Report of The Board in relation to remuneration policy and practice
4. Service contracts
The Chairman of the Group is covered by a contract which, as announced in June 2007, now extends to 30 June 2011. If the contract is terminated by the Group prior to the expiry of the term, contractual compensation equivalent to the fees payable during the balance of the term (subject to a maximum compensation equivalent to one year’s fees) may, in certain circumstances, be payable.
All the Executive Directors have rolling contracts which can be terminated by the Group on one year’s notice or by the Director on six months’ notice. If any contract is terminated by the Group, contractual compensation up to the equivalent of one year’s basic salary may, in certain circumstances, be payable. There is no contractual compensation entitlement for any of the Directors beyond this. Executive Directors are expected to make reasonable efforts to mitigate any loss arising from early termination of their contracts.
There are no provisions in service contracts which provide for enhanced terms on a change of control of the Group.
It is the Committee’s policy to design contracts for any newly recruited Executive Directors in a comparable form to the contracts of existing Executive Directors.
Non-executive Directors are appointed by letter for an initial term of three years. They will usually serve a second three year term. Where the Board is satisfied that it is in the interests of the Group and its shareholders, a Non-executive Director may be asked to serve a third three year term. Notwithstanding these three yearly terms, appointments of Non-executive Directors can be terminated at any time on one month’s written notice given either by the individual Director or by the Group.