Remuneration Committee Terms of Reference

NCC GROUP PLC
("Company")

REMUNERATION COMMITTEE: TERMS OF REFERENCE

1. Definitions
In these terms of reference:
"Board" means the board of directors of the Company from time to time;
"Combined Code" means the Combined Code on Corporate Governance, and related guidance and good practice suggestions, as amended from time to time; and
"Committee" means the remuneration committee of the Board.

2. Purpose
The purpose of the Committee is to establish a formal and transparent procedure for developing policy on executive remuneration and to set the remuneration packages of individual directors, as required by section B.2 of the Combined Code.

3. Membership and attendance
3.1 Members of the Committee shall be appointed by the Board in consultation with the chairman of the Committee. The Committee shall be made up of at least two members both of whom shall be independent non executive directors. The chairman of the Board may also be a member of (but not chair) the Committee.
3.2 Only members of the Committee have the right to attend Committee meetings. However, other individuals (such as the chief executive, the finance director, senior management and external advisers) may be invited to attend for all or part of any meeting, as and when appropriate but such invitees have (save as set out in paragraph 3.3, or, in the case of the chairman of the Board save as appointed to the Committee in accordance with paragraph 3.1), no right of attendance.
3.3 The chief executive of the Company shall have the right to address any meeting of the Committee.
3.4 Appointments to the Committee shall be for a period of up to three years, which may be extended for two further three year periods
3.5 The Board shall appoint the chairman of the Committee, who shall be an independent non executive director. In the absence of the chairman of the Committee and/or an appointed deputy, the remaining members
3.6 present shall elect one of their number to chair the meeting. The chairman of the Board shall not be eligible to be appointed as chairman of the Committee.

4. Secretary
The secretary of the Company or his/her nominee shall act as the secretary of the Committee. Where the secretary of the Company is also an executive director, the Committee may nominate one of its members to act as secretary for any meeting which the Committee wishes to hold without executive directors being present.

5. Quorum
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.

6. Frequency of meetings
The Committee shall meet at least once a year and at such other times as the chairman of the Committee shall think fit.

7. Notice of meetings
7.1 Meetings of the Committee shall be convened by the secretary of the Committee at the request of any of its members.
7.2 Unless otherwise agreed, notice of each meeting (confirming the venue, time and date, together with an agenda of items to be discussed) shall be forwarded to each member of the Committee, any other person required to attend and all other non executive directors no later than three working days before the date of the meeting. Supporting papers shall be sent to Committee members and to other attendees, as appropriate, at the same time.

8. Decisions and minutes of meetings
8.1 Decisions of the Committee will be made by majority vote. In the event of an equality of votes the chairman of the Committee will have a second or casting vote.
8.2 The secretary of the Committee shall minute the proceedings and resolutions of all Committee meetings, including recording the names of those present and in attendance.
8.3 The secretary of the Committee shall ascertain, at the beginning of each Committee meeting, the existence of any conflicts of interest and minute them accordingly.
8.4 Minutes of Committee meetings shall be circulated promptly to all members of the Committee and, once agreed, to all other members of the Board, unless a conflict of interest exists.

9. AGM
The chairman of the Committee shall attend the Company’s annual general meeting prepared to respond to any questions on matters within the responsibility of the Committee's activities.

