Report of The Board in relation to remuneration policy and practice
2. Role and membership of the Committee and compliance issues
The Remuneration Committee (the ‘Committee’) is a committee of the Board. Your Board believes that a properly constituted and effective Remuneration Committee is key to ensuring that Executive Directors’ and other colleagues’ remuneration is aligned with shareholders’ interests and that it motivates Executive Directors and other colleagues to enhance the absolute performance and the relative competitiveness of the Group. The full Terms of Reference of the Remuneration Committee can be found at http://www.hbosplc.com/abouthbos/remuneration_committee.asp.
The members of the Committee during 2007 were all independent Non-executive Directors, as shown below:
Richard Cousins (joined 1 March 2007)
Sir Ron Garrick
Sir Brian Ivory (retired 25 April 2007)
Karen Jones (Chair from 25 April 2007)
Coline McConville
At the invitation of the Chair of the Committee, the Group’s Chairman and the Chief Executive attend Committee meetings to provide background and context on matters relating to the remuneration of the other Executive Directors and other colleagues in the Group, but do not attend when their own remuneration or contractual terms are discussed. No Director is involved in determining his or her own remuneration or contractual terms.
During 2007, the Committee met on seven occasions and the attendance of Committee members is as shown below:
Richard Cousins – 2 meetings (of a possible 3)
Sir Ron Garrick – 7 meetings
Sir Brian Ivory – 4 meetings (of a possible 4)
Karen Jones – 7 meetings
Coline McConville – 7 meetings
In addition, in 2007, the Committee established a subcommittee to deal specifically with incentive issues. That sub-committee met on three occasions during 2007. The sub-committee comprises one Committee member, Coline McConville, and two advisors (see Section 3), David Fisher and Ian Goodwin, each of whom attended all three meetings.
This frequency of meetings enables the Committee to regularly review, for Executive Directors and other senior colleagues, overall reward and the components thereof, in relation to the absolute performance and the relative competitiveness of the Group.
The performance of the Committee is evaluated as part of the overall evaluation of the performance of the Board as a whole and of each Non-executive Director, as set out in the Corporate Governance Report on page 116.
Full details of the Group’s approach to Corporate Governance, including compliance with the Combined Code, are also included in that report.
The Board has approved this report. A resolution will be put to shareholders at the Annual General Meeting inviting them to consider and approve this report, as required by the Companies Act 1985.
The report complies with the requirements of all relevant regulations under the Companies Act 1985 and the Combined Code.
Section 10 of this report has been audited by KPMG Audit Plc, with the exception of Section 10.3.1 (Shares), Notes 5 and 10 to Table 6a within Section 10.3.3 (TSR performance), Section 10.3.7 (Interest in Shares under Trusts) and Section 10.3.9 (Statutory Performance Graph), which do not fall to be audited.