Development Bank of Wales Plc
Remuneration Committee
Terms of Reference 2025
Reviewed by the remuneration committee date:
12.06.2025
Reviewed and approved by the board date:
25.06.2025
1. CONSTITUTION
1.1 The board of Development Bank of Wales Plc (‘board’) has established a committee of the board known as the remuneration committee (‘committee’).
1.2 The Development Bank of Wales group is comprised of Development Bank of Wales Plc and its direct and indirect subsidiary companies.
2. PURPOSE
2.1 The purpose of the committee is to apply a formal and transparent procedure to determine and approve the framework and broad policy for the remuneration of the group’s non-executive directors and senior management team (SMT).
As part of this process, the remuneration committee will consider all factors they deem relevant to ensure that members of the SMT 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 group. However, no director will be involved in deciding his or her own remuneration.
Set the salaries and other forms of compensation for the companies’ employees in line with the pay protocol, legislation and company polices.
Within the terms of the agreed framework and broad policy and in consultation with the chair or CEO of DBW as appropriate, determine the total individual remuneration package for each member of the SMT.
3. MEMBERSHIP AND ATTENDANCE
3.1 The committee is appointed by the board and shall consist of at least two members. The members should be independent of executive management and free from any business or any relationship that could materially interfere with the exercise of their independent judgement.
3.2 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 the absence of the committee chair and/or vice-chair, the remaining members present shall elect one of themselves to chair the meeting who would qualify under these terms of reference to be appointed to that position by the board. The chair of the board shall not be chair of the committee.
3.3 The committee shall appoint the senior independent director as vice-chair of the committee.
3.4 Appointments to the committee are made by the board on the recommendation of the nomination committee and in consultation with the chair of the remuneration committee and shall be for a period of up to three years which may be extended for up to two additional three-year periods, provided members (other than the chair of the board, if they are a member of the committee) continue to be independent.
3.5 No one other than members of the committee are entitled to be present at committee meetings. The CEO, strategy, people and development director as well as the people and development business partners shall normally be in attendance except when issues regarding their own remuneration are discussed.
3.6 If a regular member is unable to attend due to absence, illness or any other cause, the committee chair may co-opt another independent non-executive director of the company to serve as an alternate member.
3.7 The committee shall, at their discretion, invite other persons to attend the meetings to provide information to assist the committee in the discharge of its duties. For the avoidance of doubt, such persons shall not be entitled to vote on any resolutions of the committee.
3.8 All members of the committee shall be advised of the business to be transacted at any meeting even if they are unable to be present.
4. SECRETARY
4.1 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 and proper consideration to be given to the issues.
5. QUORUM
5.1 The quorum for meetings will be two members present throughout the meeting in person or by telephone/ Microsoft Teams. A duly convened meeting of the committee at which a quorum is present shall be competent to exercise all powers and discretions of the committee.
6. FREQUENCY OF MEETINGS
6.1 The committee shall meet at least twice a year and at such other times as the chair of the committee shall require.
7. NOTICE OF MEETINGS
7.1 Meetings of the committee shall be called by the secretary of the committee at the request of the committee chair or 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 and any other person required to attend no later than five 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. MINUTES OF MEETINGS
8.1 The company secretary shall minute the proceedings of all meetings including the names of those present and in attendance.
8.2 Draft minutes of committee meetings shall be circulated to all members of the committee and the company secretary unless, exceptionally, it would be inappropriate to do so.
9. ENGAGEMENT WITH SHAREHOLDERS
9.1 The committee chair should attend the DBW 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 of responsibility.
9.2 Provide assurance to the Welsh Ministers that it has applied the principles of the remuneration policy framework in a fair and responsible manner.
9.3 The Welsh Ministers have the right to appoint an observer to attend meetings of DBW’s remuneration committee as per the agreed pay protocol.
10. DUTIES
The committee shall:
10.1 determine and approve the framework or broad policy for the remuneration of the company’s non-executive directors and senior management team providing that no director shall be involved in any decisions as to their own remuneration
10.2 in determining such policy, take into account all factors which it deems necessary. The objective of such policy shall be to ensure that members of the senior management team 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 organisation
10.3 approve the design of any performance related pay schemes to be operated by the organisation and approve the total annual payments made under such schemes
10.4 within the terms of the agreed framework and broad policy and in consultation with the chair or chief executive officer as appropriate determine the total individual remuneration package for each member of the senior management team.
10.5 Oversee any major changes in employee benefits structures throughout the organisation.
10.6 A pay protocol shall be maintained between the Minister and DBW and renewed in line with the terms of the document and the committee needs to operate within the scope of the Pay Protocol.
11. RESPONSIBILITIES OF THE CHIEF EXECUTIVE OFFICER
11.1 The duties of the chief executive officer in respect of recruitment, salary, training etc of staff is set out in appendix 1.
12. REPORTING
12.1 The chair of the committee shall provide feedback to the board on the proceedings at each meeting of the remuneration committee and on all matters within its duties and responsibilities.
12.2 The committee shall make recommendations to the board as is deemed appropriate on any area within its remit where action or improvement is needed.
12.3 The committee shall provide a description of its work in the annual report in line with the requirements of the Companies Act 2006 and should consider the guidance within the UK Corporate Governance Code 2024 (UKCGC2024).
12.4 The committee shall also ensure that provisions regarding disclosure of information as set out in The Companies (Non-Executive Directors’ Remuneration Policy and Non-Executive Directors’ Remuneration Report) Regulations 2019 and the UKCGC2024 are fulfilled, and that a report on the non-executive directors’ remuneration policy and practices is included in the company’s annual report and put to shareholders for approval at the AGM as necessary.
13. OTHER MATTERS
The committee shall:
13.1 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
13.2 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.
14. AUTHORITY
14.1 The board has delegated powers to the remuneration committee (with power to sub-delegate). The board may co-opt onto the committee such persons who are not non-executive directors of the company and give such persons voting rights on the committee under the DBW articles of association article 86 and 87.
14.2 The committee is authorised by the board to seek any information it requires from any employee of the organisation in order to perform its duties.
14.3 The committee is authorised to obtain independent professional advice at the expense of the DBW Plc if it considers this necessary. Arrangements for this advice should be channelled through the company secretary.
APPENDIX 1
Duties of the chief executive officer of the group
The chief executive officer is responsible for the personnel management of staff and should ensure that:
• The level and structure of staffing is commensurate with its functions and the requirements of efficiency, effectiveness and economy
• Recruitment of staff is based on fair and open competition
• The differences between colleagues in terms of race, religion, gender identity, age colour and disability are valued and the positive benefits of employing a diverse range of individuals are understood
• A system is available at all levels which satisfactorily appraises the performance of staff for the purposes of performance pay and where appropriate promotion
• Appropriate salaries, allowances, pensions, business expenses and redundancy payments are made to staff
• Appropriate pension arrangements are put in place for staff
• People and development policies and procedures are maintained and updated and are consistent with current legal requirements
• Assess best practice in the financial services sector and applying them to the organisation where applicable
• A staff development programme is available
• Grievance and disciplinary procedures are established for the group
• Full regard is given to an equal opportunities policy
• There is proper consultation with staff of the group on matters affecting them.
The staffing and personnel management responsibilities of the chief executive officer are based on section 4 of the framework document which governs the relationship between the Welsh Ministers and Development Bank of Wales Plc.
FURTHER READING
FCA Corporate Governance Code
https://www.frc.org.uk/library/standards-codes-policy/corporate-governance/uk-corporate-governance-code/
Companies Act 2006
https://www.legislation.gov.uk/ukpga/2006/46/contents
