Compensation Discussion and Analysis

Overview
This Compensation Discussion and Analysis describes the objectives and the role of the Compensation Committee and further discusses the philosophy upon which the Compensation Committee bases its decisions in its endeavors to meet the objectives. It also describes the principles that are the foundation of the Company’s executive compensation policies and details the individual material elements of compensation awarded to, earned by, or paid to the named executive officers. Compensation for named executive officers residing in the US is paid in US dollars, while compensation for named executive officers residing in the UK is paid in pounds sterling.

Introduction
Signet’s compensation program has been designed to assist in achieving its business objective of consistently outperforming the speciality retail jewelry market segment and thereby deliver superior returns to Shareholders.

In order to accomplish a superior performance, we have to be able to employ, motivate and retain superior management. The primary compensation principle, therefore, is to target total delivered compensation at the median of a customized group of comparator companies. Those companies are specifically chosen as they reflect various attributes similar to ours but also because they pose a potential threat as to solicitation of our executives if their compensation is not competitive. Executives are paid in a range related to that median dependent upon experience and proven ability to consistently deliver a superior performance.

The existing named executive officers have considerable individual and collective experience and a proven track record of superior performance. As a result of that consistent performance, the Compensation Committee has determined that it is appropriate that the aggregate total direct compensation at target performance should place the compensation of the named executive officers above the comparator company median, which it does, currently placing them at the 65th percentile.

A number of sub-principles have also been developed as follows:

1. The compensation program must align the interests of senior management with those of Shareholders. This is achieved by delivering approximately 60% of total compensation for named executive officers as incentives dependent upon share price performance or factors that should produce long-term share price growth.
2. The only element of guaranteed pay is base salary with the percentage of at risk compensation increasing in line with the responsibility and experience of each executive. Base salary accounts for only 33% of the annual value of the Chief Executive Officer’s potential total direct compensation versus approximately 40% for other named executive officers.
3. Elements of compensation that are at risk should separately reward both annual and multi-year performance as well as reward exceptional performance. This is achieved through the annual bonus plan, which represents approximately 20% to 25% of the named executive officers’ target total direct compensation, together with awards of performance restricted stock units, which account for approximately another 20% of the total.
4. Compensation should include a retention component, which encourages high performing executives to remain with the Company. An award of service-based restricted stock which accounts for approximately 20% of named executive officers total compensation and which doesn’t vest until the third anniversary of the grant, strengthens the retention value of the compensation.
5. The compensation program should be simply constructed and easily understood so that the named executive officers are in no doubt as to the performance requirements and their relationship to the level of payments and therefore remain motivational.
6. Although there is no formal share retention requirement in place for most of the named executive officers, the compensation program should encourage all senior executives to build a substantial holding of the Company’s shares.

In summary, the Committee has awarded compensation in fiscal 2010 on the basis of continuing superior performance. The Company has continued to increase profitable market share during the year as several competitors’ experienced major declines and even bankruptcy and the compensation for fiscal 2010 reflects the strong performance of the Company in fiscal 2010: positive free cash flow (determined as described in the Company’s Form 10-K for fiscal 2010) of $471.9 million against a target of $175 million to $225 million; significantly exceeded working capital reduction objectives, achieved a $100 million cost savings program and an income before income taxes of $241.8 million with basic earnings per share $1.92, above guidance provided in January 2010 of $1.76 to $1.84, and a year end net debt (determined as described in the Company’s Form 10-K for fiscal 2010) of $7.9 million, all in a speciality jewelry market that declined in sales. As a result, following two previous years in which only a minimum bonus was earned in one year, and none in the other, maximum bonus payments were earned in fiscal 2010.

Objectives of the Executive Compensation Program
The Compensation Committee has established the following objectives for the compensation program:

• to attract, motivate and retain the management talent necessary to develop and execute both the annual and strategic plans;
• to reward achievement of annual and long-term financial goals; and
• to link management’s interests with those of the Shareholders.

The total executive compensation program includes base salary, annual and long-term incentives and benefits.

1. The Role of the Compensation Committee
The Compensation Committee’s role is to set the compensation for Signet’s named executive officers to ensure that they are fairly rewarded for their individual contributions to Signet’s performance having due regard to the interests of Shareholders, the financial and commercial health of the business and pay and conditions throughout Signet. It is also the role of the Committee to ensure that Signet’s compensation remains competitive.

Surveys are undertaken on a regular basis to ensure that total compensation packages remain in the percentile range close to the comparator company median described herein. Recognizing that approximately 80% of Signet’s sales and profits are generated in the US, and that significant differences in compensation practices exist between the US and the UK, separate surveys are conducted in each country.

Although the Company does not have a defined policy regarding the potential claw back of compensation, if elements of incentive compensation are awarded or made available on the basis of the achievement of a level of performance that proves to be erroneous, the Compensation Committee will endeavor to seek reparation.

