Terms of Reference
As part of the SDL Group's corporate governance policy, there are certain material matters that are reserved for decision by the Board. The Board is also advised by a number of committees covering audit, nomination and remuneration. The detailed matters that are reserved for the Board and the terms of reference for the Board committees are as follows:
Matters Reserved for the Board
In general, the full Board of Directors of the Company (the “Board”) should consider all important management and policy matters. In particular, the Board has specifically resolved that the following matters should be reserved for decision by the Board:
1. Strategy and Management
1.1 Responsibility for the overall direction of the SDL Group of Companies (‘the Group’).
1.2 Approval of the Group’s long term objectives and strategy, policies and annual budgets.
1.3 Oversight of the Group’s operations and management.
1.4 Review of performance in the light of the Group’s strategy, objectives, business plans and budgets and ensuring that any necessary corrective action is taken.
1.5 Extension of the Group’s activities into new business or geographic areas.
1.6 Any decision to cease to operate all or any material part of the Group’s business.
2. Structure and capital
2.1 Changes relating to the Group’s capital structure.
2.2 Major changes to the Group’s corporate structure, management and control structure.
2.3 Any changes to the Company’s listings or its status as a plc.
3. Financial reporting and controls
3.1 Approval of preliminary announcements of interim and final results.
3.2 Approval of the Annual Report and Accounts, including the Corporate Governance statement and Remuneration Report.
3.3 Approval of the dividend policy.
3.4 Declaration and recommendation of dividends.
3.5 Approval of any significant changes in accounting policies or practices.
3.6 Approval of treasury policies.
3.7 Approval of material unbudgeted capital or operating expenditures.
4. Risk Management and Internal controls
4.1 Responsible for:
- a sound system of risk management and internal control;
- oversight and review of risk management and internal control; and
- determining the appropriate level of risk exposure for the Group
5.1 Approval of major capital projects, investments or contracts which are materially strategic or sensitive or by reason of size, entered into by the Company or any subsidiary in the ordinary course of business.
5.2 Contracts, lending or borrowing by the Company/Group made outside the normal course of business of the Company/Group.
5.4 Material acquisitions and disposals either by reason of size or strategically, entered into by the Company or any subsidiary.
5.3 Agreement to PLC guarantees exceeding £100,000.
6.1 Approval of resolutions and related documentation to be put forward to shareholders at a general meeting.
6.2 Approval of press releases concerning matters decided by the Board.
7. Board membership and other appointments
7.1 Board appointments and removals; selection of the Chairman, Senior Independent Director and Chief Executive Officer; membership and chairmanship of board committees, following recommendations from the Nomination Committee.
7.2 Succession planning.
7.3 Appointment or removal of the company secretary.
7.4 Appointment, reappointment or removal of the external auditor to be put to shareholders for approval, following the recommendation of the Audit Committee.
8.1 Determining the remuneration policy for the Chairman, the Chief Executive Officer and the Executive Directors following recommendations from the Remuneration Committee.
8.2 Determining the remuneration of the Non-Executive Directors, subject to the Articles of Association and shareholder approval as appropriate.
8.3 The introduction of new share schemes or new long-term incentive schemes or major changes to existing schemes, which require shareholders’ approval.
9. Delegation of Authority
9.1 The division of responsibilities between the Chairman and the Chief Executive Officer.
9.2 Approval of terms of reference of board committees.
10. Corporate governance matters
10.1 Conduct an adequate annual evaluation of its own performance, that of its committees, and individual directors, and the division of responsibilities.
10.2 Determining the independence of directors.
10.3 Receiving reports on the views of the Company’s shareholders.
10.4 Authorising conflicts of interest where permitted by the Company’s articles of association.
11.1 The making of political donations.
11.2 Approval of the appointment of the Group’s principal professional advisers.
11.3. Prosecution, defence or settlement of litigation, or an alternative dispute resolution mechanism involving an amount above £100,000 or being otherwise material to the interests of the Group.
11.2 This schedule of matters reserved for board decisions.
11.3 Any decision likely to have a material impact on the Company or Group from any perspective, including, but not limited to, financial, operational, strategic or reputational.
