Oxford Instruments plc: Terms of reference ofRemuneration committee
January 2024
Applicable principles from the UK Corporate Governance Code 2018
P. Remuneration policies and practices should be designed to support strategy and promote
long-term sustainable success. Executive remuneration should be aligned to company purpose
and values, and be clearly linked to the successful delivery of the company’s long-term strategy.
Q. A formal and transparent procedure for developing policy on executive remuneration anddetermining director and senior management remuneration should be established. No director
should be involved in deciding their own remuneration outcome.
R. Directors should exercise independent judgement and discretion when authorising
remuneration outcomes, taking account of company and individual performance, and wider
circumstances.
Terms of reference1.

Membership

1.1
The committee shall comprise at least three members, all of whom shall be independent
non-executive directors. The chair of the board may also serve on the committee as an additional
member if they were considered independent on appointment as chair.
1.2
Appointments to the committee are made by the board on the recommendation of thenomination committee and in consultation with the chair of the remuneration committee andshall be subject to reappointment annually as part of the Committee and Board effectivenessprocess.
1.3
Only members of the committee have the right to attend committee meetings. However,other individuals such as the Chief Executive, the Chief HR Officer and external advisers may beinvited to attend for all or part of any meeting, as and when appropriate.
1.4
The board shall appoint the committee chair who shall be an independent non-executive
director who should have served on a remuneration committee for at least 12 months. In theabsence of the committee chair and/or an appointed deputy, the remaining members present
shall elect one of themselves to chair the meeting who would qualify under these terms ofreference to be appointed to that position by the board. The chair of the board shall not be chairof the committee.
2.

Secretary

The company secretary or their nominee shall act as the secretary of the committee and will
ensure that the committee receives information and papers in a timely manner to enable full andproper consideration to be given to the issues.

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QuorumThe quorum necessary for the transaction of business shall be two.
4.

Frequency of meetings

The committee shall meet at least twice a year and otherwise as required.
5.

Notice of meetings

5.1
Meetings of the committee shall be called by the secretary of the committee at therequest of the committee chair or any of its members.
5.2
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 thecommittee and any other person required to attend no later than five days before the date of themeeting. Supporting papers shall be sent to committee members and to other attendees, asappropriate, at the same time.
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
Draft minutes of committee meetings shall be circulated to all members of the committee.
Once approved, minutes should be circulated to all other members of the board and thecompany secretary as required unless it would be inappropriate to do so.
7.

Engagement with shareholders

The committee chair should attend the annual general meeting to answer any shareholder
questions on the committee’s activities. In addition, the committee chair should seek
engagement with shareholders on significant matters related to the committee’s areas ofresponsibility.
8.

Duties

The committee should carry out the duties detailed below for the parent company, major
subsidiary undertakings and the group as a whole, as appropriate.
The committee shall:
8.1
Have delegated responsibility for determining the policy for directors’ remuneration andsetting remuneration for the company’s chair and executive directors and senior management.
The term “senior management” for the purposes of these Terms of Reference is defined as the2members of the Management Board and the Company Secretary (referred to as “ManagementBoard”).
8.2
Consider and approve any contract of employment or related contract for the executive
directors and Management Board.
8.3
Establish remuneration schemes that promote long-term shareholding by executive
directors that support alignment with long-term shareholder interests.
8.4
Design remuneration policies and practices to support strategy and promote long- term
sustainable success, with executive remuneration aligned to company purpose and values,
clearly linked to the successful delivery of the company’s long-term strategy, and that enable theuse of discretion to override formulaic outcomes and to recover and/or withhold sums or shareawards under appropriate specified circumstances.
8.5
When determining executive director remuneration policy and practices, consider theCode requirements for clarity, simplicity, risk mitigation, predictability, proportionality andalignment to culture.
8.6
No director or member of the Management Board shall be involved in any decisions as totheir own remuneration outcome. The board itself or, where required by the Articles ofAssociation, the shareholders should determine the remuneration of the non-executive directors
within the limits set in the Articles of Association.
8.7
In determining remuneration policy, take into account all other factors which it deems
necessary including relevant legal and regulatory requirements, the provisions andrecommendations of the Code and associated guidance. The objective of such policy shall be toattract, retain and motivate executive management of the quality required to run the company
successfully without paying more than is necessary, having regard to views of shareholders andother stakeholders including the workforce.
8.8

Review the ongoing appropriateness and relevance of the remuneration policy.

8.9
Within the terms of the agreed policy and in consultation with the chair and/or chief
executive, as appropriate, determine the total individual remuneration package of each
executive director, the company chair and Management Board including pension arrangements,
bonuses, incentive payments and share options or other share awards. The choice of financial,non-financial and strategic measures is important, as is the exercise of independent judgementand discretion when determining remuneration awards, taking account of company andindividual performance, and wider circumstances.
8.10 Determine the terms of any compensation package in the event of early termination of thecontract of any executive director or member of the senior management population ensuring
they are fair to the individual, and the Company, that failure is not rewarded and that the duty to
mitigate loss is fully recognised.
8.11

Agree the policy for authorising claims for expenses from the directors.

8.12 Have full authority to appoint remuneration consultants and to commission or purchase any
reports, surveys or information which it deems necessary at the expense of the company.
3However the committee should avoid designing pay structures based solely on benchmarking to
the market or on the advice of remuneration consultants.
8.13 Review the design of all share or phantom plans for approval by the board and, whererequired, shareholders.
8.14 For any such plans, determine each year whether awards will be made, and if so, theindicative aggregate amount of such awards, the individual awards for executive directors andManagement Board, and the performance targets to be used. The CHRO in conjunction witheither the CEO or CFO may be permitted to approve awards to employees below this level,
provided that this be reported to the Committee at its next scheduled meeting.
8.15 Review workforce remuneration and related policies to ensure they are aligned to thelong-term strategic goals of the Company and support its values and desired culture and takethese into account when setting executive director and Management Board remuneration.
8.16 Work and liaise as necessary with other board committees, ensuring the interaction
between committees and with the board is reviewed regularly, as appropriate.
9.

Reporting responsibilities

9.1
The committee chair shall report to the board after each meeting, as required, on thenature and content of its discussion, recommendations and action to be taken.
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, and adequate time should
be available for board discussion when necessary.
9.3
The committee shall provide a description of its work in the annual report in line with therequirements of the UK Corporate Governance Code.
9.4
The committee shall also ensure that provisions regarding disclosure of information as set
out in The Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report)
Regulations 2019 and the Code are fulfilled, and that a report on the directors’ remuneration
policy and practices is included in the company’s annual report and put to shareholders forapproval at the AGM as necessary.
9.5
If the committee has appointed remuneration consultants, the consultant should be
identified in the annual report alongside a statement about any other connection it has with thecompany or individual directors.
10.

Other matters

The committee shall10.1 Have access to sufficient resources in order to carry out its duties, including access to thecompany secretariat for advice and assistance as required.

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10.2 Be provided with appropriate and timely training, both in the form of an induction
programme for new members and on an ongoing basis for all members.
10.3 Give due consideration to all relevant laws and regulations, the provisions of the Code andpublished guidelines or recommendations regarding the remuneration of company directors andthe formation and operation of share incentive plans, the requirements of the FCA’s Listing Rules,
Prospectus Rules, Disclosure Guidance and Transparency Rules sourcebook, and any otherapplicable rules, as appropriate.
10.4

Ensure that a periodic evaluation of the committee’s own performance is carried out.

10.5 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 forapproval.
11.

Authority

The committee is authorised by the board to obtain, at the company’s expense, outside legal orother professional advice on any matters within its terms of reference.

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