The directors present their remuneration report for the year ended 31 December 2008.

The remuneration committee is responsible for recommending to the Board the broad policy for the remuneration of the Chairman, the Chief Executive, the executive directors and the company secretary. The remuneration of non-executive directors is a matter reserved to the Chairman and executive directors.

Within the terms of the agreed policy, the committee determines:

The committee also monitors the level and structure of remuneration for business unit presidents or managing directors and the head of corporate development.

The remuneration committee consists of the Chairman and the non-executive directors (all of whom are independent), these being at the date of this report Anthony Reading (chairman), Peter Chambré, John Hughes and John Warren. The Chief Executive may be in attendance by invitation and the committee takes into consideration his recommendations regarding the remuneration of his executive colleagues. The Chief Executive is not involved in discussions concerning his own remuneration.

The committee has appointed Hewitt New Bridge Street (a trading name of Hewitt Associates Limited which acquired New Bridge Street Consultants LLP) to advise on various aspects of the Chairman's and executive directors' remuneration. Hewitt New Bridge Street did not provide any other services to the company during the year. However, Hewitt Associates Limited provided benchmark data on selected management roles during the year. Hewitt New Bridge Street operates separately from the rest of Hewitt.

The terms of reference of the remuneration committee can be found on the company's website and are available on request.

The Board, in considering the recommendations of the remuneration committee, complied throughout the year with the provisions of the Combined Code (including the principles for performance-related remuneration set out in Schedule A). The policy objective is to ensure that the high calibre individuals required at board level are fairly and competitively remunerated and incentivised in a manner consistent with the group's strategic objectives.

The remuneration committee also regularly reviews the balance between fixed and variable pay.

Salaries and fees
Base salaries and fees are established by reference to surveys of the terms offered by comparable UK quoted companies. The starting point for comparative surveys is the scope of the position and associated performance of the Chairman, each executive director and the company secretary. Excluding his own position and performance, the Chief Executive is responsible for the definition of the scope of positions and assessment of the performance of each executive director, for approval by the remuneration committee. Salaries are reviewed at the beginning of each year and are set at competitive levels, typically based around the market median, although the remuneration committee reserves the flexibility to respond to individual circumstances which may cause salaries to be set at a level higher or lower than market median. Market ranges are reviewed on a regular basis.

Salary levels for all Board members were not subject to any increase at the review date of 1 January 2009.

Bonuses
To align remuneration with shareholders' interests, a significant proportion of executive directors' potential total remuneration is related to annual corporate performance.

Under the 2008 arrangements, bonuses of up to 100% of base salary were achievable upon the attainment of demanding profitability (75% potential) and personal (25% potential) targets set in relation to carefully considered business plans. Bonus payments commence only at a level which shows an acceptable financial result in the context of economic circumstances and market expectations, with an 'on-plan' performance yielding a payment of approximately half the maximum potential. Targets for maximum outturn are set at highly stretching, albeit attainable, levels. There is no change to the bonus potential or performance measures for 2009. Bonuses achieved in respect of 2008 performance based on targets set at the start of the financial year were as follows (as a percentage of salary at 31 December 2008):

J E O'Higgins 81.10%
C G Watson 75.65%
J C Webster 77.90%

Share-based incentives
The remuneration committee keeps under review the company's share-based incentive arrangements and takes advice on market practice. The committee is of the view that offering senior management the opportunity to be awarded and then retain shares in the company is an important part of motivating and rewarding key employees so that they may participate in the future growth in value of the company. The Spectris Performance Share Plan ('the Plan'), approved by shareholders at the 2006 AGM, is intended to support this objective and to facilitate the retention of senior management over the longer term.

Under the Plan, annual awards of shares may be made which vest at the end of a three-year period, subject to continued employment and the satisfaction of challenging performance conditions. The maximum award of performance shares that can be made to any participant in any financial year is limited to shares with a market value equal to 125% of the participant's salary, although the committee's general policy is to determine awards by reference to a base award over shares worth 100% of salary, which may then be flexed up or down from year to year depending on corporate and personal performance.

Awards are currently structured so that 50% of the award is subject to an earnings per share ('EPS') target and 50% subject to a total shareholder return ('TSR') target. Each condition operates over a fixed three-year period with no opportunity for retesting.

The performance criteria for grants made in 2008 are summarised in the tables below.

Company EPS performance	% of award that vests (expressed as a percentage of one-half of the total number of shares subject to an award)
Consumer Prices Index ('CPI') + 12% compound per annum ('c.p.a.')	100%
Between CPI +5% and 12% c.p.a.	Pro rata straight line between 25% and 100%
CPI +5% c.p.a.	25%
Less than CPI + 5% c.p.a.	0%
Company TSR performance relative to the FTSE 250 (excluding investment trusts)	% of award that vests (expressed as a percentage of one-half of the total number of shares subject to an award)
Upper quintile or above	100%
Between upper quintile and median	Pro rata straight line between 25% and 100%
Median	25%
Below median	0%

The above criteria will continue to apply to Performance Share Plan awards to be made in 2009.

For grants made in 2006 and 2007, the upper end of each vesting scale was set at a) CPI + 10% c.p.a. and b) upper quartile. The reference level for a base award of shares in 2006 and 2007 was 67% of salary.

If awards in excess of 100% of salary were to be granted, the committee has also undertaken that the percentage of an award that will vest for threshold performance will be limited to 25% of a participant's base salary rather than 25% of the number of shares subject to an award, with pro rata straight line vesting from this lower point up to 100% of the award. There is no intention to make awards in excess of 100% of salary during 2009.

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