The board of directors of the Company (the "Board") has resolved to establish a committee of the Board to be known as the Nomination Committee (the “Committee”).
2.1. The Committee shall be appointed by the Board and shall comprise at least 3 members.
2.2. A majority of members of the Committee shall be independent non-executive directors.
2.3. Appointments to the Committee are made by the Board and shall be for a period of up to three years, which may be extended for further periods of up to three years, provided the director still meets the criteria for membership of the Committee. The Board shall appoint the Committee Chairman who should be either the Chairman of the Board or 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 their number to chair the meeting. When the Committee discuss matters relating to the Board position of individual Committee members, each person that is the subject of such discussion shall absent himself/herself for the duration of the discussion that relates to him/her. (When the Board discuss appointments to/removals from the Committee, each person that is the subject of consideration for appointment/removal shall absent himself/herself for the duration of the discussion that relates to him/her.)
2.4. If a regular member is unable to act due to illness or any other cause, the Chairman of the Committee may appoint another director of the company to serve as an alternate member having due regard to maintaining the required balance of executive and non-executive members.
3.1. Only Committee members will have a right of attendance at Committee meetings together with such other person or persons as the Committee may invite to be in attendance.
3.2. The Company Secretary shall act as the secretary of the Committee.
The quorum necessary for the transaction of business shall be 2 of whom at least 1 must be an independent non-executive director. 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 or exercisable by the Committee.
5. Frequency of Meetings
The Committee shall meet not less than once a year and at such other times as the chairman of the Committee shall require.
6. Notice of Meetings
Meetings of the Committee shall be called by the secretary of the Committee at the request of the Committee chairman.
7. Minutes of Meetings
7.1. The secretary shall minute the proceedings and resolutions of all Committee meetings, including the names of those present and in attendance.
7.2. Minutes of the Committee meetings shall be circulated to all members of the Committee and to the Chairman of the Board (if not a member of the Committee) and made available to other members of the Board unless in the opinion of the Committee chairman it would be inappropriate to do so.
8. Annual General Meeting
The Committee chairman shall attend the Annual General Meeting to answer any shareholder questions on the Committee's activities.
9.1. The Committee shall carry out the duties below for the parent company, major subsidiary undertakings and the group as a whole, as appropriate.
- 9.1.1. Regularly review the balance of skills, knowledge and experience on the Board, and the structure, size and composition of the Board and make recommendations to the Board with regard to any adjustments that are deemed necessary.
- 9.1.2. Give full consideration to 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 the skills and expertise needed on the Board in the future.
- 9.1.3. Keep under review the leadership needs of the organisation with a view to ensuring the continued ability to compete effectively in the organisation's marketplace.
- 9.1.4. Keep up to date and fully conversant with strategic issues and commercial changes affecting the company and the market in which it operates.
9.2. The Committee shall also make recommendations to the Board:
- 9.2.1. Identifying and nominating candidates to fill Board vacancies as and when they arise.
- 9.2.2. Before any appointment is made, evaluate the balance of skills, knowledge, experience and diversity on the Board, and prepare a description of the role and capabilities required for a particular appointment.
- 9.2.3. As regards plans for succession for both executive and non-executive directors and in particular for the key roles of chairman (for whom a job specification should be prepared, including an assessment of the time commitment expected) and the chief executive.
- 9.2.4. As regards the re-appointment of any non-executive director at the conclusion of his or her specified term of office.
- 9.2.5. Concerning the re-election by shareholders of any director under the annual re-election provisions of the Code or the retirement by rotation provisions in the Company’s articles of association (particularly in relation to directors being re-elected for a term beyond six years).
- 9.2.6. Concerning any matters relating to the continuation in office as a director of any director at any time.
- 9.2.7. Concerning the appointment of any director to executive or other office.
- 9.2.8. Concerning membership of the audit and remuneration committees, and any other Board committees as appropriate, in consultation with the chairman of those committees.
10. Reporting responsibilities
10.1. The Committee chairman shall report to the Board on its proceedings after each meeting on all matters within its duties and responsibilities.
