Executive Committee – Terms of Reference

Approved by UK Board 24

March 2022

1. Purpose

1.1. The purpose of the Executive Committee is to manage the day-to-day activities of the LLP’s

business through:

• Developing and implementing strategy, operational plans, policies, procedures and

budgets;

• Driving and monitoring operating and financial performance;

• Assessing and controlling risk;

• Prioritising and allocating resources.

1.2. In fulfilling its purpose the Executive Committee shall give due consideration to:

• The LLP’s obligations and commitments as a member firm of the KPMG global network;

• Balancing the interests of various stakeholders (employees, partners, clients, regulators

and the public at large);

• Upholding the integrity, brand and reputation of KPMG; and

• Planning the firm’s future development.

1.3. In fulfilling its responsibilities (set out in section 5) the Executive Committee ensures that the

firm discharges its public interest responsibilities, in particular, prioritising (in coordination with

the Audit Executive) Audit Quality and the application of Ethical Standards and the ICAEW’s

Code of Ethics.

2. Authority and Delegation

2.1 The Executive Committee is a committee of the LLP and the individual members of the

Executive Committee have duly delegated authority to carry out the responsibilities in section 5

below and as set out from time to time in their respective role mandates approved by the Chief

Executive (and, in the case of the Head of Audit’s role mandate, subject to consultation with the

Audit Board).

2.2 These terms of reference should be read in conjunction with any delegated authorities or

decisions matrix approved by the Chief Executive.

2.3 Subject to the LLP Agreement and the firm’s other constitutional documents and to any

directions given by the Board, the Executive Committee may exercise all the powers of the

LLP provided that the Executive Committee shall not exercise any power reserved to the Board

(as set out in the LLP Agreement, Board Charter and Terms of Reference, or notified by the

Board from time to time) or reserved to the Audit Board (as determined by the Board),or

reserved to the Members (as set out in the LLP Agreement).

2.4 The Executive Committee may delegate any of the powers it is authorised to exercise to an

Executive subgroup of the Executive Committee but shall continue to remain accountable for

any management undertaken or any decisions made by any of those Executive subgroups.

2.5 The Executive Committee shall remain accountable to the Chief Executive and to the Board, and

may at its own discretion or at the request of the Board, promptly give or make available to the

Board such information, reports and other documents to enable the Board to carry out its duties.

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March 2022

3. Constitution

3.1 Chair

3.1.1 The Chair of the Executive Committee is the Chief Executive.

3.1.2 In the absence of the Chair of the Executive Committee or if the Chair so chooses another

member of the Executive Committee shall act as Chair.

3.1.3 The Chair of the Committee has a casting vote.

3.1.4 In the event that the Chair of the Executive Committee declares a conflict of interest, or

the Executive Committee decides that such individual has a conflict of interest, then the

members of the Executive Committee shall appoint a chair from amongst themselves to

chair the meeting or the relevant part of the meeting.

3.2 Membership

3.2.1 The Executive Committee comprises those senior executives as the Chief Executive may

determine as ratified by the Board (and who shall be appointed with the endorsement of

the People Committee). At the date of these Terms of Reference, such senior executives

are the following:

• Chief Executive (Chair);

• Chief Operating Officer (“COO”);

• Chief Risk Officer (“CRO”);

• Chief Digital Officer (“CDO”);

• Chief Financial Officer (“CFO”)

• Head of Audit;

• Head of Consulting;

• Head of Corporates;

• Head of Corporate Affairs;

• Head of Deal Advisory;

• Head of Financial Services;

• Head of KPMG Business Services (KBS);

• Chief People Officer (CPO);

• Head of Regions; and

• Head of Tax and Legal.

3.2.2 Executive Committee Members’ roles, duties, responsibilities, goals, delegations and key

accountabilities shall be set by the Chief Executive with reference to strategic goals,

performance (including financial, operations and technology), people and culture and risk.

Performance against these objectives and accountabilities shall be the subject of regular

reporting (on an approximately monthly basis) to the Executive Committee.

3.3 Duration of appointments

Unless otherwise determined by the Board, the duration of appointments will be for a

continuous term at the discretion of the Chief Executive.

3.4 Secretary

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March 2022

3.4.1 The Head of Governance or their nominee shall act as Secretary to the Executive

Committee and attend all meetings.

