The Remuneration Committee, Audit & Risk Committee and Nomination Committee are formal committees of the Board. Terms of Reference of these Committees can be found below.

Remuneration Committee - Terms of Reference

Role

• To determine and recommend for the Board's approval the framework for the remuneration of the senior executives (the top 120) of the Company - including the approach to setting base pay, annual bonus schemes, long-term incentive plans, pension provision, and other benefits.
• To determine the individual remuneration packages for the Chairman, the executive directors and the Company secretary, subject where necessary to the consent of the Secretary of State.
• To agree the targets for any performance-related incentive schemes applicable to executive directors and other senior executives.
• To agree, after taking input from the Secretary of State, the level of annual bonus awards for the executive directors.
• To agree the standard form of contract for executive directors and other senior executives.
• To ensure that for executive directors and senior executives, the contractual terms on termination, and any payments made, comply with company policy.
• To agree the Directors' Remuneration Report in the Annual Report and Accounts, ensuring that the requirements for the appropriate disclosure of remuneration information, including pensions, are met.
• To report the proceedings of the committee to the Board.

David Fish (chair)
Sir Mike Hodgkinson
Richard Handover
Quorum - two

Meeting frequency

At least quarterly, and as necessary.

Nomination Committee - Terms of Reference

Role
For appointments to the Holdings Board:

• To evaluate the balance of skills, knowledge and experience on the Board to inform the capabilities required for a particular appointment.
• To work with the scrutiny panels set up under OCPA rules to select candidates to fill vacancies requiring the Secretary of State's consent.
• To ensure that on appointment to the Board non executive directors receive a formal letter of appointment setting out clearly what is expected of them in terms of time commitment, committee service and involvement outside Board meetings.

• To nominate suitable candidates for Director positions on Boards of subsidiary/joint venture Boards/main Business Unit Executive Committees.
• To nominate suitable candidates for trustees of the Company's pension schemes, and trustees of the Postal Heritage Trust.

• To have in place a succession planning process which takes into account the challenges and opportunities facing the Company, and the skills and expertise needed in the future.
• To review the succession management process within the Company for the top 120 senior management positions.

• To report the proceedings of the committee to the Holdings Board, and in the annual report.

Richard Handover (Chair)
David Fish
Allan Leighton
Quorum - two

Meeting frequency

At least quarterly, and as necessary.

Audit And Risk Committee - Terms of Reference

Role
In respect of the external auditors:

• To consider the appointment of the external auditors and assess their independence, ensuring that key partners are rotated at appropriate intervals. Oversee the process for selecting the external auditors and make appropriate recommendations to the Board.
• To agree the audit fee and pre-approve any fees in respect of non-audit services provided by the external auditors, and ensure that the provision of non-audit services does not impair the external auditors' independence and objectivity.
• To discuss and agree with the external auditors, prior to commencement of services, the nature and scope of the work to be conducted by the external auditors, and review the auditors' quality control procedures and steps taken to respond to changes in regulatory and other requirements.
• To review the external auditors' management letter and responses of management.

• To review the scope and programme of internal audit activities to ensure focus is maintained on key business risks, processes and controls.
• To ensure the internal audit function adopts professional standards, is adequately resourced and has appropriate standing within the company.
• To approve the appointment or dismissal of the Internal Audit & Risk Management Director.
• To review internal audit and business management reports on the effectiveness of the company's systems for financial reporting, internal control and risk management.
• To consider management's response and progress in dealing with significant internal or external audit recommendations.

• To review, and challenge where necessary, the actions and judgements of management in relation to the interim and annual financial statements prior to submission to the Board, paying particular attention to:
  a. Accounting policies and practices, including changes.
  b. Decisions requiring a major element of judgement.
  c. The extent to which unusual transactions impact on the financial statements and how these have been disclosed.
  d. The adequacy and clarity of disclosures.
  e. Significant adjustments resulting from external audit.
  f. The going concern assumption.
  g. Compliance with accounting standards.
  h. Compliance with legal/regulatory requirements.
  i. Reviewing the company's statement on internal control systems prior to endorsement by the Board and reviewing the policies and process for identifying and assessing the risks the company is exposed to and the management of those risks by the company.

• To review the company's procedures for handling allegations from whistleblowers.
• To receive and review regular reports from the Corporate Risk Management Committee (a sub-committee of the Audit & Risk Committee).

Bob Wigley (Chair)
John Neill
Baroness Margaret Prosser
Quorum - 2 Directors

Meeting frequency

Quarterly, and as required.