The following information, comprising details of the Remuneration Committee, the statement of the Company’s policy on directors’ remuneration, the directors’ service agreements and the performance graph, is unaudited.

The Remuneration Committee

Members

From 1 January 2010 to 12 May 2010, the Committee consisted of Tony Hales and Nick Page under the chairmanship of Ray Miles. On 12 May 2010 Ray Miles retired from the Board and so ceased to be Chairman of the Committee; on the same date Tony Hales became Chairman and John Lorimer became a member of the Committee.

Further details are set out in the report on the Remuneration Committee in the corporate governance statement.

Other matters

Following a competitive tender held in October 2010, the Committee reappointed Kepler Associates (‘Kepler’) as remuneration adviser. Kepler is independent and does not provide any other services to the Group. The Chief Executive Officer normally attends and speaks at meetings of the Committee (other than when his own remuneration or any matter relating to him is being considered). No director is involved in determining his / her own remuneration. The Company Secretary, Rosamond Marshall Smith, is Secretary to the Committee and attended the meetings of the Committee in 2010; as a solicitor she provides legal and technical support to the Committee. The Human Resources Director Helen Thornton also attended most of the meetings of the Committee and provides advice to the Committee.

Statement of the Company’s policy on directors’ remuneration

Key principles of the remuneration policy

The remuneration policy applied by the Committee:

• is cognisant of the need to attract, motivate and retain talent via remuneration at appropriate market levels; and
• recognises the need for prudence and effective risk management in its reward structures.

The remuneration policy is therefore founded on the following principles:

• target total remuneration reflecting effective performance will be around market median, based on an assessment of comparable positions from a cross-section of companies drawn from a combination of: relevant broad equity index, similar market capitalisation and broadly comparable sectoral profile;
• where performance has been demonstrated at a consistently high level, total remuneration above market median will be appropriate to attract and retain key talent;
• the fixed component of remuneration should be sufficient to allow for a fully flexible bonus plan; there will be no minimum bonus guarantees;
• flexible elements of total remuneration at executive director and senior management level are designed to ensure clear links to long-term performance, with suitably demanding targets aligned with the objective of creating sustainable shareholder value. This means that a significant proportion of bonus will be deferred, and all share-based incentives will be subject to an appropriate vesting period, as determined by the Remuneration Committee;
• no element of remuneration will be designed or applied in a way that is inconsistent with the Company’s values and goals, or in a way that encourages the taking of inappropriate risk; and
• remuneration plans will be straightforward and easy to administer.

It is the Committee’s policy to consult with major shareholders before making significant changes.