10. Duties
The Committee shall:
10.1 determine and agree with the Board the framework or broad policy for the remuneration of the Company's chief executive, chairman, the executive directors, and such other members of the executive management as it is designated to consider by the Board. The remuneration of non executive directors shall be a matter for the chairman and executive members of the Board. Neither the chairman of the Board nor any director or manager shall be involved in any decisions as to his/her own remuneration.
10.2 in determining such policy, take into account all factors which it deems necessary, including the remuneration policies applying to other staff across the business. 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;
10.3 review the ongoing appropriateness and relevance of the Company's remuneration policy;
10.4 approve the design of, and determine the targets for, any performance related pay schemes operated by the Company, and approve the total annual payments made under such schemes;
10.5 review the design of all employees' share schemes and other incentive plans for approval by the Board and, where appropriate, the shareholders. For any such schemes/plans, determine each year whether awards will be made and, if so, the overall amount of such awards, the individual awards to executive directors and other members of the executive management and the performance targets to be used;
10.6 determine the policy for, and scope of, pension arrangements for each executive director and other members of the executive management;
10.7 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, while dealing fairly with cases where a departure is not due to poor performance;
10.8 within the terms of the agreed policy and in consultation with the chief executive as appropriate, determine the total individual remuneration package of each executive director (including bonuses, incentive payments and share options or other share awards) ensuring that:
10.8.1 remuneration packages are sufficient to attract, retain and motivate executive directors of the quality required, while avoiding paying more than is necessary for this purpose; and
10.8.2 performance-related elements of remuneration form a significant proportion of the total remuneration package, and are designed to align their interests with those of the shareholders;
10.9 in determining such packages and arrangements, give due regard to any relevant legal requirements and the provisions and recommendations in the Combined Code, the Listing Rules of the UK Listing Authority, and associated guidance;
10.10 review and note annually the remuneration trends across the group;
10.11 be aware of and advise on any major changes in employee benefits structures throughout the group;
10.12 agree the policy for authorising claims for expenses from the chief executive and the chairman of the Board (the chairman of the Board shall not be party to any discussions relating to approval procedures for his expense claims);
10.13 ensure that all legal and regulatory provisions regarding disclosure of remuneration (including pensions) are fulfilled;
10.14 to obtain, review and have regard to the conditions of service and remuneration levels of competitor companies, but not so as to cause remuneration to rise without a corresponding improvement in performance;
10.15 liaise with the nominations committee of the Company to ensure that the remuneration of newly appointed executives in within the Company’s overall policy; and
10.16 be exclusively responsible for establishing the selection criteria, selecting, appointing and setting the terms of reference for any remuneration consultants who advise the Committee; and to obtain reliable, up to date information about remuneration in other companies. The Committee shall have full authority to commission any reports or surveys which it deems necessary to help it fulfil its obligations.

11. Reporting responsibilities
11.1 The chairman of the Committee shall report formally to the Board on its proceedings after each meeting on all matters within its duties and responsibilities.
11.2 The Committee shall make whatever recommendations to the Board it deems appropriate in the context of the scope of its responsibilities.
11.3 If required by the Board the Committee shall produce an annual report of the Company's remuneration policy and practices, which will form part of the Company's annual report and accounts, and ensure that, at each AGM, such report is laid before, and voted on by, shareholders.

12. Directors duties
12.1 Each member of the Committee will be required to comply with his/her duties and responsibilities as a director in force from time to time pursuant to common law and equitable principles and the Companies Act 2006. In particular, the Companies Act 2006 introduced a statutory statement of the general duties of directors which replaces the corresponding common law duties and equitable principles as follows:
12.1.1 to act within powers, (in accordance with the Company’s constitution and to only exercise powers for the purposes for which they are conferred);
12.1.2 to act in a way the director considers, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole and in doing so have regard to the following (non-exhaustive) factors:
• the likely consequences of any decision in the long term;
• the interests of the Company’s employees;
• the need to foster the Company’s business relationships with suppliers, customers and others;
• the impact of the Company’s operations on the community and the environment;
• the desirability of the Company maintaining a reputation for high standards of business conduct; and
• the need to act fairly as between members of the Company;

12.1.3 to exercise independent judgment;
12.1.4 to exercise reasonable care, skill and diligence;
12.1.5 to avoid conflicts of interests; and
12.1.6 to declare interests to the Board in proposed transactions or arrangements with the Company and to declare to the Board interests in existing transactions or arrangements.
12.2 Each member of the Committee should also note that the purpose of the business review in relevant financial statements is to inform members of the Company and help them assess how the directors have performed their duty to promote the success of the Company.

13. Self appraisal
The Committee shall, at least once a year, review its own performance, 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.

14. Authority
The Committee is authorised by the Board:
14.1 to seek any information it requires from any employee of the Company in order to perform its duties; and
14.2 to obtain, at the Company's expense, outside legal or other professional advice on any matters within its terms of reference.

Updated May 2010