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CONSTITUTION / MEMBERSHIP

1. The Committee shall consist exclusively of independent non-executive directors, appointed by the Board on the recommendation of the Nominations Committee.

2. The minimum number of members shall be three.

3. The Chairman of the Committee shall be appointed by the Board.

4. The Company Secretary shall be the Secretary of the Committee.

ATTENDANCE AT MEETINGS

5. The Chief Executive and Group HR Director shall normally be invited to attend meetings of the Committee but will not take part in any discussions concerning their own remuneration.

FREQUENCY OF MEETINGS

6. Meetings shall be held not less than three times a year.

TERMS OF REFERENCE

7. The Committee has the exclusive power of determining on behalf of the Board the Company’s broad policy for executive remuneration and to review at least annually the entire individual remuneration packages (including pension entitlements) for each of the executive directors of the Company, members of the Group Executive Committee and other senior executives within the Group as may be agreed by the Board from time to time (together referred to as the senior executives) with particular regard to:
   
   - The composition of the remuneration package as between salary, bonus, pension, share options and other benefits:
   
   - Where the company aims to stand in relation to similar companies in its industry sector;
   
   - The need to give the executive directors and senior executives every encouragement to enhance the Group’s performance and to ensure that they are fairly, but responsibly, rewarded for their individual contributions;
   
   - The relationship between the remuneration of executive directors and that of other employees.
   
   - The recommendations of the Combined Code as well as the UK Listing Authority’s Listing rules and associated guidelines.

8. The Committee reviews the recommendations for annual reviews of salary and performance of executive directors and senior executives and the objective criteria to be used in granting discretionary and performance related benefits;

9. The Committee determines how the Company’s Long Term Incentive Plan should be operated, the executives to be included and to make recommendations to the trustees of the Company’s Employee’s Trust regarding any distributions or awards of options or shares to participants by the Trustees;

10. The Committee determines how the Company’s Executive Share Option Schemes should be operated and oversees the grant of options and allocation of shares to each executive director, senior executive or other participant within the Group;

11. The Committee determines how the Group’s Executive Bonus Plan should be operated and the criteria to be applied from time to time.

12. The Committee reviews regularly the process of succession planning and its working in practice.

13. The Committee may seek information it requires from any employee of the Company and appoint consultants to advise on issues of remuneration if and when considered appropriate.

14. The Committee shall review these Terms and Conditions and the Committee’s performance against these Terms on an annual basis.

REPORTING PROCEDURES

15. The Secretary shall circulate the minutes of the meetings of the Committee to all members of the Board.

January 2004