Oxford Instruments plc

Terms of Reference

Board Committees
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Audit and Risk
Nomination
Remuneration
Administration

1.

Board Committees – Audit & Risk Committee

Purpose of the Committee
In summary, the Committee is responsible for monitoring the integrity of the financial
statements of the Company and the internal control and risk processes which are relied uponby the Board. The Committee reviews the Group’s financial statements, internal controls andrisk management processes and considers the scope and planning of internal and external
audits and the findings of the audits.
Membership
The members of the Committee shall be at least three independent non-executive directors.
At least one member of the Committee shall have recent and relevant financial experience.
Members of the Committee shall be appointed by the Board on the recommendation of theNomination Committee and in consultation with the Chairman of the Audit & Risk Committee.
The Committee Chairman shall be an independent non-executive director and shall be
appointed by the Board.
The membership of the Committee shall be reviewed annually by the Nomination Committee
and the Audit & Risk Committee Chairman.
QuorumThe quorum of the Committee shall be at least two members. In the absence of theCommittee Chairman and/or an appointed deputy, the remaining members present shall electone of themselves to chair the meeting.
Secretary
The Company Secretary of the Company or his or her nominee shall be Secretary to theCommittee. The Secretary shall ensure that the Committee receives information and papers
in a timely manner to enable full and proper consideration to be given to the issues.
Attendance
Only members of the Committee have the right to attend Committee meetings. Others suchas the Chairman, the Chief Executive, the Finance Director, the Head of Internal Audit and/or
the Auditor shall be invited to attend all or part of any meeting as and when appropriate.
Frequency and Notice of meetings
Meetings shall be held no less than three times a year and in addition shall be held as andwhen necessary to approve the financial content of shareholder statements. Unlessotherwise agreed notice of each meeting together with an agenda shall be forwarded tomembers of the Committee, any other person required to attend and all other directors nolater than five days before the date of the meeting. Supporting papers shall be sent toCommittee members and to those attending as appropriate.
Advisers
The Committee is authorised by the Board to seek appropriate professional advice on any
matter within its terms of reference inside and outside the Group as and when it considers
this necessary.

The Company’s external auditors shall be invited to attend meetings of the Committee on aregular basis, including once at the planning stage before the audit and once after the audit
at the reporting stage. At least once a year the Committee or representatives of it shouldmeet the external auditors without the Executives present to discuss their remit and any
issues.
DutiesThe duties of the Committee shall be as detailed below.
Financial Reporting
The Committee shall monitor the integrity of the financial statements of the Company,
including its annual and half year reports, preliminary results’ announcements and anyother formal announcement relating to its financial performance, reviewing significant
financial issues and judgements which they contain.
The Committee shall consider and confirm to the Board that it can validly make thestatements to be included in the Company’s annual report under the section on Directors’
Responsibilities in relation to the Financial Statements.
The Committee shall review and challenge where necessary:• changes in significant accounting policies and ensure consistency of application;• the methods used to account for significant or unusual transactions where different
approaches are possible taking into account any major judgmental areas highlighted
by the external auditors;• whether the Company has followed appropriate accounting standards and madeappropriate estimates and judgements, taking into account the views of the external
auditor;• all material information presented with the financial statements, such as the operating
and financial review, the corporate governance statement, and related party
transactions in so far as it relates to the audit;• check that all material matters, such as contingent liabilities, including litigation,
actual or pending, have been considered in preparing published statements;• confirm to the Board that the contents of the Reports and Financial Statement are
fair, balanced and understandable.
External Audit
The Committee shall:• consider and make recommendations to the Board in relation to the appointment, reappointment and removal of the Company’s external auditor;• ensure that at least once every ten years the audit services contract is put out totender and in respect of such tender oversee the selection process;• if an auditor resigns, investigate the issues leading to this and decide whether any
action is required;• oversee the relationship with the external auditor including (but not limited to):• Approval of their fees
• Approval of their terms of engagement and the scope of the audit

