Annual report and accounts 2023 - Flipbook - Page 118
A.G. BARR p.l.c. Annual Report and Accounts 2023
Directors’ Remuneration Report continued
Explanation of performance metrics chosen and the target setting process
Performance measures are selected that are aligned to the Company’s strategy. Stretching performance targets are set each year for the annual bonus and LTIP awards. When
setting these performance targets, the Remuneration Committee will take into account a number of different reference points, which may include the Company’s business
plans and strategy and the market environment. Full payment or vesting will only occur for what the Remuneration Committee considers to be stretching performance.
Additionally, the Remuneration Committee has discretion to change formulaic outcomes to ensure that payments made through variable incentive plans are proportionate
to the Company’s overall performance.
The annual bonus performance targets have been selected to provide an appropriate balance between incentivising directors to meet financial targets for the year and
achieving strategic and/or personal objectives. The Remuneration Committee also aims to make sure that targets are set in line with the Company’s risk appetite so as to
ensure that executive directors are not incentivised to take inappropriate risks.
The LTIP performance targets reflect the Company’s strategic objectives and therefore the financial and strategic decisions which ultimately determine the success of the
Company. The LTIP performance measures may be based on key financial and/or strategic and/or total shareholder return related measures. LTIP performance will normally
be based on Earnings Per Share, which is a key measure of the Company’s profitability, relative Total Shareholder Return to further strengthen the link between the interests
of the executive directors and the shareholders and a performance measure aligned with Environmental Sustainability.
The Remuneration Committee retains the ability to adjust or set different performance measures if events occur (such as a change in strategy, a material acquisition and/or
a divestment of a Group business or a change in prevailing market conditions) which cause the Remuneration Committee to determine that the alternative measures are
more suitable either for a defined period or for the foreseeable future so that they achieve their original purpose.
Awards and options may be adjusted in the event of a variation of share capital in accordance with the Scheme rules.
Policy for the remuneration of employees generally
Remuneration arrangements are determined throughout the Group based on the same principle that reward should be achieved for delivery of the business strategy and
should be sufficient to attract and retain high calibre talent.
All employees are eligible to receive base salary, retirement benefits and other benefits based on role, seniority and location. The majority of employees are currently eligible
to receive awards under an annual bonus plan, with only the most senior employees currently eligible to participate in the LTIP as set out below.
The annual bonus arrangements for the senior management team are similar to those for the executive directors in that targets are set annually dependent on financial and/or
non-financial performance metrics. The key principles of the remuneration philosophy are applied consistently across the Group below this level, taking account of the
seniority of employees.
Approach to recruitment remuneration
The Policy aims to facilitate the appointment of individuals of sufficient calibre to lead the business and execute the strategy effectively for the benefit of shareholders. When
appointing a new director, the Remuneration Committee seeks to ensure that arrangements are in the best interests of the Company and in line with market practice.
When agreeing the level of remuneration appropriate for the individual, the Remuneration Committee will take into consideration a number of relevant factors, which may
include the calibre of the individual, the candidate’s existing remuneration package, and the specific circumstances of the individual including the jurisdiction from which the
candidate was recruited.
The Remuneration Committee will typically seek to align the remuneration package, including salary, benefits and pension, with the Policy (as set out in the Policy table).
The maximum level of variable remuneration which may be granted (excluding buy-out awards referred to below) is 325% of salary (in line with this Policy). Subject to this
overall maximum variable remuneration, incentive awards will only be granted above the normal maximum annual award opportunities where the Remuneration Committee
considers there to be a commercial rationale, which may include but is not limited to circumstances where an executive director is recruited at a time in the year when it
would be inappropriate to provide a bonus and/or LTIP award for that year as there would not be sufficient time to assess performance. The quantum in respect of the
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