Directors’ Remuneration Committee Report
Dear Shareholder
On behalf of my colleagues on the Committee and the Board, I am pleased to present the Directors’ Remuneration Report (‘Report’) for the year ended 29 February 2020.
The Company is incorporated in Ireland and is therefore not subject to the UK company law requirement to submit its Directors’ Remuneration Policy (‘Policy’) to a binding vote. Nonetheless, in line with our commitment to best practice, at the AGM in July 2018, our revised Policy was approved by our shareholders on an advisory basis. As no changes to the Policy are proposed this year, the Policy will not be subject to a vote at the 2020 AGM. In the interests of succinct reporting the Policy is not reproduced in this Report but can be found on our website and in our 2018 Annual Report.
Last year, the Report received the support of over 99% of the votes cast. We hope that shareholders will demonstrate their support again this year.
Executive Remuneration for FY2020
Salary
Executive directors received increases of 2% from March 2019, this being the same or less than the increase awarded to all employees across the Group that were effective at the same time.
Incentive out-turns
Annual bonus targets were set by reference to challenging financial and personal performance measures, as set out below. For the year to 29 February 2020, the financial performance of the Group resulted in an actual bonus achievement (as a percentage of their maximum opportunity) of 12.5% for Andrea Pozzi and 25% for Jonathan Solesbury.
As he was employed for the entirety of FY2020, Stephen Glancey was eligible to earn a bonus in respect of the year calculated by reference to the ordinary performance targets. The financial performance of the Group resulted in an actual bonus achievement (as a percentage of his maximum opportunity) of 25%.
The Committee believes the bonus outcomes appropriately reflect the overall performance in FY2020. Although the bonuses earned are disclosed in the Single Total Figure of Remuneration table on page 83, the Committee is mindful of the current circumstances affecting the wider economy and the Company’s commitment to preserve cash and lower operating expenses. Consequently, final approval of the amount of any bonuses based on performance during FY2020 will be deferred until after the end of the FY2021 half year in August. This deferral will apply to all continuing Executives as well as former Group CEO, Stephen Glancey.
For the LTIP and ESOS, which vested in 2020, the targets we set in 2017 - based on EPS growth, free cash flow conversion and growth in ROCE - were demanding and were met in full over the three year performance period ended 29 February 2020.
This has led to an overall outcome for both the LTIP and ESOS of 100% of the maximum opportunity. The Committee considered this outcome and determined that it was a fair reflection of the performance of the Company as a whole over the performance period, which concluded on 29 February 2020. In determining the appropriateness of the vesting of awards to Executives, the Committee was cognisant of the impact of COVID-19 on the company’s share price and the economy.
In evaluating whether the final outcomes were a fair reflection of Company performance and individual contribution, the Committee noted the significant reduction in the value of vested awards to participants and did not deem it necessary to exercise discretion over vesting levels. While the ESOS awards technically vested, the share price on the vesting date was below that of the grant date and as such, no value is yet capable of realisation by participants.
When determining executive director and senior management remuneration, the remuneration committee addresses the following:
- clarity – remuneration arrangements will be transparent and promote effective engagement with shareholders and the workforce;
- simplicity – remuneration structures will avoid complexity and their rationale and operation should be easy to understand;
- risk – remuneration arrangements will ensure reputational and other risks from excessive rewards, and behavioural risks that can arise from target-based incentive plans, are identified and mitigated;
- predictability – the range of possible values of rewards to individuals and other limits or discretions will be identified and explained;
- proportionality – the link between individual awards, the delivery of strategy and the long-term performance of the company will be clear; and,
- alignment to culture – incentive schemes will drive behaviours consistent with company purpose, values and strategy.
Engagement with our key investors during our last policy review in 2018 was constructive and insightful. We look forward to engaging with them on the Policy again in the coming year.
In accordance with the Policy approved at the 2018 AGM, the executive Directors’ remuneration framework for FY2020 was as follows:
Opportunity | Performance Measures | Out-turn | |
|---|---|---|---|
Annual Bonus | 100% of salary | Andrea Pozzi 37.5% of the opportunity: Adjusted operating profit. 12.5% of the opportunity: cash conversion. 50% of the opportunity: increased distribution/volume for our branded cider portfolio. Jonathan Solesbury 75% of the opportunity: Adjusted operating profit. 25% of the opportunity: cash conversion Personal underpin applying to 100% of the opportunity of restructuring finance and reducing the fixed cost of the finance structure. Stephen Glancey 75% of the opportunity: Adjusted operating profit. 25% of the opportunity: cash conversion. | Detail as to the performance against the relevant measures is set out on page 84. The cash conversion element of the bonus was achieved at 100%. The Adjusted operating profit element of the bonus was below the threshold level of performance and therefore no bonus will be payable in relation to this element. The cider target element of the bonus, using our extended route to market in order to gain incremental distribution/volume for our branded cider portfolio, was below the threshold level of performance and therefore no bonus will be payable in relation to this element. Overall bonuses earned are as follows: Andrea Pozzi: 12.5% of salary Jonathan Solesbury: 25% of salary Stephen Glancey: 25% of salary The Committee considers the level of achievement is reflective of the overall performance of the Group in the year and is appropriate. |
Long-Term Incentives awarded in the year | LTIP: 150% of salary | As set out below: - EPS growth (33.3% of the opportunity) - Free Cash Flow Conversion (33.3% of the opportunity) - Return on Capital Employed (33.3% of the opportunity) | Performance will be assessed over the three year period ending with FY2022 and then be subject to a two year holding period. |
LTIP Performance Conditions
Performance condition | Weighting | Performance target | % of element vesting |
|---|---|---|---|
Compound annual growth in Underlying EPS over the three year | 33% | ||
Threshold | 3% | 25% | |
Maximum | 8% | 100% | |
Free cash flow Conversion – average over the three year period | 33% | ||
Threshold | 65% | 25% | |
Maximum | 75% | 100% | |
Return on Capital Employed | 33% | ||
Threshold | 9.3% | 25% | |
Maximum | 10% | 100% |
Notwithstanding the extent to which the performance conditions set out above are satisfied, an award or option will only vest to the extent the Committee is satisfied that the improvement in the underlying financial performance of the Company over the performance period warrants the degree of vesting. The Committee retains the discretion to reduce (but not increase) awards should it see fit to do so on the basis of the wider business performance or other factors.
