Whistle blowing
- to review the company's procedures for whistle blowing and ensure that arrangements are in place by which staff may, in confidence, raise concerns about possible improprieties in matters of financial reporting, financial control or any other matters.
Reporting
- The Secretary shall circulate the minutes of meetings of the Committee to all members of the board, and the chairman of the Committee shall, as a minimum, attend the board meeting at which the accounts are approved.
- The Audit Committee shall annually review its performance and terms of reference and recommend any necessary changes to the board.
- The role and responsibilities of the Audit Committee and the actions taken by the Audit Committee to discharge those responsibilities shall be disclosed in the annual report and accounts. Such a report should specifically include:
- a summary of the role of the Audit Committee
- the names and qualifications of all members of the Audit Committee during the period.
- the number of Audit Committee meetings, and
- the way the Audit Committee has discharged its responsibilities.
- Where disagreements between the Audit Committee and the board cannot be resolved, the Audit Committee shall report the issue to the shareholders as part of the report on its activities in the company's annual report.
- If the board does not accept the Audit Committee's recommendation regarding the appointment, reappointment and removal of the external auditors, the Audit Committee shall include a statement explaining its recommendation and reasons why the board has taken a different stance in the annual report.
- The Audit Committee chairman shall attend the AGM and shall answer questions, through the chairman of the board, on the Audit Committee's activities and their responsibilities.
Appendix A
Audit Committee meeting timetable
March
- Review of preliminary announcement
- Review of annual report and accounts
- Review of external audit findings
- Meeting with external auditors without management
August
- Review of half year results
- Agreement of external audit strategy and scope
- Requirement for an internal audit functionStanding agenda items
- Minutes from previous meeting
- Relevant updates on corporate governance, financial reporting and auditing
- Progress on actions taken by management in response to Audit Committee recommendations as well as those from external auditors.
- Discussions with external auditors without the presence of executive management if needed.
- These schedules assume that the Group's year end remains as 31 December.
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