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Nominations Committee - Terms of reference

CONSTITUTION

The Board has established a committee of the Board to be known as the Nominations Committee("the Committee").

MEMBERSHIP

The Committee and its Chairman shall be appointed by the Board from amongst the Non-Executive Directors.

The Committee shall consist of not less than two members. A quorum shall be two members.

In the absence of the Committee Chairman, the remaining members present shall elect one of themselves to chair the meeting.

The Company Secretary or their nominee shall be the Secretary to the Committee.

FREQUENCY OF MEETINGS

Meetings shall be held as and when appropriate but at least once per annum. The Chairman of the Committee may convene additional meeting(s) if deemed necessary.

ATTENDANCE AT MEETINGS

Only members of the Committee have the right to attend Committee Meetings. However, other individuals may be invited to attend all or part of any meetings as and when appropriate.

AUTHORITY

HM Treasury (the Shareholder) appoints the Chairman of the Board and appoints two Non-Executive Directors in consultation with the Chairman.

The Shareholder must give its consent for the appointment of other members of the Board proposed to be appointed by the Committee and agree the terms on which the Directors are appointed and incentivised.

The Chairman and a senior official nominated by the Chancellor of the Exchequer (the Nominated Official) will discuss and confirm Board composition and succession regularly in the light of performance and the requirements of the Company's strategic and funding plan (the Plan).

The Chairman will discuss with the Nominated Official any impending changes to Board membership.

The Nominated Official will meet with the Chairman of the Committee as necessary to discuss any proposed Board changes before they became subject to the formal appointment/consent procedure.

Subject to the foregoing, the Committee will consider and make recommendations to the Board on the following matters:

• the identification and recruitment of potential Executive and Non-Executive Directors with a view to ensuring the continued ability of the Company to compete effectively in the marketplace;
• the structure, size and composition (including skills, knowledge, experience required) of the Board having regard to agreed strategy;
• the respective numbers of Non-Executive Directors and Executive Directors;
• the requirement for the members of the Board of Directors to have an appropriate range of skills

The Committee shall review annually the adequacy of time spent by Non-Executive Directors in the performance of their duties to the Company.

The Committee shall be responsible for preparing a description of the role and capabilities required for a particular appointment, in the light of an evaluation of the balance of skills, knowledge and experience of the Board.

The Committee is authorised by the Board to obtain at the Company's expense outside professional advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary.

The Committee may form sub-committees or delegate such powers as it thinks necessary to designated individuals to assist in carrying out the work required by the Committee.

The Committee's responsibilities and authority covers all of the Northern Rock Group of companies and any joint ventures which may be entered into.

REVIEW

The Committee will conduct an annual review of its performance and ensure that it is provided with sufficient resources to undertake its duties, and that sufficient training is provided to members on appointment and on an ongoing basis, and recommend any changes that it considers necessary to the Board for approval.

These terms of reference shall be reviewed by the Committee and, where necessary updated, at least once a year.

REPORTING PROCEDURES

The Committee will report to the meeting of the Board of Directors next following a meeting of the Committee and the Secretary will circulate the minutes of the meeting of the Committee to all members of the Board.

The Chairman of the Committee or another of its members will be available at the Company's Annual General meeting to answer questions on matters falling within the Committee's remit.

© Northern Rock plc. 2008