Opportunity | Performance Measures | Out-turn | |
|---|---|---|---|
Long term incentives vesting in respect of performance in FY2020 | LTIP: 100% of salary | As set out below: EPS growth (33.3% of the opportunity) Free Cash Flow Conversion (33.3% of the opportunity) Return on Capital Employed (33.3% of the opportunity) | The performance measures for the awards granted in June 2017 were met in full and the awards vested at maximum as set out below:- EPS growth achieved – 8.0% FCF Conversion achieved – 84.9% ROCE achieved – 11.9% Total Vested 100%. |
ESOS: 150% of salary | As set out below and note 4 to the financial statements, EPS growth. | The performance measures for the awards granted in June 2017 were met and the awards vested in full as set out below:- EPS growth achieved – 8.0% |
ESOS Performance Conditions
Performance condition | Performance target | % of element vesting |
|---|---|---|
Compound annual growth in Underlying EPS over the three year | ||
Threshold | 2% | 25% |
Maximum | 6% | 100% |
LTIP Performance Conditions
Performance condition | Weighting | Performance target | % of element vesting |
|---|---|---|---|
Compound annual growth in Underlying EPS over the three year | 33.3% | ||
Threshold | 3% | 25% | |
Maximum | 8% | 100% | |
Free cash flow Conversion – average over the three year period | 33.3% | ||
Threshold | 65% | 25% | |
Maximum | 75% | 100% | |
Return on Capital Employed | 33.3% | ||
Threshold | 9.3% | 25% | |
Maximum | 10% | 100% |
Notwithstanding the extent to which the performance targets set out above are satisfied, an award or option will only vest to the extent the Committee is satisfied that the improvement in the underlying financial performance of the Company over the performance period warrants the degree of vesting. The Committee considered the vesting outcomes of the LTIP and ESOS awards during the year to be appropriate. Again, the Committee retains the discretion to reduce (but not increase) awards should it see fit to do so on the basis of the wider business performance or other factors.
Director Changes
As announced on 16 January 2020, Stephen Glancey stepped down from the Board on 15 January 2020 and left the Company on 29 February 2020. As he was employed for the entirety of FY2020, Stephen Glancey remains eligible to receive a bonus in respect of the year ending 29 February 2020, calculated by reference to the performance targets that applied to the FY2020 bonus plan.
In relation to outstanding awards under the two long-term incentive schemes, Stephen retained awards granted to him in June 2017 under the ESOS and LTIP 2015 under the terms of the respective schemes. As with the bonus, the Committee was of the view that due to his working the entire performance period, and informing the Board of his intention to retire just six weeks prior to the conclusion of FY2020, Stephen should be entitled to the entire portion of the 2017 awards. In line with the outcome for continuing Executives, these awards vested in full and will be released on their normal vesting date.
As Stephen informed the Board of his intention to retire, all other unvested share awards under the Company’s share plans lapsed in full on his departure.
Full detail of the terms of his departure are set out on page 86.
Stewart Gilliland was appointed as interim Executive Chairman from 16 January 2020 to ensure continuity of executive leadership while the Group recruits Stephen’s Glancey’s successor.
Gender Pay Gap Disclosure
In April 2020 we published our second Gender Pay Gap report for those entities with more than 250 UK employees, namely, Matthew Clark Bibendum Limited and Tennent Caledonian Breweries Limited. Details can be found on each business’s respective website.
We are committed to promoting equality, diversity and inclusion as we build a culture where everyone can progress. This includes ensuring that our colleagues are paid a fair and equitable rate for the work they do regardless of gender or other differences. Going forward we will continue to focus on areas that improve our gender pay gap.
Wider Workforce Remuneration and Employee Engagement
In line with the Code, the Company takes a fully aligned approach to remuneration throughout the organisation to support succession, as well as a culture of performance and ownership. The Company regularly engages directly with the workforce through a number of channels and on a wide range of topics, including pay. The Company’s annual engagement survey places a focus on employee satisfaction, and seeks details on a number of areas including competitive pay and benefits.
It is an important part of our values that all employees, not just management, have the opportunity to become shareholders in the Group. All employees with at least one month’s continuous service have the opportunity to participate in our Share Incentive Plan.
An aspect of the new Code that we believe will enhance business is the greater linkage between companies’ corporate governance and remuneration frameworks. The widening of the remit of Remuneration Committees to oversee employee rewards and ensure incentives are aligned with culture while simultaneously promoting greater consideration of the ‘employee voice’ in Board decision-making is a particularly positive step. My role as the non-executive Director responsible for engaging with HR will be an invaluable resource when reviewing wider employee incentive arrangements.
Review of the Remuneration Policy during 2020
The Committee will be undertaking a full review of its Policy during 2020, ahead of a vote at the 2021 AGM. As always, that review will take account of market practice, shareholder expectations and best practice governance developments since our last review. These matters will be given careful consideration during the Policy review process. In particular, we will take into account the Code provisions in relation to the alignment of executive director pensions with those of the wider workforce and the requirement to adopt a formal policy on post-employment shareholding requirements. While we determine our formal policy on post-employment shareholding, we will, where relevant, rely on the existing ‘leaver’ provisions in the plan rules, deferring to the ordinary vesting date the vesting of awards retained on cessation ensuring awards are only released on the original vesting date for departing executives.
In addition to the post-employment holdings, the Committee is fully aware of the focus on Executive Director pensions and, more specifically, any difference between contributions for Executive Directors and those of the workforce. As part of the policy that will be put to shareholders at the 2021 AGM, there will be a cap on contributions for all future Executive Directors. The Committee is also aware of the expectation that contributions for incumbent Executive Directors are aligned with the majority of the workforce by the end of 2022, and will set out a clear plan to achieve this for all current Executive Directors in the 2021 Annual Report.