3.4.2 The Head of Governance (or nominee) shall record the proceedings and decisions of the

Executive Committee meetings and the minutes shall be circulated to all members and

attendees, as appropriate, taking into account any conflicts of interest that may exist.

4. Proceedings of Meetings

4.1 Frequency of Meetings

4.1.1 The Executive Committee shall meet monthly and otherwise as required.

4.1.2 Meetings of the Executive Committee may be called by the Chair of the Executive

Committee at any time to consider any matters falling within these Terms of Reference.

4.2 Quorum

4.2.1 The quorum for any meeting of the Executive Committee shall be two-thirds of its

members.

4.2.2 A duly convened meeting of the Executive Committee at which a quorum is present

shall be competent to exercise all or any of the authorities, powers and discretions

vested in or exercisable by the Executive Committee.

4.2.3 The members of the Executive Committee may participate in a meeting of the Executive

Committee from separate locations by means of conference telephone or other

communication equipment which allows those participating to hear each other and be

heard, and shall be entitled to vote or be counted in the quorum accordingly.

4.3 Attendees

4.3.1 Only the members of the Executive Committee, and the General Counsel, have the right

to attend all Executive Committee meetings.

4.3.2 In addition to the General Counsel, regular attendees at meetings of the Executive

Committee include the following (at the discretion of the Chair of the Executive

Committee):

• Chief Financial Officer;

• Chief of Staff; and

• Head of Governance (or delegate).

4.3.3 Any Partner, officer, employee of the LLP or other potential attendees may attend all or part

of an Executive Committee meeting at the invitation of the Chair of the Executive

Committee and they may collectively or individually be requested to withdraw from

meetings of the Committee at any time if required to do so by the Chair of the Executive

Committee.

4.4 Resolutions

4.4.1 The Committee shall reach decisions by a simple majority of those voting on the issue in

question. If the number of votes for and against a certain proposal are equal, the Chair has

a casting vote.

4.4.2 Any resolution evidenced in writing or by electronical or voice recognition means, by such

member or members of the Executive Committee as would have been necessary to pass

such resolution had all members of the Executive Committee been present at a meeting

to consider such resolution, shall be valid and effective as if it had been passed at a

meeting of the Executive Committee duly convened and held, provided that notice and

details of the proposed resolution have been given in advance to each member of the

Executive Committee.

5. Conflicts of interest of individual Executive Committee members

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If a member of the Executive Committee has a conflict of interest, they shall immediately

disclose this to the Chair of the Executive Committee and where appropriate recuse

themselves from any deliberations or votes of the Executive Committee concerning the

relevant subject-matter.

Scope of Responsibilities and Oversight

The detailed responsibilities of the Executive Committee include, but are not limited to, the

following:

6.1. Board Alignment and Escalation

The Executive Committee has a responsibility to identify matters required or appropriate for

escalation to the Board or the appropriate Board Committee and to review, debate and form

recommendations on relevant items prior to such escalation. This responsibility is in addition

to the right for the Board or any Board Committee to request or require escalation to them of

any defined matters or categories of matter.

6.2. Values, integrity and diversity

The Executive Committee is responsible for:

6.2.1.

Actively promoting the LLP’s culture and values;

6.2.2.

Operationalising the firm’s values and ensuring these are widely understood and

consistently adhered to;

6.2.3.

Ensuring the firm, its partners and employees act with high integrity, which is aligned

to and promotes the KPMG vision of becoming the most trusted professional

services firm;

6.2.4.

Driving inclusion and diversity and ensuring the composition of the LLP’s workforce

(partners, employees and contractors) is representative of wider society; and

6.2.5.

Developing and proposing Inclusion and Diversity targets and recommending to the

Board for approval

6.3 Strategy

The Executive Committee is responsible for:

6.3.1 Working jointly with the Board on the development of the strategy for the LLP (for

recommendation and approval by the Board) having regard to:

• the interests of its members, clients, employees, regulators and other stakeholders;

and

• the appropriate appetite for associated risks;

6.3.2 Informing the strategy, laying the foundations and designing the process for the strategy

development;

6.3.3 The delivery, successful execution and implementation of the approved strategy including

considering and managing actual and emerging risks that may impact achievement of the

strategy;

6.3.4 The development and implementation of financial and operational plans, policies,

procedures and budgets to execute the strategy; and

6.3.5 Ensuring the active liaison, co-ordination and co-operation between different parts of

the business to support execution of the strategy and business plans and fulfilment

of its other responsibilities.