2. The Role of Compensation Consultants
The Compensation Committee regularly uses external professional advice and annually uses competitive market surveys conducted independently in both the US and in the UK.

The Committee has retained Towers Watson (formerly Towers Perrin) as advisers who were not retained by Signet in any other capacity in fiscal 2010 such that would require additional disclosure. Towers Watson is a human resources and compensation consulting firm which assists the Compensation Committee in its review, evaluation and analysis of Signet’s executive compensation program. In this role, Towers Watson collects relevant market data in order to assist the Compensation Committee in delivering effective and competitive executive compensation. Towers Watson also advises the Compensation Committee on the best ways of motivating, rewarding and retaining executives in terms of both short and long term performance and advising the Committee of the most effective way of linking the interests of management and Shareholders.

Towers Watson collects market data of compensation programs both within and outside the retail sector. In analysing the market data provided by Towers Watson, the Compensation Committee focuses on established peer groups of companies for benchmarking purposes. The Compensation Committee annually reviews the composition of the peer groups in order to ensure that they continue to comprise appropriate representative groups. The Committee did so in fiscal 2010, and a customized group of retail peers used for the basis of assessing the compensation of Signet’s Chief Executive was based upon the following criteria:

• peer focus on retailers with international operations, headquartered in the US and listed on a US stock market;
• the median peer has total sales similar to Signet’s;
• most peer companies revenue ranges from half to twice the Company’s revenue; and
• approximately half of the peers generate higher and half lower sales than Signet.

The peer group used for assessing the compensation of Signet’s Chief Executive is:

Nordstrom Inc., Bed Bath and Beyond Inc., Foot Locker Inc., Barnes & Noble Inc., Liz Claiborne Inc., Jones Apparel Group Inc., Collective Brands Inc., Williams-Sonoma, Inc., Borders Group Inc., Coach Inc., Saks Inc., American Eagle Outfitters Inc., Tiffany & Co., Phillips Van Heusen Corporation, Ann Taylor Stores Corporation, Zale Corp., The Talbots Inc., Pier 1 Imports Inc., Abercrombie & Fitch Co., and Charming Shoppes Inc.

For the assessment of the UK named efxecutive officers, a customized group of companies that participated in the Towers Watson Top Executive remuneration survey for the UK was used. This survey includes executives employed in general industry, which was used to assess the compensation of the Group Finance Director, and retail industry, which was used to assess the compensation of the CEO of the UK division. For the assessment of the US named executive officers, namely the compensation of the Chief Executive Officer and the Chief Operating Officer of the US division, the Retail/Wholesale Executives Database within the Towers Watson Compensation Database was used, which provides compensation data for a variety of retail and wholesale companies located in the US.

Towers Watson has also been used to provide data to the Compensation Committee in relation to the compensation structure and pay practices for independent directors of US companies.

3. The Allocation of Executive Compensation
It is the objective of the Compensation Committee to deliver and maintain a competitive executive compensation program in accordance with its compensation principles. The Compensation Committee has established an executive compensation program that provides a broad mix of overall direct compensation (base salary, short term incentive compensation in the form of an annual cash bonus and long-term incentive compensation in the form of an equity interest) for its named executive officers.

In allocating the various elements of total compensation, the Compensation Committee seeks to ensure that the greater the responsibility and direct influence over the performance of the Company an executive officer has, the more their total compensation will be weighted toward incentive payments. The Compensation Committee evaluates the annual compensation benchmarking data, with total remuneration, including base salary and incentive based payments, being targeted at the median of industry total compensation of the comparator group as determined by the benchmarking process, along with other factors such as an executive officer’s level of experience, the Company’s desire to retain the executive, the availability of replacement personnel, as well as the individual’s responsibilities and actual performance. Responsibility for external factors that potentially have an impact on the results of the Company will also be considered. The various elements of a named executive officer’s compensation package are then allocated as a percentage of base salary.

Any gains realized from previous pay and/or awards do not impact the setting of pay or awards going forward. In applying this principle the Compensation Committee hopes to discourage the belief that a prior year’s award may negatively or positively impact the level of future awards. Moreover, the Company does not conduct any wealth accumulation analysis.

The Compensation Committee reviews and evaluates the impact of tax laws, accounting changes and similar factors affecting the Company’s executive compensation program. The Committee believes that ordinarily it is in its best interests to retain maximum flexibility in the compensation programs to enable the Company to appropriately reward, retain and attract the executive talent necessary for success. To the extent these goals can be met in a tax and accounting efficient manner, the Committee will endeavor to do so. However, the Board and the Compensation Committee believe it is important to retain the flexibility to provide compensation that is appropriate in the circumstances, taking all relevant matters into consideration.

4. Performance Criteria
For performance based compensation, the Compensation Committee reviews proposed performance measures and targets in order to effectively motivate management and drive the creation of Shareholder value, while seeking to ensure that the targets are set at a level that is stretching but not out of reach. Bonuses are reviewed annually to confirm that they remain appropriate and clearly aligned with business strategy and objectives.