The policy will be proposed in the new Group CEO’s first full year since appointment, being an opportune time to put in place a new three-year Policy designed to continue to drive the delivery of strategy and generate value for all stakeholders. The new Group CEO will be provided time to review the Group’s existing incentive framework and input into the Committee’s proposals prior to our consultation with shareholders in 2020 and 2021.
COVID-19
As detailed in other areas of the Annual Report, COVID-19 has had a significant impact on our business. In response to the rapid emergence of the pandemic, on 30 April, the Company announced actions to preserve cash and reduce costs. As part of those actions, there was an average reduction in salary of approximately 20% across the workforce, with management and Board remuneration reduced by 30% and 40% respectively for at least a three-month period until the end of June, at which point the Board and management will review the decision.
While the final level of that impact is yet unclear, the Committee also considered it prudent to delay certain key decisions in the first half of FY2021. Consequently, all decisions on salary, bonuses and share awards for FY2021 have been deferred until at least September, following the completion of our half year. In practice, this means that the targets relating to bonuses for FY2021 and performance ranges for the FY2021 LTIP awards will not be set until the second half of the financial year.
This decision was made to ensure that the Committee has a clear line of sight over expected performance and the full impact of COVID-19 on the business prior to implementing any decisions and setting performance targets. In implementing the decision, the Committee had the full support of Executive Management.
Once the Committee confirms the granting of the LTIP awards, the targets for those awards will immediately be communicated to shareholders through the stock exchange announcement detailing the number of awards to Executive Directors. Bonus targets will be detailed in the FY2021 Annual Report, the year of any potential payment, in line with market best-practice.
Committee Evaluation
The evaluation of the Committee was completed as part of the 2020 external board evaluation process conducted by Independent Audit. An explanation of how this process was conducted, the conclusions arising from it and the action items identified is set out on pages 64 and 65. The Committee has considered this in the context of the matters that are applicable to the Committee.
Conclusion
I would like to thank my colleagues for their invaluable contribution and counsel over the past 12 months. I also thank our shareholders for their continued support and trust you will find the Report useful and informative. For the 2020 Annual General Meeting, your attention is drawn to details set out in the notice of meeting. Given government and health authority guidance on COVID-19 is still evolving, shareholders are encouraged to monitor the Company’s website and regulatory news for updates in relation to the AGM.
Helen Pitcher OBE
Chairman of the Remuneration Committee
Annual report on remuneration for the year ended 29 February 2020
Implementation of the Policy
This section of the report sets out how the Policy, which was approved by shareholders at the 2018 AGM has been applied in the financial year.
Governance
The Committee has defined Terms of Reference which can be found in the Investor Centre section of the Group’s website. A copy may be obtained from the Company Secretary.
Remuneration Committee Membership and Meeting Attendance
The following non-executive Directors served on the Committee during the year:
Member | Member since | Number of Meetings Attended | Maximum Possible Meetings | % of Meetings Attended |
|---|---|---|---|---|
Helen Pitcher (Chairman) | 1 March 2019 | 7 | 7 | 100 |
Jill Caseberry* | 1 March 2019 | 6 | 7 | 86 |
Vincent Crowley** | 21 March 2018 | 2 | 2 | 100 |
Jim Clerkin | 24 October 2019 | 5 | 5 | 100 |
* Jill Caseberry was unable to attend the meeting on 9 May 2019 due to a prior engagement.
** Vincent Crowley was a member of the Committee until 23 October 2019.
All members of the Committee are and were considered by the Board to be independent.
Details of the skills and experience of the Directors are contained in the Directors’ biographies on pages 50 and 51. Their remuneration is set out earlier in this Report. The quorum necessary for the transaction of business is two, each of whom must be a Non-Executive Director. Only members of the Committee have the right to attend committee meetings, however, during the year, Stewart Gilliland (Chairman), Stephen Glancey (CEO) and the Group Director of Human Resources were invited to attend meetings (although never during the discussion of any item affecting their own remuneration or employment).
The Company Secretary is Secretary to the Committee.
Meeting Frequency and Main Activities in the Year
The Committee met seven times during the year ended 29 February 2020 to:
- Approve the 2019 bonus;
- Approve the Report for the financial year ended 28 February 2019;
- Approve the Policy for the financial year ended 28 February 2019;
- Approve the 2019/20 Pay Award Strategy;
- Approve the 2019/20 bonus scheme;
- Review achievement of the target set for the 2020 bonus;
- Review the Report for the 2020 financial year;
- Recommend to the Board revisions to the Committee’s Terms of Reference
- Consider the 2020/21 Pay Award Strategy;
- Review Executive Directors’ and other executives’ remuneration packages;
- Approve salary increases for the Executive Directors;
- Approve the size of LTIP awards to Executive Directors;
- Consider, approve and adopt the performance conditions for 2019/22 and future PSP awards;
- Approve the terms of the CEO, Stephen Glancey’s departure
- Approve the terms of Stewart Gilliland’s appointment as interim Executive Chairman; and,
- Consider the bonus scheme for 2020/21.
Since 29 February 2020, the Remuneration Committee met on three occasions to:
- Agree the 2020 bonus subject to final approval later in FY2021; and
- Approve the Report for the financial year ended 29 February 2020.
External Advisers
The Committee seeks and considers advice from independent remuneration advisers where appropriate. During the year ended 29 February 2020, the Committee obtained advice from Deloitte LLP. Deloitte’s fees for this advice amounted to £6,050 charged on a time or fixed fee basis. Deloitte is one of the founding members of the Remuneration Consultants’ Code of Conduct and adheres to this Code in its dealings. The Committee is satisfied that the advice provided by Deloitte is objective and independent. The Committee is comfortable that the Deloitte engagement team that provide remuneration advice to the Committee do not have connections with the Company that may impair their independence.
Statement of Shareholder Voting
The Company is committed to ongoing shareholder dialogue and takes shareholder views into consideration when formulating remuneration policy and practice. To the extent there are substantial numbers of votes against resolutions in relation to directors’ remuneration, the Company will seek to understand the reasons for any such vote and will provide details of any actions in response to such a vote.