6.3.6 Ensuring the alignment between the strategy for the audit business, as developed by the

Audit Executive, and the strategy for the LLP.

6.4 Performance and Operations

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The Executive Committee is responsible for:

6.4.1 Developing and preparing the firm’s budgets, forecasts, annual budget plan and UK

Business Plan and recommending to the Board for approval;

6.4.2 Achieving the approved budgets, and annual budget plan;

6.4.3 Actively managing and monitoring the operational and financial performance of the LLP

against targets, objectives and key performance indicators (set by the Board or the

Executive Committee where appropriate)

including oversight of delivery of these

targets, objectives and performance indicators by individual Executive Committee

members in line with their individual accountabilities, and in the case of the Audit

business and the Head of Audit, taking into account any targets, objectives and key

performance indicators recommended by the Audit Board

;

6.4.4 Optimising the calibration, allocation, prioritisation and adequacy of the firm’s

resources;

6.4.5 Holding leaders within the business to account through an effective organisational,

performance and accountability structure taking action where required; and

6.4.6 Identifying issues and acting on early warnings and deviations from the business plan

and/or budget, reviewing the adequacy of interventions and monitoring the effectiveness

of remedial actions.

6.5 Partner promotion, performance cycle and remuneration

The Executive Committee is responsible for:

6.5.1 The design (for recommendation and approval by the People Committee and Board as

appropriate) of the performance cycle for Partners, including balanced score cards, goals,

mid-year reviews, year-end reviews, partner 360 evaluation and dual pens, taking account

of relevant recommendations of the Audit Board as concerns Audit Partners;

6.5.2 Developing the partner promotion framework and process (for recommendation and

approval by the People Committee and Board as appropriate), identifying suitable

candidates for partner promotion and approving the quantum of promotions and

individual candidates in alignment with the business plan, inclusion and diversity targets

and KPMG values, taking account of relevant recommendations of the Audit Board with

respect to the framework and process only as concerns Audit Partners;

6.5.3 The design (for recommendation and approval by the People Committee and Board as

appropriate) of relevant remuneration policies and principles for Partners, taking account

of relevant recommendations of the Audit Board and the Remuneration Committee of the

Audit Board, as such policies and principles concern Audit Partners; and

6.5.4 Implementation of the performance cycle, remuneration policies and principles through

the annual distribution of profits to Partners within the parameters established by the

Board, including taking account of recommendations as the case may be by the People

Committee and/or the Audit Board, and set out in the LLP Partnership Agreement.

6.6 Investments

The Executive Committee is responsible for:

6.6.1 Developing an investment framework (for approval by the Board) (including processes,

portfolio allocation, evaluation criteria and governance) and implementing it effectively;

6.6.2 Reviewing proposed investment business cases (including assessing strategic and financial

merits as well as risk profile) and, in the case of investments with a value or aggregate

commitments of up to £5million, approving them if appropriate, or, in the case of

investments of value or aggregate commitments greater than £5million, making

recommendations to the Board for its deliberation and approval;

6.6.3 Ensuring that the relevant members of the Executive Committee and Executive

subgroups execute and deliver all approved investments in accordance with the relevant

approved business plans in their business area;

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6.6.4Examining all trade investments, divestments and major capital expenditure proposals

and recommending to the Board, for approval, those which are material either by

nature or cost; and

6.6.5 Reviewing the performance of investments in terms of both effectiveness of

integration, management of risks and return on investment, each as set out in the

given investment’s approved business case.