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Assessing annually their independence and objectivity taking into account (butnot limited to) the provision of any non audit services• Agreeing with the Board a policy on the employment of former employees of theCompany’s auditor and monitoring the implementation of this policy• Monitoring the auditor’s compliance with relevant ethical and professional
guidance on the rotation of audit partners• Assessing annually the effectiveness of the audit process
meet regularly with the external auditor (including once at the planning stage before
the audit and once after the audit at the reporting stage) and at least once a year
without management being present to discuss the auditor’s remit and any issues
arising from the audit;
review and approve the annual audit plan and ensure that it is consistent with thescope of the audit engagement
review with the external auditors the results of their audit, including any major issues
which arose during the audit, key accounting and audit judgements, levels of errors
identified during the audit, the effectiveness of the audit process together with thequality of accounting, accountants and controls within the Group and its subsidiaries.
review any representation letter(s) requested by the external auditor before they are
signed by management;
review the management letter and management’s response to the auditor’s findings
and recommendations;develop and implement a policy on the supply of non-audit services by the external
auditor.

Internal Audit and Risk
The Committee shall• approve the appointment or termination of appointment of the Group Audit & Risk
Manager (GARM);• ensure the GARM has direct access to the board chairman and to the committee
chairman and is accountable to the committee;• consider annually what resources are needed for an effective internal audit and riskfunction and make recommendation to the Board accordingly;• review the annual internal audit and risk plans and the results of such work;• ensure that adequate resources and appropriate access to information is provided toenable the internal audit and risk process to function effectively and to enable thedirectors to form an opinion as to the effectiveness of internal controls;• review the Company’s internal controls and related risk management systems;• review annually the key risks inherent and emerging in the Group and the system ofinternal control necessary to monitor such risks;• keep under review the Group’s overall risk assessment processes that inform theboard’s decision making• review regularly and approve the parameters used in these processes and themethodology adopted;• review reports on any material breaches of risk limits and the adequacy of proposed
action

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keep under review the effectiveness of the company’s internal financial controls andinternal controls and risk management systems and review and approve thestatements to be included in the annual report concerning internal controls and risk
management.
review and monitor management’s responsiveness to the GARM’s auditor’s findings
and recommendation;
approve the form of the management compliance letter, which shall be completed atleast once per year by each business’ Managing Director;
bi-annually review internal financial and non-financial controls; andmeet with the GARM at least once a year without the presence of management.

Business Malpractice
The Committee shall review the:• adequacy and security of the Company’s arrangements for its employees andcontractors to raise concerns, in confidence, about possible wrongdoing in financial
reporting or other matters. The Committee shall ensure that these arrangementsallow proportionate and independent investigations of such matters and appropriate
follow up action;• Company’s procedures for detecting fraud;• Company’s systems and controls for the prevention of bribery and receive reports of
non-compliance.
Reporting Responsibilities
The Committee shall:• compile, and recommend to the Board for approval, a report on its activities which iscompliance with the requirements of the UK Corporate Governance Code to be
included in the Company’s annual Report;• report to the Board any matters where it considers that action or improvement isneeded;• advise the Board on the Directors’ responsibilities in relation to the financial
statements and recommend to the Board for approval the statement to be included in
the Company’s annual Report.
The Committee Chairman shall report to the Board on the Committee’s discussions, findings
and agreed actions
Other Matters
The Committee:• shall have access to sufficient resources in order to carry out its duties;• shall be responsible for co-ordination of the internal and external auditors;• shall review at least annually its own performance, constitution and terms ofreference to ensure it is operating effectively and recommend any changes it
considers necessary to the Board for approval;

•can seek any information it requires from any employee of the Company in order toperform its duties and call any employee to be questioned at its meetings.

Minutes
The minutes of meetings of the Committee, including the names of those present and in
attendance, shall be kept and the minutes of meetings of the Committee shall be circulated to
all members of the Board and where appropriate to the external auditors.
Annual General Meeting
The Chairman of the Committee shall attend the Annual General Meeting prepared torespond to any shareholder questions on the Committee’s activities.