The following table sets out the votes at our most recent AGMs in respect of the Report and the votes at the 2018 AGM in relation to the Policy.
Directors’ Remuneration Report
AGM | For | Against | withheld |
|---|---|---|---|
2019 | 212,409,822 | 1,181,109 | 4,047 |
Directors’ Remuneration Policy
AGM | FOR | Against | Withheld |
|---|---|---|---|
2018 | 230,550,915 | 46,281 | 557,974 |
Directors’ Remuneration (Audited)
The following table sets out the total remuneration for directors for the year ended 29 February 2020 and the prior year.
Single Total Figure of Remuneration – Executive Directors (Audited)
The table below reports the total remuneration receivable in respect of qualifying services by each executive Director during the year ended 29 February 2020 and the prior year. Stewart Gilliland was non-executive Chairman from 1 March 2019 until 16 January 2020, at which point he was appointed as interim Executive Chairman; given the proportion of the year for which he was a non-executive, his remuneration for the whole year is included in the Single Total Figure of Remuneration Table for non-executive Directors on page 88.
Salary/fees (a) | Taxable benefits (b) | Annual Bonus (c) | Long term incentives | Pension related benefits | Termination Payments (f) | Miscellaneous (g) | Total | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Year ended February | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 |
€’000 | €’000 | €’000 | €’000 | €’000 | €’000 | €’000 | €’000 | €’000 | €’000 | €’000 | €’000 | €’000 | €’000 | €’000 | €’000 | |
Executive Directors | ||||||||||||||||
Joris Brams | - | 374 | - | 28 | - | 338 | - | 169 | - | - | - | 474 | - | 1,383 | ||
Stephen Glancey* | 698 | 675 | 52 | 51 | 174 | 540 | 1,120 | 342 | 175 | 169 | 698 | - | 56 | 2,973 | 1,777 | |
Andrea Pozzi | 368 | 340 | 28 | 26 | 46 | 262 | 544 | - | 92 | 85 | - | - | - | 1,078 | 713 | |
Jonathan Solesbury | 497 | 481 | 37 | 96 | 124 | 385 | 1,020 | - | 124 | 120 | - | - | - | 1,802 | 1,082 | |
Total | 1,563 | 1,870 | 117 | 201 | 344 | 1,525 | 2,684 | 511 | 391 | 374 | 698 | 474 | 56 | 5,853 | 4,955 | |
The remuneration for Stephen Glancey, Jonathan Solesbury and Andrea Pozzi was translated from Sterling using the average exchange rate for the relevant year. For Executive Directors who joined or left in the year, salary, taxable benefits, annual bonus, long term Incentives and pension relates to the period in which they served as an Executive Director
* Stephen Glancey left the Board on 15 January and the Group on 29 February 2020. The remuneration referred to in the table above for 2020 is the remuneration he earned for the full year. Further information in relation to the remuneration arrangements in connection with his leaving the Board and Group is set out below.
Details on the valuation methodologies applied are set out in Notes (a) to (g) below. The valuation methodologies are as required by the Regulations and are different from those applied within the financial statements, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”).
Notes to Directors’ Remuneration Table
(a) Salaries and fees
1. The amounts shown are the amounts earned in respect of the financial year.
(b) Benefits
1. The Executive Directors received a cash allowance of 7.5% of base salary. The Group provided death-in-service cover of four times annual base salary and permanent health insurance (or reimbursement of premiums paid into a personal policy). Stephen Glancey also availed of medical insurance under a Group policy.
(c) Annual Bonus
1. The amounts shown are the total bonus achieved under the annual bonus scheme in respect of the financial year under review (subject to final approval).
2. For the year ended 29 February 2020, the maximum bonus opportunity was 100% of salary.
Details of how the bonuses achieved relate to performance are provided below.
Performance Targets | ||||||
|---|---|---|---|---|---|---|
Measure | Weighting | ‘Target’ | ‘Maximum’ | Actual Performance | Bonuses | Bonuses achieved (percentage of salary) |
Adjusted Operating Profit | Andrea Pozzi: 37.5% Jonathan Solesbury: 75% Stephen Glancey: 75% | €117-€120 million (excluding impact of IFRS 16 Leases) | 10% | 2% | Nil | For FY2020, Adjusted Operating Profit was below the minimum target resulting in no bonus being paid. |
Cash Conversion | Andrea Pozzi: 12.5% Jonathan Solesbury: 25% Stephen Glancey: 25% | 65% (excluding impact of IFRS 16 Leases) | 75% | 103.5% | Achieved | For FY2020, cash conversion exceeded the maximum target resulting in bonuses of: 12.5% of salary for Andrea Pozzi 25% of salary for Jonathan Solesbury 25% of salary for Stephen Glancey |
Cider Target | Andrea Pozzi: 50% | 35.3khl | 58.3khl | 13% below target | Nil | The Cider target element was below the minimum threshold therefore no bonus will be payable in relation to this element. |
Jonathan Solesbury’s bonus opportunity was also subject to a personal underpin of restructuring finance and reducing the fixed cost of the finance structure. The Committee considered the underpin was satisfied as the restructuring of account services was delivered on time and to plan.
Accordingly, overall bonuses achieved by the executive Directors were:
- Andrea Pozzi: 12.5% of salary
- Jonathan Solesbury: 25% of salary
- Stephen Glancey: 25% of salary
The Committee considers the level of achievement is reflective of the overall performance of the Group in the year and appropriate.
(d) Long term incentives
1. The amounts shown in respect of long term incentives are the values of awards where final vesting is determined as a result of the achievement of performance measures or targets relating to the financial year and is not subject to achievement of further measures or targets in future financial years.
2. The awards granted in June 2017 in respect of the LTIP and ESOS, the performance conditions for these awards are detailed above on page 79 and in note 4 (Share-Based Payments). Details of the extent to which the performance measures were met are set out below.