The Compensation Committee believes that the choice of performance measures should be made in the context of Signet’s business strategy, reflect Signet’s particular circumstances and be related to overall corporate performance. In certain circumstances it may be appropriate to set performance criteria that are specific to individual roles within the corporate strategy.

The Compensation Committee believes that where performance criteria are used they should be: easily understood; directly linked to the performance of the Company or the relevant business unit; directly influenced by management’s actions; able to incentivize the efficient use of capital; and, for long term awards, be equity based. In assessing actual performance, it is the Compensation Committee’s policy to measure the Company or relevant business unit’s results on the basis of constant exchange rates so that executive officers neither benefit from, nor are penalized by, exchange rate fluctuations over which they have no control.

The vesting of incentive awards will normally be subject to the participant’s continued employment within the business until the end of the performance period. However, partial vesting pro-rata to the length of time since grant may occur at the end of the performance period if the participant’s employment within the business ends before the end of the performance period on account of death, redundancy, retirement, injury, disability or other circumstances as determined by the Compensation Committee, provided that it is satisfied that the performance conditions have been fulfilled in respect of the period from the date of grant of an award to the date of cessation of employment.

5. Compensation Overview, Objectives and Key Features
The Compensation Committee has established an executive compensation plan that contains the following key components:

An additional component of the compensation plan is the provision of a benefits package which consists of a program of benefits that includes pension, health and life insurance and has the objective of retaining executive officers over the course of their careers.

6. Elements of Executive Compensation
Based upon the policies, principles and philosophy described above, the Compensation Committee has designed, developed and implemented an executive compensation program that it believes provides executive officers with total compensation that adequately rewards the executive for his or her contribution in achieving superior corporate performance and increasing the share price. Each of these elements is described below.

a) Base salary
The Committee determines the salaries for each named executive officer as one part of a competitive total compensation program designed to attract and retain the Company’s named executive officers.

Each named executive officer receives a fixed level of base annual salary, which is paid monthly, as compensation for services rendered during the fiscal year. Base salaries encourage and reward attainment of individual performance. The level of base salary also recognizes and is a reflection of experience, expertise, responsibility, seniority and leadership qualities, as well as individual achievements and accomplishments and any other significant contribution to the achievement of corporate performance targets. The Compensation Committee has established the base salary range as derived from the benchmarking process in accordance with the Company’s Compensation Principles. This benchmarking is based upon market data of comparable companies described above, trends and geographic location of each position, as well as the movement of base salary within the business or division as a whole. Base salary ranges are monitored to ensure that attraction, retention and motivational objectives are maintained.

In fiscal 2011, Mr. Burman’s salary was increased 6.1% from fiscal 2009 to $1,721,000. Mr. Burman’s service contract provides for a 3% increase in basic salary in 2009 and 2010. In fiscal 2010, Mr. Burman had declined this 3% annual salary increase in line with a business-wide salary freeze implemented in fiscal 2010 due to the challenging economic environment. The increase in fiscal 2011 reflected the contractual undertaking in Mr. Burman’s service contract.

For fiscal 2011, the Compensation Committee determined to increase the base salaries for the other named executive officers, none of whom received base salary increases in fiscal 2010 as a result of the businesss-wide salary freeze. The fiscal 2011 increase was implemented following the benchmarking analysis, and specific levels of increase were determined by the Committee’s evaluation of the named executive officer’s performance of his particular executive role. The increases placed the aggregate total direct compensation at target performance at the 65th percentile of the comparator peer companies. The annual base salaries for fiscal 2011 were set as follows: Mr. Light—$863,100 an increase of 5%, Mr. Montalto—$615,436 an increase of 6%, Mr. Boyd—$737,784 an increase of 6% and Mr. Anderson—$578,429 an increase of 4%.

(b) Annual bonus
Annual bonus performance targets are set by the Compensation Committee each year. In determining the performance target at the commencement of each year, the Compensation Committee gives consideration to relevant market data, i.e. market positioning both of the annual bonus as an element of the total compensation and the positioning of the Company in its sector and in comparison to its competitors, as well as its current business plans. There is a maximum bonus level set each year on such awards, which is equal to twice the target level, and a threshold performance below which no payments are made.

This incentive program has been developed specifically to focus management on the achievement of each year’s performance objectives. The annual incentive is based on a pre-determined formula either on a divisional basis or a group basis which is a combination of the divisional performance, depending upon the named executive officer’s particular responsibilities. The annual incentive for Mr. Burman and Mr. Boyd is based upon Company performance with a proportion of the bonus based on the performance of each of the divisions, while the annual incentive for Mr. Light and Mr. Montalto is based solely on the performance of the US division as that is where their responsibilities are. Similarly, the annual incentive for Mr. Anderson is based upon the performance of the UK division for the same reason.

Annual bonus fiscal 2010
At the beginning of fiscal 2010, the Committee considered a number of different performance parameters and decided that due to the extremely uncertain economic environment it was appropriate to have the entire bonus based upon the targeted EBIT and cash flow objectives of the Company or division, as appropriate.

