Directors’ Remuneration Report (unaudited)
Statement from the Chairman of the Remuneration Committee Dear Shareholder I am pleased to present the Directors’ Remuneration Report for the year ended 27 June 2015.
Although not subject to the remuneration reporting regulations applicable to fully listed companies in the UK the Committee has decided to take into account these regulations in the preparation of the Directors’ Remuneration Report for the year as a matter of best practice. Therefore this report is presented as:
1. A Directors’ Remuneration Policy – setting out the parameters within which the remuneration arrangements for Directors operate 2. An Annual Report on Remuneration – setting out remuneration earned during the year and any changes planned for the 2015-16 financial year
We hope this change will provide our shareholders with greater clarity and transparency on our pay arrangements for our most senior individuals.
The Committee will continue to monitor remuneration policy to ensure it remains aligned to the long-term interests of the Company, profitable growth and the delivery of shareholder value.
Review of the 2014-15 Financial Year As described earlier in the Annual Report the Company has performed well delivering strong profits of £18.3 million EBITDA. The Executive Directors also delivered a number of key strategic milestones as noted in the Highlights on page 1. This delivery of excellent EBITDA growth of 70% on prior year and against our budget resulted in an annual bonus being earned equating to 100% of salary. In line with the Committee’s commitment to align Executives’ interests with those of shareholders, 50% of total bonuses earned in the year will be paid as cash and 50% in the form of shares, in order to develop further the shareholdings of the Executive Directors. The Directors were also awarded a bonus relating to the successful execution of the Genius and Fletcher transactions, which they had handled personally and which had saved the Group significant costs with regard to external advisors.
The Committee remains committed to a fair and responsible approach to Executive pay (including the avoidance of pay level ratcheting). In October 2014 the Committee determined it was appropriate to award the CEO and CFO a 2.5% salary increase which was in line with increases for the wider workforce.
In response to feedback from our shareholders that Executive Directors should be appropriately incentivised over the longer term and build up personal equity holdings the Committee introduced a new long-term incentive plan following consultation with advisors and our largest shareholder. The new long-term incentive plan is designed to motivate the senior executives over the longer term to deliver the Group’s strategy and to reward appropriately, reflecting their contribution to shareholder value creation. The plan is based on the achievement of stretching three year performance conditions and Executive Directors are required to hold shares for a further two years after the end of the performance period. The first awards were made on 26 June 2015. Further details of the plan are set out in the Policy table on the following page and details of the first awards are provided in the Annual Report on Remuneration.
Outlook for the 2015-16 Financial Year
• Having undertaken a detailed review of variable remuneration, the Committee will now seek to embed the new long-term plan into the Group and will focus on this in the current year as the primary incentive mechanism. Awards are planned to be made after our 2014-15 preliminary announcement and we will review the performance measures at this time and especially our absolute EPS targets to ensure that these support our long-term plans.
• Salary increases for 2015-16 will be reviewed in October, after the printing of this document and will therefore be fully disclosed and explained in next year’s Report.
• The annual bonus will continue to be based on EBITDA performance as the Committee considers this to be the key short-term financial measure.
Raymond Duignan Chairman of the Remuneration Committee 18 September 2015
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