LTIP
The performance measures for the measures granted in June 2017 were met and the awards vested between threshold and maximum as set out below:-
- EPS growth achieved – 8.0%
Award Vested – 100% of target, 33.3% of total award; - FCF Conversion achieved – 84.9%
Award Vested – 100% of target, 33.3% of total award; - ROCE achieved – 11.9%
Award Vested - 100% of target, 33.3% of total award
Total Award Vested 100%.
ESOS
The performance measures for the awards granted in June 2017 were met in full and the awards vested at maximum as set out below:-
- EPS growth achieved – 100%; Award Vested – 100%;
Executive Director | Award | Shares under award | Vested shares | Value* | Value attributable to share price at grant** | Value attributable to share price growth*** | Value attributable to dividends**** | Total value for single total figure |
|---|---|---|---|---|---|---|---|---|
Stephen Glancey | LTIP | 201,434 | 201,434 | €830,270 | €684,876 | €145,394 | €71,287 | €901,557.05 |
ESOS | 302,152 | 302,152 | €218,092 | €1,027,317 | €218,092 | €0 | €218,091.66 | |
Andrea Pozzi | LTIP | 97,888 | 97,888 | €403,474 | €332,819 | €70,655 | €34,643 | €438,116.79 |
ESOS | 146,833 | 146,833 | €105,983 | €499,232 | €105,983 | €0 | €105,983.25 | |
Jonathan Solesbury | LTIP | 164,140 | 164,140 | €676,551 | €480,930 | €195,621 | €49,537 | €726,088.80 |
ESOS | 246,211 | 246,211 | €293,433 | €721,398 | €293,433 | €0 | €293,432.92 |
* Based on a share price at vesting of €4.122 (representing the average closing price between 24 February 2020 and 28 February 2020. Converted to Euro equivalent. Pricing data sourced from Bloomberg.) The LTIP awards are structured as nil cost options however the ESOS awards have an option price of €3.40 (€2.93 in respect of Jonathan Solesbury). Therefore, the value of the ESOS awards have been calculated by the difference between the option price and vesting price.
** Based on a share price at grant of €3.40 (€2.93 in respect of Jonathan Solesbury) for the LTIP awards. ESOS were awarded at grant price so no differential.
*** Based on the increase in the share price from €3.40 (or €2.93 in respect of Jonathan Solesbury) at grant to €4.122 at vesting.
**** No dividends accrue for ESOS awards.
(e) Pensions related benefits
No Executive Director accrued any benefits under a defined benefit pension scheme. Under their service contracts, Executive Directors received a cash payment of 25% of base salary in order to provide their own pension benefits as disclosed in column (e) of the table.
(f) Termination Payments
Stephen Glancey stepped down as Group Chief Executive Officer with effect from 15 January 2020 and left the Company on 29 February 2020. Details of payments made to Stephen Glancey in connection with his leaving the Company are set on page 86.
(g) Miscellaneous
Stephen Glancey received a payment in relation to holiday entitlement that was not taken at the time of stepping down from the Board as Group Chief Executive Officer on 15 January 2020 and leaving the Company on 29 February 2020.
Additional Information
Fees from external appointments
None
Payments to Former Directors
Joris Brams stepped down as Managing Director, International Division with effect from 28 February 2019 and both his employment and appointment as a Director of the Company terminated on that date. Pursuant to a contract for services effective as of 1 March 2019 between C&C IP Sàrl (‘CCIP’) and Joris Brams BVBA (‘JBB’), (a company wholly owned by Joris Brams and family), CCIP paid fees in FY2020 of €94,240 to JBB in respect of brand development services provided by JBB to CCIP in relation to Belgian products.
Payments for Loss of Office
Stephen Glancey stepped down as Group Chief Executive Officer with effect from 15 January 2020 and left the Company 29 February 2020.
The arrangements made in respect of Stephen Glancey leaving the Company are in line with the Remuneration Policy approved by shareholders at the 2018 AGM.
Stephen Glancey’ remuneration for the whole of 2020 is disclosed in the Single Total Figure of Remuneration table on page 83.
Stephen Glancey received a payment of €698,000 in lieu of his notice period, which is included in the “termination payments” in the Single Total Figure of Remuneration Table on page 77.
As he was employed for the entirety of FY2020, Stephen Glancey was eligible to receive a bonus in respect of the year ending 29 February 2020, calculated by reference to the performance targets that applied to the FY2020 bonus plan. Any bonus will be paid (subject to final approval) in the normal way and is included in the Single Total Figure of Remuneration Table on page 83.
Stephen Glancey retained awards granted to him in June 2017 under the ESOS and LTIP 2015 under the terms of the respective schemes. The targets were met in full over the three year performance period ended 29 February 2020 which led to an overall vesting for both the LTIP and ESOS of 100% of the maximum opportunity. These awards are included in the Single Total Figure of Remuneration Table on page 83. All other unvested share awards under the Company’s share plans lapsed in full on Stephen leaving.
Directors’ Shareholdings and Share Interests
Shareholding guidelines
Executive Directors are required to build up (and maintain) a minimum holding of shares in the Company. The CEO is expected to maintain a personal shareholding of at least two times’ salary. For the other Executive Directors, this has been set at one times’ salary. Executive Directors are expected to retain 50% of the after tax value of vested share awards until at least the shareholding guideline has been met.
Executive Directors’ Interests in Share Capital of the Company (Audited)
The beneficial interests, including family interests, of the Directors and the Company Secretary in office at 29 February 2020 in the share capital of the Company are detailed below:
29 February 2020 (or date of retirement from the Board if earlier) Total | 1 March 2019 (or date of appointment if later) Total | |
|---|---|---|
Directors | ||
Stephen Glancey | 4,223,586 | 4,223,586 |
Andrea Pozzi* | 66,465 | 66,460 |
Jonathan Solesbury | 50,000 | 50,000 |
Total | 4,340,051 | 4,340,046 |
Company Secretary | ||
Mark Chilton ** | 17,587 | - |
* Andrea Pozzi continued his participation in the Share Incentive Plan during the period. The SIP scheme is made available to all employees. The SIP allows for the grant of a number of “free” shares which are allocated to employees equally, as permitted by the relevant legislation.
