Annual report and accounts 2023 - Flipbook - Page 93
Strategic Report
LTIP awards – awards granted using three
performance metrics of EPS, TSR and ESG
The Committee concluded that it was appropriate to
grant LTIP awards in April 2022 at a value equal to 150%
of base salary, consistent with the normal maximum
opportunity under the Remuneration Policy. These LTIP
awards will be assessed over the three year vesting
period using the performance metrics of EPS, TSR and
ESG with relative proportions of 60%, 30% and 10%.
Employee engagement
The Remuneration Committee recognises the
importance of culture and effective employee
engagement in the creation of a good workplace. The
Board’s role is to ensure that effective processes and
procedures are in place for gathering workforce views
and engaging in meaningful dialogue with employees.
The Board receives regular updates on workforce
engagement throughout the year; the topic regarding
how executive directors’ remuneration aligns with wider
Company pay policy is included as a specific discussion
item at workforce engagement sessions at least once
per annum. Further information on employee
engagement is included in the Corporate Governance
Report on pages 78 and 79.
Looking forward – implementation of
Remuneration Policy for 2023/24
Set out below are the decisions anticipated to be
made during 2023/24 in implementing the
Remuneration Policy.
Base salary – increase set lower than the average
for the wider workforce
Set at a level lower than the average of salary increases
across the workforce, and to reflect the commitment
and effort of our executive directors, an increase of
4.35% will be made to the executive directors’ base
salaries with effect from 1 April 2023. An increase of
4.00% will be made to the Chair’s fee and the other
non-executive directors’ basic fee with effect from
1 April 2023.
Annual bonus – to be operated in line with
Remuneration Policy
The Remuneration Committee intends to operate the
bonus scheme for the year ending 28 January 2024
in line with the Remuneration Policy, with maximum
awards at 125% and continuing to be subject to a
combination of PBT and individual strategic objectives.
Details of bonus award levels and performance
measure weightings are provided on page 95.
Performance targets for these bonus awards will be
disclosed in the Annual Report on Remuneration for
the year ending 28 January 2024.
LTIP – awards at normal level of opportunity with
targets based on cumulative EPS, TSR and ESG
measures
In line with the Remuneration Policy, the Remuneration
Committee intends to grant LTIP awards at the normal
maximum opportunity of 150% of base salary in April
this year. These LTIP awards will be assessed
cumulatively over the following three years based on
stretching targets set across three performance
measures: EPS, TSR and ESG.
EPS is a key performance indicator for the Company
and shareholders, and remains a highly credible
measure of long term performance. Significant
uncertainty for UK focused consumer goods
businesses remains, therefore setting a three-year
forward looking cumulative EPS target is challenging.
However, the Remuneration Committee is confident
that the target range selected is appropriately stretching
and will help the Group drive growth in shareholder
earnings. The EPS targets have been set specifically
not taking into account the future impact of the
introduction of the Deposit Return Scheme (“DRS”)
in Scotland from August 2023. The overall impact
of the DRS is very challenging to assess with acceptable
accuracy at this early stage. The Remuneration
Committee has resolved to monitor the impact of the
DRS post its implementation with the expectation that
the EPS targets set in 2023 will be adjusted during the
vesting period to enable the DRS impact to be included
in the targets prior to the vesting date.
Corporate Governance
Accounts
TSR is a relative performance measure which creates
strong alignment between the executive directors and
shareholders. As for the LTIP awards granted in 2022,
the TSR performance of the Company will be
compared over the three years to the TSR of the FTSE
250 index (excluding financial services).
The Remuneration Committee believes that
environmental sustainability is important to the long
term success of the business and the executive directors’
remuneration should be related to their performance in
this area. Consistent with the LTIP awards granted in
2022, the ESG performance of the Company will feature
as a performance metric for the 2023 LTIPs based on
environmental sustainability targets.
Details of the 2023 LTIP awards are provided on page
98. Details of the performance targets set for the 2023
LTIP awards will be disclosed in the Annual Report on
Remuneration for the year ending 28 January 2024.
I look forward to your support at the upcoming AGM.
David J. Ritchie
Chair of the Remuneration Committee
28 March 2023
* Items marked with an asterisk are non-GAAP measures.
Definitions and relevant reconciliations are provided in the Glossary
on pages 199 to 204.
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