Annual report and accounts 2023 - Flipbook - Page 121
Strategic Report
Corporate Governance
Accounts
Four scenarios have been illustrated for each executive director:
Minimum performance
Performance in line with expectations
Maximum performance
Maximum performance plus 50%
growth in share price
Fixed pay
Annual Bonus
LTIP
Fixed elements of remuneration – base
salary, benefits and pension only.
No bonus.
No LTIP vesting.
50% of maximum awarded for achieving
target performance (i.e. 62.5% of salary).
60% of maximum award vesting for target
performance (i.e. 90% of salary).
Base salary is the forward looking salary
(i.e. the salary effective from 1 April
2023) and the value for benefits has
been calculated as per the single figure
table on page 92 (i.e. the benefits for
the year ended 29 January 2023).
100% of maximum awarded for achieving 100% of maximum award vesting for
maximum performance (i.e. 125% of
maximum performance (i.e. 150% of salary).
salary).
100% of maximum award vesting for
maximum performance plus 50% growth
in share price (i.e. 225% of salary).
LTIP awards are included in the scenarios above at face value with no share price movement included (except in the “maximum plus 50%” scenario).
Service contracts
Executive directors’ contracts are on a rolling basis and may be terminated on 12 months’ notice by the Company or on 6 months’ notice by the executive director. Service
contracts for new executive directors will generally be limited to 12 months’ notice by the Company.
In line with the Policy approved at the 2014 AGM, service contracts entered into prior to this date provide for a notice period of 12 months except during the six months
following either a takeover of or by the Company or a Company reconstruction. Under these conditions and certain circumstances the executive directors are entitled to
a liquidated damages payment equal to the executive director’s basic salary at termination plus the value of all contractual benefits for a two year period. In the event this
liquidated damages payment is triggered, the executive director will also be deemed to be a “good leaver” for the purposes of the Company’s share schemes. Given the size
of the Company and the sector dynamics at the time the directors were recruited, the Remuneration Committee considered this provision appropriate in order to attract
and retain high calibre executive directors. The Remuneration Committee is cognisant of the fact that these provisions do not reflect best practice. It has therefore previously
considered the alternatives available to exit these contractual arrangements, including contractual buy-out. However, the Remuneration Committee concluded that it was
not feasible to place a value on these rights, in order to remove them from the contracts, which would be acceptable to both parties. It therefore determined that the most
appropriate approach would be to maintain the legacy provisions, however for all future appointments after the approval of the 2014 Policy these provisions have not and will
not apply. S. Lorimer’s service contract does not therefore include the legacy provisions.
Non-executive directors are appointed for an initial period of three years, subject to annual re-election by shareholders in accordance with the Code. Their appointments
are terminable by either the Company or the directors themselves upon three months’ notice without compensation.
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