2.

Board Committees – Nomination Committee

Purpose of the Committee
In summary, to lead the process for Board appointments and make recommendations to theBoard. The Committee also considers the Chief Executive’s reports from time to time on
succession planning and reviews the performance of the Chief Executive.
Membership
The members of the Committee shall be at least two non-executive directors plus the
Chairman of the Board. The Chairman and members of the Committee shall be appointed by
the Board. The Committee Chairman or an independent non-executive director shall be the
Chairman of the Board. The majority of committee members shall be independent nonexecutive directors.
QuorumThe quorum of the Committee shall be at least two independent non-executive directors. 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. The chairman of theboard shall not chair the committee when it is dealing with the matter of succession to thechairmanship.
Secretary
The Company Secretary of the Company or his or her nominee shall be Secretary to theCommittee. The Secretary shall ensure that the Committee receives information and papers
in a timely manner to enable full and proper consideration to be given to the issues.
Attendance
Only members of the Committee have the right to attend Committee meetings. Others suchas the Chief Executive, the head of human resources and external advisers shall be invited toattend all or part of any meeting as and when required.
Frequency and Notice of meetings
Meetings shall be held not less than once a year. Notice of each meeting together with anagenda shall be forwarded to members of the Committee, any other person required toattend and if appropriate all other directors normally no later than working days before thedate of the meeting. Supporting papers shall be sent to Committee members and to thoseattending as appropriate, at the same time.
Advisers
The Committee is authorised by the Board to seek appropriate professional advice on any
matter within its terms of reference inside and outside the Group as and when it considers
this necessary.

Duties
The Committee shall:• review at least annually the structure, size and composition (including the skills,
knowledge, experience, diversity and independence) required of the Board and makeappropriate recommendations to the Board as appropriate;• be responsible for identifying and nominating for the approval of the Board, candidates tofill board vacancies as and when they arise;• before any appointment is made to the Board, evaluate the balance of skills, knowledge,
experience, diversity and independence on the Board and, in the light of this evaluation
prepare a description of the role and capabilities required for a particular appointment. In
identifying suitable candidates the Committee shall, where appropriate, use external
services to facilitate the search. Candidates should be considered from a wide range ofbackgrounds, be considered on merit against objective criteria, taking care thatappointees have enough time available to devote to the position;• ensure that before appointment any proposed new non-executive directors receives adraft letter of appointment setting out clearly what is expected of them in terms of timecommitment, committee service and involvement outside board meetings; This isfollowed by a formal letter on appointment.
 make recommendations to the Board for the succession of both executive and nonexecutive directors and in particular for the key roles of Chairman and Chief Executive; make recommendations to the Board for suitable candidates for the role of Senior
Independent Director, and, in consultation with the chairman of those committees, ofmembership of the Audit and Remuneration Committees, the re-appointment of any nonexecutive director at the conclusion of their specified term of office and the re-election byshareholders of any director under the annual re-elections provisions of the UK Corporate
Governance Code.
 annually receive and review a report on succession planning for the Group’s Executive
Directors and senior managers with a view to keeping under review the leadership needsof the organisation and to ensuring the continued ability of the organisation to compete
effectively in the marketplace.
 annually review the performance of the Chief Executive.
 be exclusively responsible for establishing the selection criteria, selecting, appointing andsetting the terms of reference for any nomination consultants who advise the committee.
Reporting Responsibilities
When required, the Committee shall compile, and recommend to the Board for approval, areport to shareholders about its activities, the process used to make appointments andexplain if external advice or open advertising has not been used to be included in the
Company’s Annual Report.
Other Matters
The Committee shall review at least annually its own performance, constitution and terms ofreference to ensure it is operating effectively and recommend any changes it considers
necessary to the Board for approval.