Therefore the financial performance measure for the annual bonus for fiscal 2010 upon which 100% of the total annual bonus capacity was determined, was based on targeted EBIT and cash flow targets for each division for fiscal 2010 set at the beginning of the bonus period. For fiscal 2010, the Committee set targets and maximum annual awards for each of the named executive officers based upon the achievements of the relevant fiscal 2010 targeted EBIT of the US and UK divisions. For corporate executive officers, those awards were based upon a split equal to 75%:25% of the performance of both divisions respectively. The bonus objectives for fiscal 2010 were allocated at 25% of maximum to be based on the achievement of targeted EBIT, 25% on targeted cash flow, and 50% based on a stretch EBIT target which was an increase of 15% in excess of targeted EBIT in the US and 33% in the UK. Having reviewed the performance achieved against the performance criteria set by the Compensation Committee at the beginning of the period, the Committee determined as part of the fiscal 2010 year end process in March 2010 that each performance measure had been met and exceeded at the maximum level and approved bonus payments as follows:

Annual bonus fiscal 2011
In setting the performance criteria for fiscal 2011, the Compensation Committee agreed to simplify the performance measure as economic uncertainty is still making it very difficult to set meaningful targets. Therefore the Committee determined not to base any amount of the bonus capacity on individual bonus objectives and that due to the continuing uncertain economic pressures it was appropriate to determine the entire bonus on profit measures equal to targeted operating profit, as the main focus should be on driving profit. For fiscal 2010, the Compensation Committee determined the performance criteria based upon the achievement of targeted EBIT. In 2011, the Committee described the performance criteria as being based on targeted operating profit. Although the terminology used is different, the two criteria for this purpose are interchangeable.

Therefore the financial performance measure for the annual bonus plan for fiscal 2011 upon which 100% of the total annual bonus capacity may be earned is based on target operating profit for each division set at the beginning of the bonus period. The bonuses for the corporate executive officers will be calculated on the same basis i.e. for fiscal year 2010 proportionately on the divisional results and calculated on a constant exchange rate basis. The level of achievement, between 85% and 115% of the performance target on a straight line basis over the period, will determine the level of the award between target and maximum that is paid. Bonus target and potential maximum entitlement for the named executive officers remain at the same levels as a percentage of base salary as for fiscal 2010.

For fiscal 2011, the Committee set targets and maximums for annual incentive awards for each of the named executive officers, by applying the same methodology as for fiscal 2010 and was therefore based upon the achievement of the relevant fiscal 2011 base targeted operating profit of each division, with corporate performance based upon a split of both in the same way as in fiscal 2010, as follows:

(1) In respect of Mr. Boyd, the Compensation Committee agreed that any short term bonus due in respect of fiscal 2011 will be earned pro-rata to the date of termination of his service agreement on retirement on June 25, 2010 but will be calculated and payable on the basis of the actual results when known after the end of fiscal 2011.

(c) Long Term Incentive Plans
The Compensation Committee believes that long term share based incentives are appropriate and necessary measures to properly focus the executive officers on long term results and align the interests with those of Shareholders. In determining the construction of the long term incentive each year, the Compensation Committee chooses from three main elements (1) time-based restricted shares, designed to incentivize executives to remain with the Company; (2) performance-based restricted units awarded on the basis of performance against targets set over a three year period; and (3) traditional share options which achieve value only if management action produces growth in share price.

Long Term Incentive Award Fiscal 2010
In order to provide balance to the Company’s long-term incentives, the Committee determined that as a general rule the ratio of the estimated value of time based restricted shares, performance-based restricted share unit awards and the estimated value of share option awards should be as nearly equally split as practicable. However market conditions at any given time may require that one or more of the elements of the long term incentive plan be reduced in value or even temporarily suspended. After consideration, the Compensation Committee determined that incentive awards for fiscal 2010 should not include the share option element due to the depressed share price and the Committee’s concern that named executive officers potentially could unfairly benefit from a correction in the market. As a result, long-term incentive compensation granted in fiscal 2010 was split equally between time restricted share awards requiring that named executive officers remain in employment for three years from the time of grant and performance based share units requiring not only that named executive officers remain in employment, but also achieve performance criteria over that three year period, at which time the performance based restricted stock units will cliff vest. The Committee determined that the performance targets would be over three years and based upon the achievement of targeted EBIT, either on a divisional basis for divisional named executive officers or on a blend of the two, similar to the short term bonus for corporate named executive officers discussed above. Named executive officer participants can earn between 0% to 200% of their award based on results that range from 85% to 115% of annual targeted EBIT on a cumulative basis. The first year EBIT targets were in accordance with the target set for fiscal 2010 and the subsequent years would also be based upon target EBIT and will be agreed by the Board at the commencement of the relevant fiscal year to better assess the prevailing economic environment and therefore apply meaningful and relevant performance targets at the relevant time.

