27 Finsbury Food Group Annual Report & Accounts 2017

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 1 July 2017.

The Remuneration Committee believes that the Directors’ Remuneration Policy remains appropriate and will continue to apply it in 2017-18. Accordingly, we have not included the Directors’ Remuneration Policy in this Report, however, a copy is available in our investor section of the website at

The Annual Report on Remuneration provides details of the amounts earned in respect of the year ended 1 July 2017 and how the Directors’ Remuneration Policy will be operated for the year commencing 2 July 2017.

Similar to last year 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 2016-17 Financial Year As described earlier in the Annual Report the Company has delivered a solid performance, with continued organic growth in 2016-17. Alongside this growth, our capital investment strategy, together with our continued efficiency programme has resulted in improved operating margins.

The 2016-17 annual bonus was subject to an EBITDA performance metric. The Company achieved £24.9 million EBITDA for 2016-17 which was above our forecast for the year. Consequently, this resulted in 87% of salary being earned as an annual bonus. 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. Further details are set out on page 29. The current personal shareholdings of J G Duffy and S A Boyd equate to circa 7.5 and 4.6 times salary respectively.

A new long-term incentive plan was introduced in 2015 following discussions with shareholders. It was designed to motivate the senior management team over the longer term to deliver the Group’s strategy and to reward appropriately, reflecting the contribution to shareholder value creation. The first awards granted under the Company’s LTIP were made in 2015 and these vested in respect of performance in the three financial years to 1 July 2017. The awards vested at 97.45% of the maximum due to strong share price and EPS performance over the period. For continued alignment with shareholders, the vested awards are subject to a further two year holding period. Full details of the vested awards are provided on page 30.

Awards under the LTIP were made during the year in line with the Remuneration Policy and will vest based on relative Total Shareholder Return (TSR) performance and absolute EPS targets over the three year period to 2019. These awards are subject to a two year post vesting holding period.

The Committee remains committed to a responsible approach to executive pay and believes that salary increases above wider workforce increases will only be awarded in limited circumstances. S A Boyd and J G Duffy were both awarded a 1.8% salary increase which was in line with increases for the wider workforce.

Outlook for the 2017-18 Financial Year Details in relation to the application of the Directors’ Remuneration Policy in 2017-18 are set out on page 28.

Raymond Duignan Chairman of the Remuneration Committee

15 September 2017

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