The Board of TSB Banking Group plc (the 'Board') as a whole is collectively responsible for promoting the success of the Company by directing the Company's affairs. Other than matters expressly reserved to the Board or the Board of TSB Bank plc (the 'Bank'), authority for day to day operation of the Company and Bank is delegated to the Chief Executive Officer/Executive Chairman. During the period whilst Richard Meddings is acting as the Executive Chairman, additional governance arrangements have been established to support the Executive Chairman in his interim role and to ensure effective governance with checks and challenges. Certain decisions and executive action are reserved to the Chief Executive Officer/Executive Chairman. Other than matters expressly reserved to the Chief Executive Officer/Executive Chairman, authority can be delegated to the respective Functional Heads (Bank Executive Committee members), jointly or severally.
Certain responsibilities of the Board and Bank Board are delegated to Committees of the Board to assist the Board and Bank Board in carrying out their functions and to ensure independent oversight of internal control and risk management. i.e. Remuneration, Nomination, Audit and Risk Committees.
The Audit Committee is made up of four members who are all Non-executive Directors and includes at least one member with recent and relevant financial experience. The Audit Committee is chaired by Polly Williams, an independent Non-executive Director and its other members are Graeme Hardie, Andrew Simmonds and Tomás Varela. The Audit Committee will normally meet at least four times a year at the appropriate times in the reporting and audit cycle.
The committee has responsibility for, amongst other things, the monitoring of the financial integrity of the financial statements of TSB and the involvement of the Auditors in that process as well as reviewing the Company's internal control and risk management systems. It focuses in particular on compliance with accounting policies and ensuring that an effective system of internal financial control is maintained. The ultimate responsibility for reviewing and approving the annual report and accounts and the half-yearly reports remains with the Board.
The Nomination Committee is made up of three members who are all Non-executive Directors. The Nomination Committee is chaired by Dame Sandra Dawson and its other members are Miquel Montes and Polly Williams. The Nomination Committee meets at least once a year.
The Nomination Committee is responsible for considering and making recommendations to the Board in respect of appointments to the Board, the Board Committees and the chairmanship of the Board Committees. It is also responsible for keeping the structure, size and composition of the Board under regular review, and for making recommendations to the Board with regard to any changes necessary. The Nomination Committee also considers succession planning, taking into account the skills and expertise that will be needed on the Board in the future.
The Remuneration Committee is made up of four members who are all Non-executive Directors. The Remuneration Committee is chaired by Dame Sandra Dawson, an independent Non-executive Director. Its other members are Paulina Beato, Miquel Montes and Polly Williams. The Remuneration Committee meets at least four times a year.
The responsibilities of the Remuneration Committee are to determine and approve the framework of the remuneration policy of the Company, to identify TSB’s Material Risk Takers in terms of the European Banking Authority’s Regulatory Technical Standards and to manage, consider and approve the remuneration arrangements of the Chairman, the Chief Executive, the Company Secretary, each direct report to the Chief Executive, other senior executives and employees who are designated as Remuneration Code staff under the PRA Remuneration Code, or any other employee determined by the Remuneration Committee from time to time in accordance with the requirements of TSB's regulators.
The Remuneration Committee also reviews the Company's remuneration structures for compliance with regulatory requirements and corporate governance guidelines and monitors the reporting and disclosure of such arrangements.
The aim of the Remuneration Code is to ensure firms have risk-focused remuneration policies, consistent with and promoting effective risk management. Remuneration Policies should not expose firms to excessive risk.
TSB's Remuneration Policy, alongside TSB's Delegation of Authority, Remuneration Committee Terms of Reference and related Human Resources and Risk policies constitute the bank's overall policy approach to reward. Together, they ensure TSB's compliance with the FCA/ PRA Remuneration Code ("the Code") and support effective risk management in line with the size, nature, scope and complexity of our activities. Reward at TSB promotes a customer focus, sound and effective risk management and the long-term values and goals of the bank.
A Remuneration Governance Group has been established under the Chairmanship of the Human Resources Director and includes both the Chief Financial Officer and the Chief Risk Officer. The purpose of this Group is to assist the Remuneration Committee in identifying Material Risk Takers across TSB and in considering risk adjusted outcomes to reward.
A pre-requisite for granting variable pay awards, determining award pool size and any subsequent vesting includes a requirement to consider a number of risks; explicitly regulatory and conduct risks but also the wider range of risk measures embedded in individuals' balanced scorecards, ensuring that appropriate risk behaviours and compliance are directly linked to performance assessment within the Bank's risk appetite framework. Variable pay awards are subject to the requirements of the Remuneration Code in terms of the ratio of variable to fixed pay, the split between cash and shares and the requirement to defer a proportion of variable pay, with provisions for malus and clawback.
There is a clear structure and process for setting fixed and variable remuneration, where fixed pay is given based on job role and performance with risk embedded in an individual's balanced scorecard. The bank has removed purely sales based incentives. All variable pay arrangements are based on a range of corporate and personal performance metrics, including risk metrics. Awards will be made only if the Remuneration Committee is satisfied that the performance conditions have been met at both an individual and corporate level, that they are affordable, that their payment will not impact TSB’s sound capital base and that there are no liquidity issues.
The Risk Committee is made up of six members who are all Non-executive Directors. The Risk Committee is chaired by Andrew Simmonds, an independent Non-executive Director and its other members are Paulina Beato, Graeme Hardie, Stephen Page, Tomás Varela and Polly Williams. The Risk Committee will normally meet at least four times per year.
The Risk Committee oversees the development, implementation and maintenance of TSB's risk management framework, ensuring that its strategy, principles, policies and resources are aligned to TSB's risk appetite, as well as to regulatory and industry best practices. The Risk Committee also monitors and reviews the formal arrangements established by the TSB Board in respect of internal controls and risk management framework and reviews the effectiveness of TSB's systems for risk management and compliance with financial services legislation and other regulations.