LTIP Award 2019
Reduction in the 2019 LTIP Award Levels for Executive Directors
As per page 89 of the Directors’ Remuneration Report within the Annual Report and Accounts 2018, the Remuneration Committee had proposed, for 2019 only, that the CEO and CFO receive Performance Share Plan (PSP) awards of 275% and 250% of salary respectively (i.e. 75% higher than the normal award levels) by utilising the exceptional award limit within the existing policy, with awards reverting to normal levels thereafter (i.e. 200% and 175% of salary respectively) from 2020 onwards. To balance this one-off larger PSP award in 2019, and annual bonus potential for 2019, 2020 and 2021 for the CEO and CFO will be reduced by 25% of salary each year, from 175% and 150% of salary to 150% and 125% respectively. The proposals were intended to incentivise the delivery of the new strategy in light of our clarified operating environment following a period of significant change and uncertainty and ensure management were appropriately retained at a time when there was little to no retentive effect in respect of the existing PSP awards.
However, to allow shareholders to engage further on this topic, we granted our normal policy level PSP award on 18 March 2019 following the announcement of our 2018 annual results (200% of salary for the CEO and 175% of salary for the CFO) with the intention of making the additional 75% of salary PSP award after our AGM on 15 May 2019.
Having considered shareholder and shareholder representative feedback in respect of the 2019 LTIP award levels, the Remuneration Committee has agreed not to grant the additional 75% of salary PSP awards (i.e. 2019 award levels will remain, as already granted, at 200% and 175% of salary for the CEO and CFO respectively). No changes are being made to the PSP performance conditions detailed on page 93 of the Remuneration Report and annual bonus potential will remain at reduced levels (150% and 125% of salary for the CEO and CFO respectively) for 2019, 2020 and 2021 as noted above.
Finally, I would like to thank those shareholders and representative bodies which have provided feedback on the Committee’s proposals and look forward to receiving shareholder support at the forthcoming AGM.
Chair of the Remuneration Committee
1 May 2019