The level of achievement, between 85% and 115% of the performance target on a straight line basis over the period will determine the amount of the award between nil and maximum that vests on a cliff vesting basis. The Compensation Committee considered it to be important that there was a sliding scale of achievement rather than all or nothing so as to adequately compensate named executive officers for actual performance against the
criteria.

Share option and long term incentive plan grants to executive officers are set out in the tables below.

Following approval by Shareholders of the Omnibus Incentive Plan at the annual general meeting in June 2009, the Committee approved awards to all participant employees, other than Mr. Burman pursuant to the terms of his service agreement described below. Generally awards are made at the same time as the annual compensation reviews, although in fiscal 2010 they were delayed pending Shareholder approval of the Omnibus Incentive Plan. As the restricted share and performance unit awards would in effect be full value awards, the grant amounts were determined based upon the award methodology for all participants, which was equal to the historic Black Scholes valuation applied to the previous option valuation being a percentage of salary; and where appropriate, the target performance of the previous LTIP (i.e. 37.5% of the maximum award achievable).

The Committee determined that the share price to be used to determine the amount of these grants to UK officers would be equal to the average of the closing prices of a Common Share on the London Stock Exchange on the three trading days immediately preceding June 16, 2009, being the date of Shareholder approval of the Omnibus Incentive Plan, and the amount of grants to US officers would be equal to the closing price of a Common Share on the trading day before June 16, 2009.

The number of time-based restricted shares and performance-based restricted units awarded to executive officers based upon this award methodology can be seen in the “Grants of Plan-Based Awards” table below.

The Committee determined in fiscal 2010, that the pre-determined performance conditions relating to the options over shares that were granted in fiscal 2005 were not met and therefore the Committee agreed that they had all failed to vest and subsequently lapsed. Grants of performance based awards made in 2006 have already lapsed having failed to meet the performance targets. Additionally, as the pre-determined performance conditions relating to performance based awards made in fiscal 2007 and 2008 under the Company’s LTIP, were not met, the Committee determined that none of these options vested in fiscal 2010 and none of the cash element under the LTIP for awards made in fiscal 2007 or 2008 was payable.

Long Term Incentive Award Fiscal 2011
No awards were made to Mr. Burman and Mr. Boyd in fiscal 2011 although the Committee approved awards to Messrs. Light, Anderson and Montalto. As in the previous year and for the same reason, the grant amounts were determined on the same basis. The restricted share and performance unit grant amounts were determined as a percentage of salary and, where appropriate, factored in target performance. Performance targets for Messers. Light, Anderson and Montalto were based upon divisional operating profit over a three year cumulative basis. Grants were in the form of time based restricted stock and performance based restricted stock units with cliff vesting after three years for both types of awards. Again, no share options were granted. The share price to be used to determine the amount of the grant to UK officers was to be equal to the average of the closing prices of a Common Share over the three trading days preceding the grant date which in fiscal 2011 was April 2, 2010 or, to US officers equal to the closing price of a Common Share on the trading day before the grant date.

(d) Pensions & Deferred Compensation
The Company provides pension, deferred compensation and retirement benefits to named executive officers and
employees, both as a retention mechanism and as a means to assist with the provision of a degree of financial
security post retirement. There are different plans operating in the US and the UK.

(i) UK Executive Officers
Messrs. Boyd and Anderson participate in the UK Group Scheme, which is a funded, HM Revenue & Customs registered, final salary, occupational pension scheme. Pensionable salary is the member’s base salary, excluding all bonuses.

The main features of this pension scheme applicable to Messrs. Boyd and Anderson are:

• a normal pension age of 60;
• pension at normal pension age of two-thirds of final pensionable salary, subject to completion of 20 years’ service;
• life assurance cover of four times pensionable salary; and
• spouse’s pension on death.

All UK Group Scheme benefits were, until April 5, 2006, subject to Inland Revenue limits. Since the changes to pension taxation in the UK from April 6, 2006 and the removal of existing limits, a scheme specific earnings cap has been maintained equivalent to the previous earnings cap, increased by the Retail Price Index annually. As the tax treatment and other advantages of contributing to funded unapproved retirement benefit schemes (FURBS), to fund benefits above the earnings cap, has been eroded the Company has ceased paying contributions to the Signet FURBS. In substitution a supplement is paid in accordance with the compensation principles on an individual basis. The Company will not compensate or protect members against the consequences of the changes in taxation, but will provide members with a cash supplement in lieu of pension accrual once members reach the Lifetime Allowance limit set by the legislation if they choose to exercise this option.

