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Terms of Reference of the Talent & Remuneration Committee

These Terms of Reference should be read in conjunction with the Members’ Agreement. In the event of any inconsistency or contradiction, the Members’ Agreement shall prevail.

1. Purpose and Authority

The T&RC has delegated authority from the SB. The primary purpose of the Committee is to review the remuneration, goals, talent development and, where appropriate, succession plans for the T&RC population. The T&RC population is defined as the UK Senior Partner, members of the Management Board (“MB”) and any UK partners on the Global Leadership Team (“GLT”) or EMEA Leadership Team (“EMEA LT”).

The T&RC may investigate any activity within these Terms of Reference and, within its scope of responsibilities, to seek any information it requires and to ensure the attendance of management representatives at meetings as appropriate.

The T&RC has the authority to obtain outside legal or independent professional advice. The advisers may attend meetings as necessary and the cost of the advisers shall be borne by the Firm.

2. Membership

The membership of the T&RC is as follows:

  • Glen Babcock, Chair (Deals Partner and SB member)
  • Chris Burns (Audit Partner and SB Chair)
  • Sandie Grimshaw (Consulting Partner and SB member)
  • Karen Finlayson (Risk Partner and SB member)
  • Sir Ian Gibson, CBE (Independent Non Executive (the “INE”) and Public Interest Body (“PIB”)) member.

The members of the T&RC are nominated by the Chair of the SB for a term not exceeding two years. The Chair of the SB may nominate members of the T&RC to serve additional terms as T&RC members.

The INE member shall be determined by the Chair of the Public Interest Body (“PIB”) in collaboration with the Chair of the SB.

Each member of the Committee, with the exception of the INE, shall be required to be a Covered Person[1].

Only members of the T&RC have the right to attend T&RC meetings. Other individuals may be invited to attend for part or all of any T&RC meeting, as and when appropriate. The Firm’s Head of Partner Office will be expected to be a regular attendee at T&RC meetings, or in their absence their delegate, subject to agreement in advance of the meeting with the Chair.

3. Chair

The Chair of the T&RC is nominated by the Chair of the SB for a term not exceeding two years, and approved by the SB. In the absence of the Chair at any T&RC meeting, the members present shall appoint a member in attendance as Chair of the meeting.

4. Secretary

The Secretary to the T&RC is Vicki Willis, a member of the Board Secretariat. In the absence of the Secretary, another member of the Board Secretariat of the Firm may act as Secretary of the T&RC.

The Secretary will ensure that the T&RC receives information and papers in a timely manner to enable full and proper consideration to be given to matters, and will be responsible for maintaining accurate records of meetings.

5. Quorum

The quorum shall be three members of the SB for any meeting at which the Committee’s delegated powers are to be exercised.

In the event that a T&RC meeting may be inquorate, an SB member who is not already a member of the T&RC may, at the Chair’s discretion, be appointed at the start of the meeting to form part of the meeting quorum and to participate in any decision making at that meeting, provided the majority of the quorum are T&RC members.

6. Decisions of the T&RC

A decision of the T&RC taken by vote shall require a Simple Majority. The Chair will have the casting vote.

7. Frequency of Meetings

The T&RC will meet at least three times a year at appropriate times and otherwise as required.

8. Notice of Meetings

Meetings of the T&RC will be called by the Secretary at the request of the Chair, or by any of the T&RC members, with notice of such meetings being provided at the earliest opportunity.

Unless otherwise agreed, notice of each T&RC meeting confirming the venue, time and date together with an agenda of items to be discussed, shall be forwarded to each T&RC member in a timely manner. Supporting papers shall be sent to the T&RC members and other attendees, as appropriate, at the same time.

9. Minutes of T&RC Meetings

The Secretary will minute the proceedings and decisions of all T&RC meetings, including recording the names of those present and in attendance.

Draft minutes of T&RC meetings will be circulated first to the Chair, and then to all other T&RC members for review.

Once approved, minutes will be shared with the SB, unless it would be inappropriate to do so.

10. Duties, Powers and Responsibilities

Firm’s Senior Partner

To review and challenge with the Firm’s Senior Partner their goals in the context of their manifesto, the Firm’s strategy and changing business needs.

To review and recommend to the SB any changes to the Firm’s Senior Partner’s target income.

After the relevant period end, and in respect of the UK determined element of the Firm’s Senior Partner’s reward:

  1. to review achievements against goals together with relevant appraisals and feedback; and
  2. to recommend to the SB the performance income award.

In respect of the portion of performance income determined by the Global Board, consult with the Chair of the Global Board on the determination of target income and on performance against goals and final income.

In respect of the portion of performance income determined by the Network Chair, consult with the Network Chair on the determination of target income and on performance against goals and final income.

To consult with the Chair of the Alliance Supervisory Board in respect of the Firm’s Senior Partner’s performance on the Alliance Leadership Team.

To provide a report to the SB.

T&RC Population (excluding the Firm’s Senior Partner)

The T&RC will carry out governance oversight (review and challenge) in relation to the Firm’s Senior Partner’s actions and proposals as they affect each member of the T&RC population, in particular:

  1. to review the application of the partner income system, and determine whether the Firm’s remuneration policies have been appropriately applied;
  2. to review the proposed goals in the context of individual roles and responsibilities;
  3. to review target income for each member of the T&RC population;
  4. after the relevant period end, to review the achievements against goals and appraisals;
  5. to review performance income awards;
  6. to review proposals for maintaining or changing role levels; and
  7. to take into consideration the views of the Audit Oversight Body (a Committee of the Public Interest Body) and the Audit Partner Remuneration and Admissions Committee (a Committee of the Audit Oversight Body) in respect of the remuneration relating to Audit partners of the T&RC population.

For those Firm partners on the Global Leadership Team or EMEA Leadership Team, the responsibilities set out in 10.2.1 will also consider the evaluation for the agreed percentage of the role which is global or EMEA provided by a Network Leadership Team sponsor with oversight by the Global or EMEA Board as appropriate.

Talent Development and Succession Planning

The T&RC will carry out governance oversight in relation to the Firm’s Senior Partner actions and proposals as they affect each relevant member of the T&RC population and with consideration for the opportunities and challenges facing the firm, and due regard for the skills, experience and diversity on the board in the future. In particular:

  1. To review and challenge the talent development process for members of the T&RC population;
  2. To review and challenge the succession plans for members of the MB (including future Firm Senior Partner candidates); and
  3. To periodically review and challenge the framework implemented by the MB Talent Council.
  4. Other Matters

To perform other oversight functions, as requested by the SB.

11. Reporting Responsibility

The Committee makes recommendations to the SB for approval as necessary.

The Committee will provide an annual report to the SB and, following the Committee’s full and careful consideration, will make recommendations to the SB on the following matters in respect of partner incomes for the T&RC population:

  1. the proposed Financial Year (“FY”) incomes for the T&RC population, subject to the completion of the Firm’s statutory audit and finalisation of the FY distributable profit pool;
  2. the proposed next FY role levels for the T&RC population;
  3. the Firm’s Senior Partner’s contribution and performance, and determination of the performance rating for the 50% of his role as determined by the UK Firm; and
  4. the disclosures to be made in the Firm’s statutory accounts relating to Senior Partner’s income (combining the UK 50% and the indicative Global 50%), and the aggregate income of the MB, subject to the completion of the Firm’s statutory audit and finalisation of the FY distributable profit pool.

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 SB for approval.

Approved by the SB on: 13 April 2021

[1] The FRC’s definition of a Covered Person specifically states that it does not include Independent Non-Executives – FRC Glossary of Terms—Ethics and Auditing, January 2018

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