6.7 Risk Management and Internal Controls

The Executive Committee is responsible for:

6.7.1 Owning the overall responsibility for managing the firm’s risk (including ensuring that the

Enterprise-Wide Risk Management Framework is operative and effective) and

protecting the KPMG brand in general and for each individual Executive Committee

member’s area of responsibility;

6.7.2 Ensuring the risk principles approved by the Board are respected and embedded in the

business;

6.7.3 Ensuring that the Risk Appetite is developed in collaboration with the CRO and COO and

once approved by the Board is fully embedded in the business, including across strategy,

planning, decision-making processes and partner remuneration;

6.7.4 Ensuring resources and processes are in place to support the Risk Appetite framework

(including the Audit practice’s appetite and mitigations for accepting higher risk audits as

recommended by the Audit Board);

6.7.5 Identifying on a timely basis breaches of Risk Appetite, escalating them and developing

mitigating actions;

6.7.6 Monitoring compliance with the Board approved Risk Appetite, including overseeing and

managing portfolio risks and risk reward profiles of different parts of the business;

6.7.7 Ensuring that risk considerations are incorporated within the strategic planning and

budgeting processes;

6.7.8 Ensuring each individual Executive Committee member manages the strategic risk,

operational risk, financial risk and regulatory, compliance and legal risk in their area of

responsibility, including the embedding of the risk principles and developing their

respective risk appetite statements (and, in the case of the Head of Audit’s area of

responsibility, taking account of any applicable recommendations of the Audit Board);

6.7.9 Receiving regular reports on risk issues from the CRO in their risk oversight (2

line of

defence) capacity;

6.7.10 Receiving and acting upon findings and recommendations of the Head of Internal Audit

in their risk assurance (3

line of defence) capacity;

6.7.11 Ensuring compliance with relevant policies, legislation and regulations;

6.7.12 Ensuring the adequacy and compliance with internal controls within the Executive

Committee members’ respective business areas through active monitoring and

management; and

6.7.13 Safeguarding the integrity and adequacy of management information and financial

reporting systems.

Reporting and Duty to Keep Board Informed

7.1 Minutes of each Executive Committee meeting will be disclosed at the next meeting of the

Board following their approval.

7.2 The Executive Committee reports to the Board and the Chief Executive shall report to each

Board meeting on matters within their duties and responsibilities.

7.3 The Executive Committee shall provide relevant reports to the Audit Board and the Head of Audit

shall report to each Audit Board meeting on matters relating to or impacting the Audit business

within the Executive Committee’s duties and responsibilities.

Approved by UK Board 24

March 2022

8 Executive Committee Sub-Groups and Delegations

8.1 The Executive Committee may establish Executive sub-groups to support the fulfilment of

responsibilities outlined in section 5. At the date of these terms of reference the following are in

operation:

• Operations Executive;

• Risk Executive;

• [Investments Executive]; and

• Audit Executive.

All duties and powers of such Executive sub-groups are subject to the limitations of authority

stated in their terms of reference which are subject to approval by the Executive Committee

and, in the case of the Audit Executive, also to take account of any recommendations of the

Audit Board.

8.2 Executive Committee Sub-Groups shall routinely and regularly report to the Executive

Committee, Board, Audit Board (in the case of the Audit Executive) and/or Board Committee (as

relevant) on the exercise of their delegated duties and powers.

8.3 The Executive sub-groups shall work closely with the other Executive sub-groups to share

information, be efficient and timely and prevent overlap (unless required).

9 Governance and Resources

9.1 The Executive Committee shall, via the Chief Executive’s office, make available to new

members of the Executive Committee a suitable induction process and, for existing members,

ongoing training as discussed and agreed by the Executive Committee.

9.2 The Executive Committee shall conduct an annual self-assessment of its activities under these

Terms of Reference and report any conclusions and recommendations to the Board and, as

part of this assessment, shall consider whether or not it receives adequate and appropriate

support in fulfilment of its role and whether or not its annual plan of work is manageable.

9.3 The Executive Committee shall in its decision-making, give due regard to any relevant legal or

regulatory requirements, and associated best practice guidance, as well as to the risk, public

interest and reputation implications of its decisions (liaising where relevant with the Board, its

committees and the Audit Board).

9.4 The Executive Committee shall have access to sufficient resources in order to carry out its

duties. In consultation with the Chair of the Board and/or General Counsel, it shall have the

power to engage independent counsel and other professional advisers.

Review and Terms of Reference

10.1 The Executive Committee shall annually review its Terms of Reference and may recommend to

the Board for approval any amendments.

10.2 The Executive Committee shall conduct an annual assessment of its activities under these terms

of reference and report any conclusions or recommendations to the Board.