(ii) US Executive Officers
In the US there are two defined contribution savings vehicles. The primary retirement vehicle is the company sponsored Sterling Jewelers Inc. 401(k) Retirement Savings Plan (the “401(k) Plan”) which is a qualified plan under Federal guidelines. The Company matched employee contributions to the 401(k) Plan at 25% of an employee’s contribution up to a maximum of 6% of an employee’s basic salary until December 2008 when the Company match was suspended. Under Federal guidelines, the 401(k) Plan contributions by senior management may be reduced based on the participation levels of lower paid employees. Therefore, a supplemental plan, the Deferred Compensation Plan an unfunded non-qualified plan under Federal guidelines, was established in 1996 for senior management to assist with pre-tax retirement savings in addition to the 401(k) Plan. In 2004, the Company froze the DCP (the “Frozen DCP”), to new participants and new deferrals for tax purposes and created a second unfunded, non-qualified deferred compensation plan, for management and highly compensated employees or executives (the “DCP”).

Messrs. Burman, Light and Montalto have benefits provided via the 401(k) Plan, the Frozen DCP, and the DCP. The deferred compensation rules allowed for individual contractual contribution arrangements without any effect to its tax beneficial status. Pursuant to Mr. Burman’s service contract, the Company is required to contribute annually to the DCP 20% of Mr. Burman’s base salary, without regard to any corresponding contribution from Mr. Burman.

(e) Health & Welfare
Named executive officers participate in various health and welfare programs as well as life insurance and long term disability plans, which are generally available to other executive officers of the Company.

(f) Perquisites
Signet leases, or pays an allowance in lieu of an automobile in order to provide named executive officers with the use of a company car for business travel needs but recognizes that the vehicles may also be used for personal purposes. Vehicles are typically leased for a three year term and the cost of insurance, maintenance and fuel is also met by Signet. Historically, Signet had in certain circumstances made gross-up payments pursuant to existing employment agreements with certain named executive officers to account for the tax assessed against such executive officers with respect to these amounts. The Compensation Committee determined to generally eliminate these tax gross-ups in March 2010, except where such amounts are paid pursuant to existing employment agreements.

A limited number of other perquisites are made available to some named executive officers in order to promote business objectives and to reward experience, expertise, responsibility, seniority and leadership qualities. Signet reimburses fees for one private club membership for Mr. Burman and Mr. Light to encourage them to entertain business colleagues and customers, engage in social interaction with peers from other companies, and foster local leadership and community activities. In limited circumstances, where it is appropriate that spouses attend, Signet reimburses named executive officers for the travel expenses of spouses who accompany them on business. Historically, Signet has in certain circumstances made gross-up payments to account for the tax assessed against certain named executive officers with respect to these amounts. This practice was eliminated in March 2010, except where such amounts are paid pursuant to existing employment agreements.

(g) Service Contracts
It is the Compensation Committee’s policy that the service contracts of executive officers should be on a rolling basis with the notice period to terminate by either party not exceeding one year. Should it be necessary to grant a longer period of notice in order to recruit externally, this will be reduced to a maximum of one year after an initial period. Generally, service contracts in effect may all be terminated upon notice of one year or less. In unusual circumstances, including times of possible or actual transition of corporate control, corporate restructuring or just the desire to keep an executive or the team of named executive officers in place, free of distractions that might arise out of concern for personal financial advantage or job security, the Committee will enter into a retention agreement with one or more executive officers. At the present time the Company has one retention agreement with Mr. Burman, the Chief Executive Officer who has announced his plans to retire on January 29, 2011, which is integrated with his service contract, described below.

i) Terry Burman
Mr. Burman has a service contract (dated December 20, 2000 and amended and restated in February 2008 and November 2008) with a US subsidiary with certain covenants given by Signet Jewelers Limited. Mr. Burman has given notice that his employment will terminate on January 29, 2011. The service contract provides for a 3% increase in basic salary in each of fiscal 2010 (which was declined by Mr. Burman) and 2011 and a retention payment equal to $6,547,709, in lieu of the grant of any award under the Signet Jewelers Limited Long Term Incentive Plans in fiscal 2010 and 2011. An increase in basic salary of 6.1% was agreed for fiscal 2011 which reflected the contractual undertaking for fiscal 2010 and 2011. The Compensation Committee agreed to amend Mr. Burman’s contract in this way in 2008, as being in the best interests of the Company’s Shareholders to secure his continued service until the end of fiscal 2011, thereby providing consistency and stability at a time of general economic difficulty and securing the continuation of his services through three holiday trading periods (fiscal 2009, 2010 and 2011), which are key trading periods for the Company. The retention payment will be paid, subject to the payment delay (if any) required for “specified employees” pursuant to Section 409A of the Internal Revenue Code of 1986 (as amended) in a cash lump sum on January 31, 2011, subject to Mr. Burman’s continued employment until January 29, 2011; provided, however, that the retention payment shall vest and be paid pro-rata to the extent earlier termination is as a result of permanent disability, death, without cause, or on the basis of a constructive termination, including upon specified terminations following a change of control.

