Members of the Remuneration Committee, left to right: James Wallace, Clive McLintock and Angus Crichton-Miller.

MEMBERSHIP The Remuneration Committee consists of the Company’s three independent, non-executive directors: C.H. McLintock (Chairman) H.A. Crichton-Miller J.A.S. Wallace

A review of remuneration policy is set out below. In October 2000 the Committee commissioned a comparative review of Executive Director remuneration, which was carried out by an external advisor. The recommendations of this review were taken fully into account when remuneration packages for 2001 were agreed and were again referred to in deliberations for both 2002 and 2003.

SCOPE AND OBJECTIVES
Attracting, retaining and motivating directors and senior management of appropriate calibre and experience is essential to the Company’s future success. The Remuneration Committee’s primary objective is to ensure that remuneration policy supports this objective whilst avoiding unwarranted cost.

The Committee is responsible for determining the remuneration packages of the Company’s Executive Directors. In addition, it has a broader remit which includes Executive Director performance, career development and training requirements together with stewardship of the Company’s share option schemes.

BASIC SALARY
Salaries are set taking into account performance and appropriate comparatives in the market place.

PERFORMANCE LINKED BONUS
Bonuses are based on one year performance criteria. Executive Directors are able to earn a bonus of 35% of their base salary on achievement of budget targets. A 10% bonus is paid on achievement of 97% of budget. No bonus is payable below that figure. Targets for the Group Chief Executive and Group Finance Director are linked to Earnings per Share. In the case of the other Executive Directors the targets are a combination of EPS and Divisional operating profit with a 30% weighting to the former and 70% to the latter. The bonus can rise to a maximum of 65% of salary but to reach this level would require exceptional achievement, substantially outperforming budget targets. Bonus payments are not pensionable.

PENSION CONTRIBUTIONS
The Company operates contributory money purchase pension schemes for the benefit of its executives and all UK based employees. In all cases, basic salary only is pensionable. Executives are able to increase pension contributions through salary sacrifice and benefit from a portion of the savings in National Insurance charges. Pension contributions on behalf of Executive Directors are 15% of base salary, before any salary sacrifice element.

SHARE OPTIONS
The Company believes that share options are an important element in Executive Director remuneration packages. This is particularly so where the executive in question holds only a limited number of Holidaybreak plc shares. Current policy is to grant annually options to a value equivalent to one year’s salary to each of the Executive Directors. Equal (in value) grants are made shortly after the Company’s Preliminary and Interim Results announcements. More information on the Company’s share option schemes is given on pages 2-4 together with details of options held by directors.