It shall have access to sufficient resources in order to carry out its duties.
Minutes
A written record of meetings shall be kept and the minutes of meetings of the Committee
shall be circulated to all members of the Board, unless a conflict of interest exists.
Annual General Meeting
The Chairman of the Committee shall attend the Annual General Meeting prepared torespond to any shareholder questions on the Committee’s activities.

3.

Board Committees – Remuneration Committee

Purpose of the Committee
In summary, to recommend to the Board the Company’s general policy on remuneration andin particular to determine the remuneration packages for the Chairman and the Executive
Directors.
Membership
The members of the Committee shall be at least three independent non-executive directors
plus the Chairman of the Board. Members of the Committee shall be appointed by the Boardon the recommendation of the Nomination Committee and in consultation with the Chairmanof the Remuneration Committee. The Board shall appoint the Committee Chairman. The
Board considers the Chairman of the Board should be a member of the Remuneration
Committee as it is essential that the Chairman be involved in the work of the Committee andin particular the setting of the Executive Directors’ remuneration.
The Board shall appoint the Committee Chairman who shall be an independent nonexecutive director.
The membership of the Committee shall be reviewed annually by the Nomination Committee
and the Remuneration Committee Chairman.
QuorumThe quorum of the Committee shall be at least two members. In the absence of theCommittee Chairman and/or an appointed deputy, the remaining members present shall electone of themselves to chair the meeting.
Secretary
The Company Secretary of the Company or his or her nominee shall be Secretary to theCommittee. The Secretary shall ensure that the Committee receives information and papers
in a timely manner to enable full and proper consideration to be given to the issues.
Attendance
Only members of the Committee have the right to attend Committee meetings. Others suchas the Chief Executive, Group HR Director and external advisers may be invited to attend allor part of any meeting as and when required.
In particular, the Chief Executive reports to the Committee on the performance of otherexecutive directors and on significant group-wide changes in salary structure and terms andconditions affecting other employees at senior executive level.
Frequency and Notice of meetings
Meetings shall be held not less than twice a year. Unless otherwise agreed notice of eachmeeting together with an agenda shall be forwarded to members of the Committee, any otherperson required to attend and where appropriate to all other directors normally no later than
five days before the date of the meeting. Supporting papers shall be sent to Committee
members and to those attending, as appropriate, at the same time.

Advisers
The Committee is authorised by the Board to seek appropriate professional advice on any
matter within its terms of reference inside and outside the Group as and when it considers
this necessary.
DutiesThe Committee shall:• determine and agree with the Board the remuneration policy for the Company’s Chief
Executive and executive directors. The Board shall determine the remuneration of the
Non-Executive Directors within the limits set in the Articles of Association. For the
avoidance of doubt no director or manager shall be involved in any decisions relating totheir own remuneration.
• recommend and monitor the level and structure of remuneration for senior management;• In determining such policy the Committee will take into account all factors which it deems
necessary:• The objective of such policy shall be to attract, retain and motivate executive
management of the quality required to run the company successfully without paying
more than is necessary, having regard to the view of shareholders and otherstakeholders. The remuneration policy should have regard to the risk appetite of theCompany and alignment to the Company’s long term strategic goals. A significant
proportion of remuneration should be structures so as to link rewards to corporate
and individual performance and designed to promote the long term success of theCompany. and• Review the ongoing appropriateness and relevance of the remuneration policy; and• Give due regard to any relevant legal requirements, the provisions andrecommendations in the UK Corporate Governance Code and the UK Listing
Authority’s Listing Rules and associated guidance; and• Approve the design of, and determine the targets for, performance related pay
schemes and approve the total annual payments made under such schemes; and• Determine the policy for pension arrangements for each executive director and othersenior managers; and• Recognise that performance related elements of remuneration need to be alignedwith the long-term success of the Company; and• When setting remuneration policy, review and have regard to pay and employment
conditions across the organisation, especially when determining annual salary
increases; and• Align remuneration policies with the Company's risk policies and systems; and• Review the on-going appropriateness and relevance of the remuneration policy.
• determine and agree, in the absence of the Chairman, all matters relating to the
Chairman’s remuneration;