10.2. The Committee shall make whatever recommendations to the Board it deems appropriate on any area within its remit where action or improvement is needed.
10.3. The Committee shall produce a report to be included in the company’s annual report about its activities, the process used to make appointments and explain if external advice or open advertising has not been used. Where an external search agency has been used, it shall be identified in the annual report and a statement made as to whether it has any connection with the company.
11. Other matters
The Committee shall 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.
12.1. The Committee is authorised to seek any information it requires from any employee of the company in order to perform its duties.
12.2. The Committee is authorised to obtain, at the company's expense, outside legal or other professional advice on any matters within its terms of reference.
The board of directors of the Company (the “Board”) has resolved to establish a committee of the Board, to be known as the Remuneration Committee (the “Committee”).
2.1 The Committee shall comprise at least two members. Members of the Committee shall be appointed by the Board from amongst the independent non-executive directors of the Company on the recommendation of the nomination Committee in consultation with the chairman of the Remuneration Committee 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.
2.2 The chair of the Committee shall be appointed by the Board and 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.
2.3 Appointments shall be for a period of up to three years, extendable for further periods of up to three years, provided the director still meets the criteria for membership of the Committee.
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.
4.1 Only Committee members will have a right of attendance at Committee meetings. However, other individuals such as the chief executive officer, the head of human resources and external advisors may be invited to attend for all or part of any meeting, as and when appropriate and necessary.
4.2 The chief executive officer or the head of human resources of the Company will also report to the Committee on significant group-wide changes in salary structure and terms and conditions affecting other employees at senior executive level./p>
4.3 Telephone/virtual meetings are permissible.
4.4 The company secretary or his or her nominee shall act as the secretary of the Committee.
5. Frequency of meetings
Meetings shall be held at least twice per year. Other meetings shall be convened on request by a member of the Committee.
The Committee is authorised by the Board to obtain outside legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise on any matter within its terms of reference.
7.1 The Committee shall recommend and agree with the Board the Company’s framework or broad policy for the remuneration of the Company’s chairman, chief executive, the executive directors, the company secretary and in determining such policy take into account all factors which it deems necessary including relevant market comparisons and practise as well as legal and regulatory requirements.
7.2 When setting remuneration policy for directors, review and have regard to pay and employment conditions across the Company or group, especially when determining annual salary increases.
7.3 Review the on-going appropriateness and relevance of the remuneration policy.
7.4 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 each executive director and the Company chairman and have an overview of other designated senior executives including pensions, bonuses, incentive payments and share options or other share awards. The remuneration of non-executive directors shall be a matter for the chairman and the executive members of the Board. No director or senior executive shall be involved in any decisions as to their own remuneration.
7.5 The Committee shall have full authority to appoint remuneration consultants and to commission or purchase any reports, surveys or information which it deems necessary, within any budgetary restraints imposed by the Board.
7.6 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.
7.7 Review the design of all share incentive plans for approval by the Board and shareholders.. For any such plans, determine each year whether awards will be made, and if so, the overall amount of such awards, the individual awards to executive directors, company secretary and other designated senior executives and the performance targets to be used.
7.8 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.
7.9 Oversee any major changes in employee benefits structures throughout the Company or group.
7.10 Agree the policy for authorising claims for expenses from the directors.
8. Reporting Procedures
8.1 The secretary of the Committee shall circulate the minutes of the meetings to all members of the Board, as appropriate.
8.2 The Committee shall produce a report of the Company’s remuneration policy and practices which will form part of the Company’s Annual report and ensure each year it is put to shareholders for approval at the AGM.
8.3 The Committee shall make whatever recommendations to the Board it deems appropriate on any area within its remit where action or improvement is needed.
8.4 The Committee chairman shall report to the Board on its proceedings after each meeting on all matters within its duties and responsibilities.
9. Annual General Meeting
The chairman of the Committee shall attend the Annual General Meeting to answer shareholder questions on the Committee’s activities.
10. Other Matters
The Committee shall arrange for periodic reviews of its own performance and, at least annually review its constitution and terms of reference and recommend any changes it considers necessary to the Board for approval.