** Mark Chilton elected to participate in the SIP during the year, where he was granted a number of free shares, as permitted by the legislation.
For more details on the SIP, please see page 132.
There were no other changes in the above Directors’ or the Company Secretary’s interests between 29 February 2020 and 3 June 2020.
The Directors and Company Secretary have no beneficial interests in any Group subsidiary or joint venture undertakings.
Share incentive scheme interests awarded during year (Audited)
LTIP
The table below sets out the scheme interests awarded to Executive Directors’ during the year ended 29 February 2020, each of which is subject to performance conditions as set out on page 78 measured over a performance period from 1 March 2019 to 28 February 2022.
Executive Director | Type of award | Maximum opportunity | Number of shares | Face value (at date of grant in Euros)3 | % of maximum opportunity vesting at threshold |
|---|---|---|---|---|---|
Stephen Glancey1 | LTIP2 | 150% of base salary | 270,033 | 1,013,974 | 25% |
Andrea Pozzi | LTIP2 | 150% of base salary | 142,904 | 536,605 | 25% |
Jonathan Solesbury | LTIP2 | 150% of base salary | 192,312 | 722,132 | 25% |
1. Stephen Glancey’s award lapsed on 29 February 2020 when he left the Group
2. The LTIP awards were granted in the form of nil cost options over €0.01 ordinary shares in the Company.
3. The face value of awards is based on the number of shares under award multiplied by the closing share price on the date of grant being €3.755 for Stephen Glancey, Andrea Pozzi and Jonathan Solesbury.
Directors’ Interests in Options (Audited)
Interests in options over ordinary shares of €0.01 each in the Company
Directors | Date of | Exercise price | Scheme | Exercise period | Total at (or date of appointment if later) | Awarded | Exercised | Lapsed in year | Total at |
|---|---|---|---|---|---|---|---|---|---|
Stephen Glancey | 12/5/16 | €0.00 | LTIP | 28/02/20 –28/08/20 | 111,807* | 111,807 | |||
12/5/16 | €4.18 | ESOS | 28/02/20 –28/08/20 | 175,492* | 175,492 | ||||
1/6/17 | €0.00 | LTIP | 1/6/20 – 1/12/20 | 201,434 | 201,434 | ||||
1/6/17 | €3.40 | ESOS | 1/6/20 – 1/12/20 | 302,152 | 302,152 | ||||
31/5/18 | €0.00 | LTIP | 31/5/21 – 30/5/28 | 228,097 | 228,097 | 0 | |||
31/5/18 | €2.99 | ESOS | 31/5/21 – 30/5/28 | 342,145 | 342,145 | 0 | |||
31/1/19 | €0.00 | LTIP | 31/1/24 – 30/1/29 | 207,991 | 207,991 | 0 | |||
23/5/19 | €0.00 | LTIP | 23/5/22 - 31/5/29 | 270,033 | 270,033 | 0 | |||
Total | 1,569,118 | 270,033 | 1,048,266 | 790,885 | |||||
Andrea | 21/5/14 | €0.00 | R&R | 21/5/17 – 20/5/21 | 4,360 | 4,360 | |||
29/10/15 | €0.00 | R&R | 17/5/17 – 28/10/22 | 7,128 | 7,128 | ||||
1/6/17 | €0.00 | LTIP | 1/6/20 – 31/5/27 | 97,888 | 97,888 | ||||
1/6/17 | €3.40 | ESOS | 1/6/20 – 31/5/27 | 146,833 | 146,833 | ||||
31/5/18 | €0.00 | LTIP | 31/5/21 – 30/5/28 | 110,845 | 110,845 | ||||
31/5/18 | €2.99 | ESOS | 31/5/21 – 30/5/28 | 166,268 | 166,268 | ||||
23/5/19 | €0.00 | LTIP | 23/5/22 - 31/5/29 | 142,904 | 142,904 | ||||
Total | 533,322 | 142,904 | 676,226 | ||||||
Jonathan Solesbury | 13/11/17 | €0.00 | LTIP | 13/6/20 –12/6/27 | 164,140 | 164,140 | |||
13/11/17 | €2.93 | ESOS | 13/6/20 –12/6/27 | 246,211 | 246,211 | ||||
31/5/18 | €2.99 | ESOS | 31/5/21 – 30/5/28 | 243,669 | 243,669 | ||||
31/5/18 | €0.00 | LTIP | 31/5/21 – 30/5/28 | 162,446 | 162,446 | ||||
23/5/19 | €0.00 | LTIP | 23/5/22 - 31/5/29 | 192,312 | 192,312 | ||||
Total | 816,466 | 192,312 | 1,008,778 | ||||||
Mark Chilton | 11/2/19 | €0.00 | LTIP | 11/2/24 – 10/2/29 | 86,334 | 86,334 | |||
Total | 86,334 | 86,334 |
Key: ESOS – Executive Share Option Scheme; LTIP – Long Term Incentive Plan approved in 2015
*Stephen Glancey’s 2016 LTIP award and 2016 ESOS award vested at 62.4% and 65.4% respectively in May 2019. The rest of the awards lapsed at the point of vesting.
Nominal price was paid for any award of options. The price of the Company’s ordinary shares as quoted on the London Stock Exchange at the close of business on 28 February 2020 (being the last working day) was £3.28 (28 February 2019 £2.63, which has been converted from its Euro equivalent at year end rate). The price of the Company’s ordinary shares ranged between £3.28 and £4.11 during the year.
There was no movement in the interests of the Directors in options over the Company ordinary shares between 29 February 2020 and 3 June 2020.
Single Total Figure of Remuneration – Non - Executive Directors (Audited)
The table below reports the total fees receivable in respect of qualifying services by each non-executive Director during the year ended 29 February 2020 and the prior year. Fees are the only element of the non-executive directors’ remuneration. Stewart Gilliland was non-executive Chairman from 1 March 2019 until 15 January 2020, at which point he was appointed as interim Executive Chairman; given the proportion of the year for which he was a non-executive, his remuneration for the whole year is included in the following Single Total Figure of Remuneration Table.