The service contract for Mr. Burman provides for termination payments in the case of early termination, other than for cause (as defined in the contract) by Signet or in the event of specified constructive terminations, including certain terminations following a change of control. In these circumstances the amount of termination payments due to Mr. Burman would equal, in summary, the aggregate of (i) an amount equal to 100% of his base salary in the year of termination, (ii) his short-term bonus (whether or not vested) in respect of the proportion of the fiscal year prior to the effective date of termination, (iii) 25% of his base salary in respect of pension and other benefits for the year of termination, (iv) a sum equal to a variable percentage (currently 68.21%) of the cash bonus to which he may have become entitled under the annual bonus plan and (v) a pro-rata portion of the retention payment. Mr. Burman also receives a pro-rata portion of his bonus upon death or disability.

If the Company were to reduce or eliminate the Directors’ and Officers’ liability insurance, although the Board has no intention of doing so, such that Mr. Burman does not have coverage which meets at least £100 million aggregate coverage limit and £50 million Side A aggregate dedicated coverage limits, then Mr. Burman may be permitted upon 90 days’ written notice to terminate his employment. In the event of such termination the Company will pay Mr. Burman his base salary and short term bonus and retention payment pro-rated to the date of termination. Entitlement to any share options or LTIP awards is governed by the terms of the relevant plan and the service contract contains confidentiality and non-competition clauses. See below for further details of termination payments.

ii) Walker Boyd
Mr. Boyd has a service contract (dated June 14, 1995 and amended on May 15, 2000 and November 10, 2008) with a UK subsidiary. Mr. Boyd has given notice that his employment will terminate on June 25, 2010. Mr. Boyd’s service contract provides for termination payments in the case of early termination other than for cause (as defined in the contract) by Signet or in the event of certain changes of control. The amount of termination payments due to Mr. Boyd in the case of early termination by Signet in the event of certain changes of control would equal, in summary, the aggregate of (i) his annual salary at the time of termination, (ii) the market value of the contractual benefits in kind (including any pension contribution) to which he may have become entitled during the 12 months following termination, and (iii) all payments to which he would have become entitled under the annual bonus plan during the same 12 month period. Entitlement to any share options or LTIP awards is governed by the terms of the relevant plan, and the service contract contains confidentiality and non-competition clauses. See below for further details of termination payments.

In response to Mr. Boyd’s intention to retire in June 2010, and in recognition of his long and distinguished service with the Company, the Compensation Committee exercised its discretion, where possible under the terms of the relevant compensation plans, to accelerate vesting of options and restricted stock grants and extend exercisability of options beyond cessation of his employment (but not beyond normal lapse dates) as follows:

• For already vested options, the Compensation Committee has extended the exercise date of 62,338 of these options having an exercise price ranging from $21.56 to $41.00 for an additional 12 months following cessation of employment or until their normal lapse date;
• For 43,807 unvested options having an exercise price of between $42.40 and $49.80, the Compensation Committee agreed to permit exercise of these options until their stated lapse dates of April 11, 2015 and April 23, 2017. Subsequently these options failed to vest as the performance conditions were not met and have therefore lapsed;
• For 40,407 options having an exercise price of $24.80 that have not yet vested, the Compensation Committee has agreed to permit exercise of these options until their stated lapse date of April 13, 2018;
• For time-based restricted stock grants, the Compensation Committee has accelerated vesting of 14,331 restricted stock units pro rata from the date of grant to June 25, 2010 by approximately 24 months;
• For performance-based restricted stock grants, the Compensation Committee has accelerated vesting of 28,662 restricted stock units, at maximum, pro rata from the date of grant to June 25, 2010 (first full year of three year performance cycle, and first five months of second year, with pro rata performance criteria to be based upon actual performance).

The Compensation Committee did not have discretion with respect to the Company’s share savings plan, which provides that in the event of early retirement, unless options have been held for three years or more, no exercise will be permitted. As a result, Mr. Boyd will forfeit 1,241 options granted under the Company’s share save plan, and Mr. Boyd’s cash contributions will be returned to him. Additionally, Mr. Boyd currently holds awards under the Company’s old long term incentive plan entitling him to certain stock and cash, valued at $1,075,969 based upon the closing price of a Common Share of $27.36 at January 30, 2010, if specified performance criteria are met. The Compensation Committee has no discretion to extend these awards beyond Mr. Boyd’s cessation of employment, and as it is unlikely that the applicable performance criteria will be met, the Company expects that these awards will not vest and will lapse.