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review the design of all share incentive plans for approval by the Board andshareholders. 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
and the performance targets to be used;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 for each
executive director the Company Chairman and other designated senior executives
including bonuses, incentive payments, share options and pension benefits;
approve any contract of employment or related contract with executive directors onbehalf of the Company;
determine the terms of any compensation package in the event of early termination of thecontract of any executive director ensuring they are fair to the individual, and theCompany, that failure is not rewarded and that the duty to mitigate loss is fullyrecognised;agree the policy for authorising claims for expenses from the directors;
review and note annually the remuneration trends across the Group and oversee any
major changes in employee benefit structures throughout the Group;
ensure that all the provisions regarding the disclosure of remuneration including
pensions, as set out in the Directors’ Remuneration Report Regulations 2002 and the
Combined Code are fulfilled and make recommendations to the Board regarding thecontent of the Board’s annual report to shareholders on the same;
be exclusively responsible for establishing the selection criteria, selecting, appointing andsetting the terms of reference for any remuneration consultants who advise thecommittee;
Work and liaise as necessary with other board committees.

Reporting Responsibilities
The Committee shall:• compile, and recommend to the Board for approval, a report to shareholders on the
Company’s remuneration policy and practices and its implementation during the year to
be included in the Company’s annual Report and ensure each year that the remuneration
policy and the annual report on remuneration are is put to shareholders for approval at theAGM.
• Make whatever recommendations to the Board it deems appropriate on any area within its
remit where action or improvement is needed.
Other Matters
The Committee shall review at least annually its own performance, constitution and terms ofreference to ensure it is operating effectively and recommend any changes it considers
necessary to the Board for approval.

Minutes
A written record of meetings, including the names of those present and in attendance, shallbe kept and the minutes of meetings of the Committee shall be circulated to committee
members and if appropriate other directors.
Annual General Meeting
The Chairman of the Committee shall attend the Annual General Meeting prepared torespond to any shareholder questions on the Committee’s activities.

4.

Board Committees – Administration Committee

Purpose of the Committee
In summary, the Committee has delegated authority from the Board to deal with items of aroutine and administrative nature as set out below.
Membership
The members of the Committee shall be at least two directors. The quorum of the Committee
shall be two members. The chairman of meetings of the Administration Committee is the
Chairman of the Board if present or him failing the Chief Executive if present or him failing the
Finance Director if present or him failing such member present as the Administration
Committee members present shall decide.
Secretary
The Company Secretary of the Company or his or her nominee shall be Secretary to theCommittee.
Frequency of meetings
Meetings shall be held as and when required. Meetings may be convened by the Company
Secretary, or by any Director by notice to any two Directors of whom one may be the Director
convening the meeting. It is not necessary for the notice to be given to all Directors
DutiesThe Committee shall meet to execute items relating to the following matters:• Deeds of amendment to the Oxford Instruments Pension Scheme• Banking arrangements including guarantees, facilities, foreign exchange, and overdrafts• The formal approval of the preliminary and half year results including the approval of any
dividend payments, the balance sheet, the profit and loss account of Oxford Instruments
plc and the calling of any general meeting of the shareholders• Amendments to the Company’s share schemes• The granting and exercise of options under the company’s share schemes• Powers of attorney• Freehold and leasehold property matters• The exercise of the Company’s powers to appoint and remove directors of subsidiarycompanies and directors of other companies of which the company is entitled to appoint
directors• Matters delegated to it by the main Board and• Other minor matters requiring approval
Reporting Responsibilities
The Committee shall compile a report for the main Board of Directors of the meetings held
between each of the scheduled meetings of the main Board.
The Committee’s duties and activities during the year shall be disclosed in the annual Reportand Accounts.

Other Matters
The Committee shall review regularly its constitution and terms of reference to ensure it isoperating effectively and recommend any changes it considers necessary to the Board forapproval.