Salary/fees | ||
|---|---|---|
Year ended February | 2020 | 2019 |
€’000 | €’000 | |
Non-Executive Directors | ||
Jill Caseberry1 | 69 | 4 |
Jim Clerkin | 65 | 65 |
Vincent Crowley2 | 86 | 78 |
Emer Finnan | 92 | 90 |
Stewart Gilliland3 | 278 | 179 |
Geoffrey Hemphill4 | 11 | 65 |
Richard Holroyd5 | 19 | 75 |
Helen Pitcher6 | 85 | 4 |
Jim Thompson7 | 69 | - |
Sir Brian Stewart | - | 80 |
Total | 774 | 640 |
1. Jill Caseberry and Helen Pitcher were appointed non-executive Directors on 7 February 2019.
2. Vincent Crowley was Chairman of the Remuneration Committee from 5 July 2018 to 28 February 2019 and was appointed as Senior Independent Director from 1 June 2019.
3. The fees paid to Stewart Gilliland for the year ending 28 February 2019 reflect his appointment as Chairman from July 2018 and his retirement as Chairman of the Remuneration Committee from that date. The fees paid to Stewart Gilliland for the year ending 29 February 2020 reflect his appointment as Interim Executive Chairman from 16 January 2020.
4. Geoffrey Hemphill stepped down from the Board on 1 May 2019; the figures reflect his remuneration until his departure.
5. Richard Holroyd stepped down from the Board on 31 May 2019; the figures reflect his remuneration until his departure.
6. Advanced Boardroom Excellence, of which Helen Pitcher is chair, were contracted to provide consultancy services to the Company. These were contracted prior to Helen Pitcher’s appointment date and were performed predominantly in FY2019, for which the sum of €170k was received during FY2020. The Company has not contracted, nor would it contract for any such services in the future.
7. Jim Thompson was appointed to the Board on 1 March 2019, the figures reflect his remuneration for the year from appointment.
Fees paid to non-executive Directors are determined and approved by the Board as a whole. The Committee recommends the remuneration of the Chairman to the Board.
Fees are reviewed from time to time and adjusted to reflect market positioning and any change in responsibilities.
Non-executive Directors receive a base fee and an additional fee for further duties as set out on in the following table:
Non-Executive Role / Position | Fees € |
|---|---|
Base fee | 65,000 |
Senior Independent Director | 15,000 |
Audit Committee Chair | 25,000 |
Remuneration Committee Chair | 20,000 |
Audit Committee member | 5,000 |
Remuneration Committee member | 5,000 |
Nomination Committee member | 3,000 |
Stakeholder engagement - one segment of business | 3,000 |
Stakeholder engagement - two segments of business | 5,000 |
Non-Executive Directors’ Interests in Share Capital of the Company (Audited)
The beneficial interests, including family interests, of the Non-Executive Directors who served during the year in the share capital of the Company are detailed below:
29 February 2020 (or date of retirement from the board if earlier) Total | 1 March 2019 (or date of appointment Total | |
|---|---|---|
Directors | ||
Jill Caseberry | 5,000 | - |
Jim Clerkin | 40,000 | 33,000 |
Vincent Crowley | 20,000 | 10,000 |
Emer Finnan | 7,954 | 5,191 |
Stewart Gilliland | 89,165 | 57,000 |
Geoffrey Hemphill | - | - |
Richard Holroyd | 68,241 | 68,241 |
Helen Pitcher | - | - |
Jim Thompson | 157,780 | 136,780 |
Total | 388,140 | 310,212 |
There were no other changes in the above Directors’ or the Company Secretary’s interests between 29 February 2020 and 3 June 2020.
Performance graph and table
This graph shows the value, at 29 February 2020, of £100 invested in the Company on 28 February 2010 compared to the value of £100 invested in the FTSE 250 Index. The Company became a member of the FTSE 250 Index on the London Stock Exchange on 23 December 2019 and the Committee believes that this is the most appropriate index against which to compare the performance of the Company (prior to this the Company had its primary listing on the Irish Stock Exchange).
Chief Executive Officer
The following table sets out information on the remuneration of the Chief Executive Officer for the ten years to 29 February 2020:
Total Remuneration €’000 | Annual Bonus (as % of maximum opportunity) | Long term incentives vesting (as % of maximum number of shares) | ||
|---|---|---|---|---|
FY2012 | John Dunsmore (to 31/12/11) | 1,126 | 75% | 100% |
FY2012 | Stephen Glancey (from 1/1/12) | 956 | 75% | 100% |
FY2013 | Stephen Glancey | 1,321 | Nil | 100% |
FY2014 | Stephen Glancey | 1,152 | 18.75% | 7% |
FY2015 | Stephen Glancey | 980 | Nil | Nil |
FY2016 | Stephen Glancey | 1,230 | 25% | Nil |
FY2017 | Stephen Glancey | 1,052 | Nil | Nil |
FY2018 | Stephen Glancey | 994 | 18% | Nil |
FY2019 | Stephen Glancey | 1,777 | 100% | Nil |
FY2020 | Stephen Glancey (to 15/01/20) | 2,219 | 25% | 100% |
FY2020 | Stewart Gilliland (from 16/01/20) | 71 | N/A | N/A |
The amounts set out in the above table were translated from Sterling based on the average exchange rate for the relevant year.
John Dunsmore retired as Chief Executive Officer on 31 December 2011 and Stephen Glancey was appointed with effect from 1 January 2012, having previously been Chief Operating Officer. The salary, taxable benefits, annual bonus, long term incentives and pension figures are calculated for the period in office.
Stephen Glancey retired as Group Chief Executive Officer on 15 January 2020 and Stewart Gilliland was appointed with effect from 16 January 2020 as interim Executive Chairman. The salary, taxable benefits, annual bonus, long term incentives and pension figures are calculated for the period in office, and in the case of the annual bonus, is subject to final approval.
