52 Directors’ Remuneration Report (unaudited)


Finsbury Food Group Annual Report and Accounts 2020


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 27 June 2020.


A copy of our Directors’ Remuneration Policy (the “Policy”) which has been applied since 2017-18 is available on our website at www.finsburyfoods.co.uk/investor-relations/corporate-governance.


The Annual Report on Remuneration which is on pages 52 to 56 provides details of the amounts earned in respect of the year ended 27 June 2020.


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 2019-2020 Financial Year and Remuneration Outcome The first half of the financial year was both a period of growth and of successful delivery against our strategic priorities, primarily driven by organic performance in UK Bakery as well as new business wins and the first full financial year contribution from our acquired Free From business, Ultrapharm.


Performance in the second half experienced significantly weaker trading as a result of the outbreak of Covid-19 at the end of March and the dramatic changes in demand the Group experienced thereafter. This impacted the financial performance of the Group with revenue and profit below the prior year levels. As set out on page 54, based on adjusted EBITDA performance of £24.4 million (pre first time adoption of IFRS 16), the Executive Directors did not earn a bonus for 2019-2020.


The Board also elected to take a 30% salary reduction between 1 April 2020 and 30 June 2020. This reduced the salary costs of the Group during this period. I would like to thank the Board for supporting the organisation during 2020.


The LTIP awards granted on 26 October 2017 were based on a three year performance period ending on 27 June 2020. The LTIP awards have lapsed. EPS (50% of the total award) as at 27 June 2020 was 7.70p which was below the threshold EPS target of 10.29p; 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).


The Committee awarded nil-cost share options as Performance Share Plan (“PSP”) awards 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 immediately prior to the end of the Company’s financial year ended 29 June 2019.


As outlined in the Directors’ Remuneration Report last year, in order to recognise the contribution made and the importance of retaining and motivating the Executive Directors and the wider management team, the Committee also made an additional nil-cost share option award as Restricted Stock Awards (“RSA”). These awards are subject to continued employment for three years from the date of grant. The number of shares awarded to each Executive Director was equivalent to 100% of salary based on the closing price of the shares on the day prior to grant.


These awards and the respective conditions are detailed on page 56.


Remuneration in respect of the 2020-2021 Financial Year The Committee is mindful of external developments linked to Covid-19. None of us are currently certain what the impact will be, or how long it will be felt. As set out below, we will proceed with great care in determining the operation of our Policy as detailed on www.finsburyfoods.co.uk/ investor-relations/corporate-governance. for the year ending 26 June 2021. We will monitor business conditions and exercise judgement in applying discretion relating to 2020-2021 remuneration in the context of all relevant factors.


Salary and Fees No base salary increases are proposed for the Executive Directors for the year ending 26 June 2021. The next review of Executive Directors’ salaries will be undertaken in October 2021. 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 26 June 2021.


Annual Bonus No changes are proposed to the bonus opportunity. The maximum bonus opportunity for the Executive Directors will be up to 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. At year-end, when we determine the performance outcomes for the year, we will be thoughtful in our assessment of results, balanced with the shareholder and workforce experience. Details of the performance targets for the 2020-2021 bonus will be reported in the 2021 Annual Report.


LTIP Awards under the LTIP will be made following the announcement of our results. The maximum opportunity for the Executive Directors will be 100% of salary. The LTIP awards will be subject to EPS and relative TSR performance conditions. The targets will be disclosed in the Remuneration Report next year.


Marnie Millard Chairman of the Remuneration Committee 18 September 2020


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