Terms of Reference for the Remuneration Committee

Note:
Reference to ‘Company’ shall mean QinetiQ Group plc
Reference to ‘Committee’ shall mean the Remuneration Committee
Reference to ‘Board’ shall mean the Board of Directors of the Company

1.      Membership

1.1    Members of the Committee shall be appointed by the Board. The Committee shall comprise at least three members (not counting the Chairman of the Board), all of whom shall be independent non-executive directors. The Chairman of the Board may also serve on the Committee as an additional member if he or she was considered independent on appointment as Chairman.

1.2    Only members of the Committee have the right to attend Committee meetings. However, other individuals such as the Chief Executive, the Head of Human Resources and external advisers may be invited to attend for all or part of any meeting, as and when appropriate.

1.3    The Board shall appoint the Committee Chairman who shall be an independent, non-executive director. In the absence of the Committee Chairman 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. The Chairman of the Board shall not be Chairman of the Committee.p>

2.      Secretary

The Company Secretary or his or her nominee shall act as the Secretary of the Committee.

3.      Quorom

The quorum necessary for the transaction of business shall be two members. 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

The Committee shall meet at such times as required to discharge its duties and otherwise as any member of the Board shall require.

5.      Notice of meetings

5.1    Meetings of the committee shall be convened by the Secretary of the Committee at the request of the Committee Chairman or any member of the Board.

5.2    Unless otherwise agreed, notice of each meeting confirming the venue, time and date together with an agenda of items to be discussed and supporting papers, shall be circulated to each member of the Committee and any other person as necessary, no fewer than four working days before the date of the meeting, or circulated at such other times as might be agreed between the Committee Chairman and the Secretary.

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 and, following approval by the Committee, to the Board unless it would be inappropriate to do so.

7.      Annual general meeting

The Committee Chairman shall attend the annual general meeting prepared to respond to any shareholder questions on the Committee’s activities.

8.      Duties

The Committee shall:

8.1    determine and recommend to the Board the framework or broad policy for the remuneration of the Company’s Chairman, Chief Executive, other executive directors, the Company Secretary and such other members of senior management as it is designated to consider. The remuneration of non-executive directors shall be a matter for the Chairman and the executive members of the Board. No director or manager shall be involved in any decisions as to their own remuneration.

8.2    in determining such framework or policy, take into account all factors which it deems necessary, including relevant legal and regulatory requirements and the provisions and recommendations of published corporate governance guidelines. The objective of such policy 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.

8.3    when setting remuneration policy for directors, review and have regard to the remuneration trends across the Company or Group.

8.4    review the on-going appropriateness and relevance of the remuneration policy.

8.5    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 the Chairman, each executive director, Company Secretary and other designated senior executives including, where appropriate, bonuses, incentive payments and share options or other share-based awards.

8.6    determine and agree the general terms and conditions of service contracts for designated senior executives, and specific terms for the Chairman, Chief Executive, other executive directors and Company Secretary and liaise with the Nominations Committee as necessary.

8.7    obtain reliable, up-to-date information about remuneration in other companies. 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.

8.8    be exclusively responsible for establishing the selection criteria, selecting, appointing and setting the terms of reference for any remuneration consultants who advise the committee.

8.9    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.

8.10   determine any shareholding requirements for the Chairman, Chief Executive, other executive directors, Company Secretary and designated senior executives.

8.11   review the design and development of all share incentive plans for approval by the Board and shareholders and oversee their operation and administration.

8.12   review the achievement of performance targets for all share incentive plans and determine the appropriateness of the level of achievement when considered against the intention of the targets. Consider whether any factors should be taken into account which would make an alternative outcome more appropriate and aligned to the interests of shareholders.

8.13   determine the policy for, and scope of, pension arrangements for executive directors, the Company Secretary and designated 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 is fully recognised.

8.15   oversee any major changes in employee benefits structures throughout the Company.

8.16   agree the policy for authorising claims for expenses from the directors.

9.      Reporting responsibilities

9.1    The Committee Chairman shall report to the Board on its proceedings after each meeting on all matters within its duties and responsibilities.

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 produce a report of the Company’s remuneration policy and practices to be included in the Company’s annual report and accounts in accordance with applicable regulations and ensure each year that it is put to shareholders for approval at the annual general meeting.

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 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 on-going basis for all members.

10.3   give due consideration to laws and regulations, the provisions of the UK Corporate Governance Code and the requirements of the UK Listing Authority’s Listing, Prospectus and Disclosure and Transparency Rules 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

The Committee is authorised by the Board to obtain, as is reasonable at the Company’s expense, outside legal or other professional advice on any matters within its terms of reference.

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Terms of Reference for the Remuneration Committee