Ratio of the pay of the CEO to that of the UK lower quartile, median and upper quartile employees
To reflect the most recent UK regulations in relation to remuneration reporting, this year we are reporting our CEO Pay Ratio. The table below shows the ratio of the pay of the CEO to that of the UK lower quartile, median and upper quartile full-time equivalent employees in FY2020. Stephen Glancey was Chief Executive Officer until 15 January 2020, at which point he stepped down from the Board before leaving the Group on 29 February; given the proportion of the year for which he was Chief Executive Officer, his remuneration for the whole year is used for the purposes of these calculations. As Stephen Glancey’s termination payment reflects a payment in lieu of notice otherwise attributable to FY2021 it is excluded for the purposes of these calculations. Also excluded is a payment in respect of annual leave accrued but not taken.
The UK regulations provide three methods for the calculation of the CEO Pay Ratio, A, B and C with Option A (modified) being the preferred method as it is the most statistically accurate one. Remuneration for other employees for the purposes of the calculation is for the financial year FY2020. In calculating the ratio, the Company determined full time equivalent annual remuneration for UK employees, employed in the business as at 29 February 2020. Set out below is the remuneration and salary component of that remuneration for the CEO and for employees in the 25th, 50th (median) and 75th quartiles.
Year | CEO total remuneration* | 25th percentile employee remuneration | Median employee remuneration | 75th percentile employee remuneration |
|---|---|---|---|---|
2020 | 2,218,941 697,964 | 26,146 24,080 | 32,257 30,024 | 45,075 39,232 |
* As Stephen Glancey’s termination payment reflects a payment in lieu of notice otherwise attributable to FY2021 it is excluded for the purposes of these calculations. Also excluded is a payment in respect of annual leave accrued but not taken.
Salary Only Ratios
Year | Method | 25th percentile ratio | Median ratio | 75th percentile ratio |
|---|---|---|---|---|
2020 | Option A | 29.0:1 | 23.2:1 | 17.8:1 |
Total Remuneration Ratios
Year | Method | 25th percentile ratio | Median ratio | 75th percentile ratio |
|---|---|---|---|---|
2020 | Option A | 92.3:1 | 74.9:1 | 53.6:1 |
The Company believes that the median pay ratio for 2020 is consistent with the pay, reward and progression policies for the UK employees.
Implementation of Remuneration Policy for FY2021
There will be no material changes to the Policy for FY2021. However, as outlined in the statement of the Committee Chair, all decisions on salary, bonuses and share awards for FY2021 have been deferred until at least September, following the completion of our half year. This decision was made to ensure that the Committee will have a clear line of sight over expected performance and the full impact of COVID-19 on the business prior to implementing any decisions.
We have set out below a summary of our remuneration arrangements for FY2021.
Executive Directors
Salary | Benefits and Pensions | Bonus* |
|---|---|---|
As at the date of this Report, the Committee has not reviewed the salaries for the Executive Directors’ for FY2021. | No changes are proposed to the type of benefits provided. No changes will be made to the level of pension provision. | The maximum bonus opportunity will be 100% of salary, with all bonus earned in excess of 80% of salary deferred into shares for a period of up to two years. Bonus payouts will be based on stretching performance conditions based on Adjusted operating profit (75%) and cash conversion (25%). |
* The Company is not disclosing the actual Group bonus profit and cash conversion targets prospectively as, in the opinion of the Board, these targets are commercially sensitive. The Board believes that disclosure of this commercially sensitive information could adversely impact the Company’s competitive position by providing competitors with insight into the Company’s business plans and expectations. However, the Company will disclose how the bonus pay out delivered relates to performance against targets on a retrospective basis if a bonus is earned by reference to the target.
Long term incentives
Awards will be granted in the form of LTIP (150% of base salary). The targets relating to the awards will be communicated to shareholders at the time of their grant, following the completion of our half year.
LTIP Performance Conditions
Performance condition | Weighting | Performance target | % of element vesting |
|---|---|---|---|
Compound annual growth in Underlying EPS over the three year | 33% | ||
Threshold | 3% | 25% | |
Maximum | 8% | 100% | |
Free cash flow Conversion – average over the three year period | 33% | ||
Threshold | 65% | 25% | |
Maximum | 75% | 100% | |
Return on Capital Employed | 33% | ||
Threshold | 9.3% | 25% | |
Maximum | 10% | 100% |
Notwithstanding the extent to which the performance targets set out above are satisfied, an award or option will only vest to the extent the Committee is satisfied that the improvement in the underlying financial performance of the Company over the performance period warrants the degree of vesting.
Vesting will be subject to performance measures based on EPS, ROCE and cash conversion, and subject to an additional performance underpin. All awards will be subject to a two-year holding period after vesting.
Targets are set by reference to challenging internal budgets and external forecasts.
Malus and clawback provisions
Malus and clawback provisions apply to all elements of performance-based variable remuneration (i.e. annual bonus, ESOS 2015 and LTIP 2015) for the executive Directors with effect from 1 March 2016. The circumstances in which malus and clawback will be applied are if there has been in the opinion of the Committee a material mis-statement of the Group’s published accounts; or the Committee reasonably determines that a participant has been guilty of gross misconduct. The clawback provisions will apply for a period of two years following the end of the performance period; in the case of any deferred bonus award or LTIP 2015 award which is not released until the end of a holding period, clawback may be implemented by cancelling the award before it vests/is released.
Non-Executive Director Fees
The Non-Executive Director’s fees will increase in recognition of their increased role and the time commitment required to effectively carry out workforce engagement. The Non-Executive Directors responsible for engaging with one segment of the business will receive an additional fee of €3,000 while those Non-Executive Directors responsible for engaging with two segments will receive an additional fee of €5,000. Having determined the level of fees, the Board considered it appropriate for the fees to be granted in the form of shares in the company. The shares will vest immediately upon grant and will not be subject to any performance or vesting restrictions.
This report was approved by the Board and signed on its behalf by
Helen Pitcher OBE
Chairman of the Remuneration Committee
3 June 2020