Strategic Review


40 Finsbury Food Group Annual Report & Accounts 2019


Directors’ Remuneration Report (unaudited)


Corporate Governance


Financial Statements


Statement from the Chairman of the Remuneration Committee Dear Shareholder


I am delighted to present the Directors’ Remuneration Report as Chair of the Remuneration Committee of Finsbury Food Group for the year ended 29 June 2019.


I was appointed Chair of the Remuneration Committee (the “Committee”) with effect from 1 July 2019. I would like to take this opportunity to thank Zoe Morgan for her valuable contribution over the last three years to both the Board and to the Company. I wish her all the best for the future.


During 2017-18 we updated our Directors’ Remuneration Policy (the “Policy”) which received good support following extensive discussions with our major shareholders. The Committee believe that the Policy remains appropriate and will continue to apply in 2019-20. We have not included the Policy in this report, however a copy is available on our website at www.finsburyfoods.co.uk/investor-relations/corporate-governance, pre-faced with a summary of the limited changes which had been made to our original 2015 Policy.


The Annual Report on Remuneration which is on pages 40 to 44 provides details of the amounts earned in respect of the year ended 29 June 2019.


Similar to previous years and as a matter of best practice, the Annual Report on Remuneration has been prepared taking into account the remuneration reporting regulations applicable to fully listed companies in the UK.


Review of the 2018-2019 Financial Year and Remuneration Outcome As described earlier in the Annual Report, the Company has grown like for like sales and profit year on year, driven by organic growth and previously communicated new business wins despite the volatile retail environment and unprecedented input cost inflation we have experienced over the period. This robust performance has been delivered with a continuous focus on innovation using our extensive knowledge of our markets and what end consumers want.


For the financial year ended 29 June 2019, the Executive Directors were eligible for a maximum bonus award of up to 100% of base salary. The bonus was assessed against an adjusted EBITDA performance measure. As set out on page 42, based on adjusted EBITDA performance of £25.5 million, the Executive Directors did not earn a bonus for 2018-2019.


The LTIP awards granted on 29 September 2016 were based on a three year performance period ending on 29 June 2019. The LTIP awards have lapsed. EPS (50% of the total award) as at 29 June 2019 was 9.00p which was below the threshold EPS target of 10.23p; and relative total shareholder return (“TSR”) performance (50% of the total award) was below the threshold target of being ranked at median against the FTSE Small Cap (excluding investment trusts).


For the purpose of our LTIP our definition of EPS is adjusted diluted EPS and for this year, adjustments include the exclusion of exceptional costs, Defined Benefit Scheme charges and fair value of interest rate swaps and foreign exchange contract charges. The Committee considered that this underlying EPS measure was a fairer reflection of the underlying earnings of the business over the last three financial years.


The Committee awarded nil-cost share options under the LTIP to Executive Directors, (and participants including senior management), during the year. The number of shares awarded to each Executive Director was equivalent to 100% of salary based on the average price of the shares over the three business days following the announcement on 17 September 2018 of the Company’s preliminary results for the year ended 30 June 2018. These awards and the respective performance conditions are detailed on page 42.


Remuneration in Respect of the 2019-2020 Financial Year The Policy as detailed on www.finsburyfoods.co.uk/investor-relations/corporate-governance will be implemented for the year ending 27 June 2020, as set out below:


Salary and Fees The next review of Executive Directors salary will be undertaken in October 2019. It is intended that the Executive Directors’ salaries will increase in line with the general increases applied to the wider workforce.


Following a review of the Chairman and Non-Executive Directors’ base and additional fees. It was agreed no changes will be made to the base fee and additional fees for the Chairman and Non-Executive Directors for the year ending 27 June 2020.


Annual Bonus No changes have been made to the bonus structure. The maximum bonus opportunity for the Executive Directors will be 100% of salary. The annual bonus will continue to be based on adjusted EBITDA performance as the Committee considers this to be the most appropriate short term measure for assessing Executive Directors’ performance.


LTIP Awards under the LTIP will be made following the announcement of our results and the Committee will discuss the performance conditions which will apply, although it anticipated this will be EPS and TSR. The targets will be disclosed in the Remuneration Report next year. The maximum opportunity for the Executive Directors will be 100% of salary.


The Committee recognises the contribution made and the importance of retaining and motivating the Executive Directors and the wider management team. As such, the Committee is intending to grant an additional share award which will vest in three financial years from 30 June 2019. These awards will be subject to continued employment. The maximum opportunity for the Executive Directors will be 100% of salary.


Marnie Millard Chairman of the Remuneration Committee 13 September 2019


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