Annual report and accounts 2023 - Flipbook - Page 91
Strategic Report
Corporate Governance
Accounts
Directors’ Remuneration Report
Remuneration Committee – Chair’s Statement
Introduction
On behalf of the Board, I am pleased to present the
Directors’ Remuneration Report for the year ended
29 January 2023, which sets out the new
Remuneration Policy intended to take effect from the
close of the 2023 AGM on pages 107 to 121, and the
Annual Report on Remuneration which provides details
of the amounts earned by the directors in respect of
the year ended 29 January 2023 and how we intend
to operate the Remuneration Policy for the year
commencing 30 January 2023 on pages 92 to 106.
The current Remuneration Policy was approved by
a binding vote at the 2020 AGM and became effective
for three years from the close of that meeting. The
proposed new Remuneration Policy will be subject to
a binding vote and the Annual Report on Remuneration
will be subject to an advisory vote at the 2023 AGM.
I am pleased to report a successful period of
consultation with shareholders on the proposed
new Remuneration Policy, which was undertaken in
December 2022 through to February 2023 prior to the
Remuneration Committee finalising the proposed new
Remuneration Policy. Shareholders representing c.70%
of the shares on the register were consulted. There was
good support for the changes being proposed to align
the new Remuneration Policy with evolving governance
guidance. There was also good support for the
confirmed position in respect to new executive director
pension provision being aligned with the wider
workforce and a recognition that it remains challenging
to alter the pre-existing legacy contractual position
of pension provision for existing executive directors.
There was consistent support for the overall levels of
remuneration, recognising the relatively modest levels
of total pay, compared to companies of comparable
size and complexity, combined with the challenging
performance targets set by the Remuneration
Committee each year. Whilst individual stakeholder
views did vary, we take comfort from the broad
consensus of supportive shareholder feedback received
as we finalised the proposed new Remuneration Policy.
There were no changes to the composition of the
Remuneration Committee during the year. The
Remuneration Committee carried out an externally
facilitated review of its performance and effectiveness
during the year. This review employed written survey
questionnaires, which were completed by members
of the Remuneration Committee and the Company
Secretary. The results of the evaluation were shared
with the Remuneration Committee. Overall, the review
found that the Remuneration Committee was
functioning in an effective manner and performing
satisfactorily, with no major issues identified.
Proposed Remuneration Policy
As required by the 2018 UK Corporate Governance
Code, the Remuneration Committee has completed
an extensive review of the Remuneration Policy at
the third anniversary of the last shareholder approval,
having held the existing Remuneration Policy unaltered
over the last three years. In completing this, the
Remuneration Committee has reviewed the
appropriateness of the existing Remuneration Policy
based on the Company’s strategy and culture, market
conditions and corporate performance since the last
Remuneration Policy review, alongside developments
in market practice. Following this review, the
Remuneration Committee has made changes to the
Remuneration Policy to ensure that it is appropriate for
the next three years, so that it complies with the 2018
UK Corporate Governance Code and effectively
supports the delivery of the business strategy, is aligned
with its culture and values, adequately rewards strong
performance and suitably aligns reward with the
creation of shareholder value.
The details of the proposed new Remuneration
Policy are set out on pages 107 to 121. In summary,
the changes planned for the new Remuneration
Policy as compared to the existing Remuneration
Policy approved at the 2020 AGM are as follows:
Pension provision: new executive directors will
receive pension contributions at levels aligned with the
wider workforce in the Company. The Company will
continue to honour its contractual obligations to
incumbent executive directors which recognises that
there is a legacy position with base salary and pension
contributions at levels which ensure an appropriate and
balanced total level of fixed pay;
Increase in annual bonus deferral: executive
directors will be required to hold 25% of any annual
bonus earned in shares in the Company for a period of
two years, this requirement previously being 20%;
LTIP holding period: all executive directors will be
required to hold any shares vesting from LTIP awards
granted after adoption of the new Remuneration Policy
for a period of two years, previously this requirement
excluded any executive director who already held
shares with a value greater than 300% of base salary;
Increase in shareholding guidelines: all new
executive directors will be required to build and hold
a shareholding in the Company of 200% of base salary,
currently the requirement is 150% of base salary for
existing executive directors other than the Chief
Executive where the requirement is already at 200%;
Increase in post cessation shareholding period: for
new executive directors there will be a requirement to
hold their shares in the Company (up to a maximum of
the shareholding guidelines) for two years after leaving
the employment of the Company; the incumbent
executive director requirement will remain at one year
after leaving employment;
Extension of malus and clawback provisions: the
existing malus and clawback provisions are extended
to align with latest best practice and corporate
governance guidelines.
Remuneration in context
The last year has remained very challenging with the
evolution of global supply chain issues associated with
the Covid-19 pandemic transitioning to a cost of living
crisis with high levels of cost inflation. In this context,
the Remuneration Committee has considered the
experiences of key stakeholders over the year, as well
as overall Group performance, when making executive
remuneration decisions in respect of 2022/23 and the
forthcoming financial year. Below is a summary of the
key drivers of our decisions:
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