New World Department Store China Limited

We established a remuneration committee on 12 June 2007, with written terms of reference in compliance with the Code on Corporate Governance Practices set out in Appendix 14 to the Listing Rules. The remuneration committee will make recommendations to the Board on our framework of executive remuneration and determine on behalf of the Board specific remuneration packages and conditions of employment for executive Directors and our senior management. The remuneration committee comprises of Mr. CHENG Chi-kong, Adrian, Mr. TONG Hang-chan, Peter, Mr. CHEUNG Fai-yet, Philip, Mr. CHEONG Ying-chew, Henry, Mr. CHAN Yiu-tong, Ivan and Mr. YU Chun-fai, Henry and is chaired by Mr. TONG Hang-chan, Peter.

Terms of Reference of the Remuneration Committee

Constitution

The board of directors of the Company (the "Board") hereby resolves to establish a committee of the Board to be known as the remuneration committee (the "Remuneration Committee").

Objective

The Remuneration Committee shall review and develop, for the Board's endorsement, the Company's policy on remuneration for its Directors and its Senior Management (as defined in paragraph 19 below) by reference to paragraph 16 below.

It shall provide a medium of public accountability, which is not controlled by the Company's management.

Membership

The Remuneration Committee shall consist of at least five members. A majority of them are to be selected by the Board from amongst its independent non-executive Directors.

The chairman of the Remuneration Committee shall be appointed by the Board.

A quorum shall be two-third of the members of the Remuneration Committee.

Frequency of meetings

The Remuneration Committee shall meet as and when necessary or at such other times as its chairman shall require.

Notice of meetings

Meetings of the Remuneration Committee shall be called by its chairman or at request of the Board.

Unless otherwise agreed, notice of each meeting confirming the venue, time and date, together with an agenda of items to be discussed, shall be issued to each member of the Remuneration Committee and any other person required to attend no less than three working days prior to the date of the meeting.

Attendance at meetings

10.

The Remuneration Committee may request any Director, any member of Senior Management or any other individual to attend its meetings.

11.

The Company Secretary or his nominee shall be the secretary of the Remuneration Committee

Authority

12.

The Remuneration Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to seek any information it reasonably requires from any employee in order to perform its duties. All employees are directed to co-operate with any reasonable request made by the Remuneration Committee.

13.

The Remuneration Committee is authorized by the Board, at the Company's expense, to appoint legal or other independent professional advisers with relevant experience and expertise (including remuneration consultants) to assist the Remuneration Committee, to secure the attendance of such professional advisers at its meetings if it considers it necessary and to obtain reliable, up-to-date information about remuneration in other companies. The Remuneration Committee shall have full authority to commission any reports or surveys which it considers necessary to help it fulfil its obligations.

14.

The Remuneration Committee is authorized to require management to provide it with such resources as may be necessary for it to discharge its duties.

15.

The Remuneration Committee shall consult the Chairman and/or the chief executive officer of the Company about their proposals relating to the remuneration of other executive Directors.

Duties

16.

The Remuneration Committee shall have the following specific duties:

A.	to make recommendations to the Board on the Company's policy and structure for all remuneration of Directors and Senior Management and on the establishment of a formal and transparent procedure for developing policy on such remuneration;
B.	to have the delegated responsibility to determine the specific remuneration packages of all executive Directors and Senior Management, including benefits in kind, pension rights and compensation payments, including any compensation payable for loss or termination of their office or appointment, and make recommendations to the Board of the remuneration of non-executive Directors. The Remuneration Committee should consider factors such as salaries paid by comparable companies, time commitment and responsibilities of the Directors, employment conditions elsewhere in the group and desirability of performance-based remuneration;
C.	to review and approve performance-based remuneration (if any) by reference to corporate goals and objectives of the Company resolved by the Board from time to time;
D.	to review and approve the compensation payable to executive Directors and Senior Management in connection with any loss or termination of their office or appointment to ensure that such compensation is determined in accordance with relevant contractual terms and that such compensation is otherwise fair and not excessive for the Company;
E.	to review and approve compensation arrangements relating to dismissal or removal of Directors for misconduct to ensure that such arrangements are determined in accordance with relevant contractual terms and that any compensation payment is otherwise reasonable and appropriate;
F.	to ensure that no Director or any of his associates is involved in deciding his own remuneration; and
G.	to produce an annual report of the Remuneration Committee's remuneration policy which will form part of the Company's annual report and account.

17.

In determining the framework or Board policy for the remuneration of the Directors and Senior Management, the Remuneration Committee shall take into account relevant provisions of the "Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited" and other factors that it deems necessary. The objective of such policy is to ensure that employees of the Company and members of Senior Management in particular, are provided with appropriate incentives to encourage enhanced performance and are, in a fair and responsible manner, rewarded for their individual contributions to the success of the Company.

18.

The Remuneration Committee shall determine, prior to the beginning of each financial year, the details of any performance-related remuneration whether on a Company-wide basis or for Senior Management. Following each financial year the Remuneration Committee shall review the performance against these targets.

Senior Management

19.

For the purposes of these terms of reference, Senior Management shall mean employees or officers at the rank of deputy regional general manager or above.