As reflected above, the Compensation Committee has agreed that any short term bonus due to Mr. Boyd in respect of fiscal 2011 will be paid pro rata to June 25, 2010, but will be calculated and payable on the basis of actual results when known after the end of fiscal 2011.

iii) Mark Light
Mr. Light has a service contract (dated 26 April 2002 and amended and restated in August 2004 and amended in January 2006) with a US subsidiary. The Company may terminate the contract at any time by notice in writing with immediate effect. In the case of termination other than for cause (as defined in the contract) the Company is obligated to continue to pay salary for 12 months from the date of termination. Mr. Light also receives a pro rata portion of his annual bonus upon disability and six months of salary continuation and a pro rata portion of his annual bonus upon death. Entitlement to any share options or LTIP awards is governed by the terms of the relevant plan, and the service contract contains confidentiality and non-competition clauses. See below for further details of termination payments.

iv) Robert Anderson
Mr. Anderson has a service contract (dated 1 March 2003) with a UK subsidiary which can be terminated on one year’s notice in writing by either party or terminates on his 65th birthday. In the case of early termination, the contract provides for salary to be paid in lieu of notice for 12 months from date of termination. Entitlement to any share options or LTIP awards is governed by the terms of the relevant plan, and the service contract contains confidentiality and non-competition clauses. See below for further details of termination payments.

v) William Montalto
Mr. Montalto has a service contract (dated May 10, 1996 and amended and restated in August 2004 and amended in September 2006, September 2007 and December 2007), with a US subsidiary. The Company may terminate the contract at any time by notice in writing with immediate effect. In the case of termination other than for cause (as defined in the contract) the Company is obligated to continue to pay salary for 12 months from the date of termination. Mr. Montalto also receives a pro rata portion of his annual bonus upon disability and six months of salary continuation and a pro rata portion of his annual bonus upon death. Entitlement to any share options or LTIP awards is governed by the terms of the relevant plan, and the service contract contains confidentiality and non-competition clauses. See below for further details of termination payments.

vi) Service Contract for New Chief Financial Officer
In addition to the service agreements for the named executive officers described above, on April 12, 2010, a US subsidiary of the Company entered into a service contract dated April 12, 2010 with Ronald Ristau, appointing him Chief Financial Officer with effect from June 26, 2010. He joined the Company on April 15, 2010 as Chief Financial Officer Designate and will succeed Mr. Boyd upon his retirement on June 25, 2010.

The Company may terminate the contract at any time by notice in writing with immediate effect. In the case of termination other than for cause (as defined in the contract), the Company is obligated to continue to pay salary for 12 months from the date of termination. Mr. Ristau would also be entitled to earn a bonus and Omnibus Incentive Plan award on a pro-rata basis for the year of termination. The service contract contains confidentiality and non-competition clauses. Mr. Ristau’s starting annual salary is $650,000, with a maximum annual bonus target capacity of 120% and target Omnibus Incentive Plan award of 115% of salary among other benefits, including relocation expenses on a grossed-up basis.

Termination will be subject to severance obligations if Mr. Ristau’s employment is terminated without cause (as defined in the contract) or if Mr. Ristau terminates his employment due to constructive termination (as defined in the contract and including certain events occurring within the one-year following a change of control). Upon the events described above, in addition to any accrued but unpaid benefits or obligations as of the date of termination, Mr. Ristau will be entitled to (i) continued payment of base salary then in effect for 12 months (6 months in the case of the executive’s resignation during a specified period as described in the definition of constructive termination), (ii) a pro-rata portion of the annual bonus for the fiscal year in which such termination occurs, and (iii) a pro-rata portion of the Omnibus Incentive Plan award for the performance period in which such termination occurs. The service contract also includes other customary terms, including with respect to disability and death.

During the term of employment and for specified periods thereafter Mr. Ristau will be subject to confidentiality, non-solicitation, and non-competition restrictions.

h) Equity Ownership by Executive Officers and Directors
The Company has a share ownership policy applicable to Directors, the Chief Executive Officer and the Group Finance Director to better align management’s interests with those of Shareholders over the long-term.

The Chief Executive Officer is expected to build a holding of Common Shares equal to at least twice his base salary and the Group Finance Director to at least one times his base salary. Until these levels have been achieved, half of any after tax option gains made on the exercise of share options under the 2003 Plans are expected to be held in the Company’s shares. In addition, a $250,000 minimum share ownership requirement, to be achieved within 5 years of selection as Chairman, is required by the Chairman and a $150,000 minimum share ownership requirement, to be achieved within 5 years of election to the Board of Directors is required by the independent Directors. However once achieved at any given share price, the requirement is considered to have been met notwithstanding any subsequent change in share price. The holding is to be maintained while he or she is an executive officer or Director, as applicable, of the Company.

i) Termination for Cause and Violation of Non-Compete Covenants
Share options granted under the employee incentive plans may not be exercised after a termination for cause. Performance-based restricted share units will not vest if termination for cause occurs before the conclusion of the three-year performance period. All executive officer service agreements contain a non-competition covenant that has between a 9 and 12 month post-employment term. Violation of the non-compete covenants will result in potential litigation.

j) Limitation under Section 162(m) of the Revenue Code
Section 162(m) of the Revenue Code generally denies a federal income tax deduction to the Company for compensation in excess of $1 million per year paid to certain of the named executive officers. This denial of deduction is subject to an exception for “performance-based compensation”. Although the Committee has designed the executive compensation program with tax considerations in mind, the Committee does not believe that it would be in the best interests of the Company to adopt a policy that would preclude compensation arrangements subject to deduction limitations and current outstanding awards do not qualify as performancebased compensation.