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Greencore Group plc Annual Report & Financial Statements 2015 Element of remuneration
Purpose and
link to strategy Operation Maximum opportunity Performance measures Annual Bonus Plan To support the business
strategy by incentivising the delivery of annual financial targets as well as the achievement of personal and strategic objectives. The deferred element aligns the interests of Executives and shareholders and provides a strong retention mechanism.
Performance is assessed over the relevant financial year.
The level of payment is determined by the Committee after the year end, based on performance against targets and any additional factors they deem significant. A proportion (normally 50% unless the Committee determines otherwise) of any bonus is paid in cash, with the remainder deferred into a share award. Cash bonuses are paid following the year-end.
Deferred share element The Deferred Share awards will normally vest three years after the grant of an award (unless the Committee determines an alternative vesting period is appropriate). The vesting of Deferred Share awards will normally be subject to continued employment.
The Committee has the discretion to reduce the number of Deferred Shares if, prior to vesting, the participant is in fundamental breach of their employment contract. Dividend equivalents may be awarded. See page 51 for further details.
The maximum annual bonus opportunity is 150% of salary. The award opportunity for bonus at threshold performance is nil with up to 50% of the award normally payable for target performance. 100% of the award is payable for maximum performance.
The bonus is determined based on performance against financial performance metrics and personal objectives.
Currently, 75% of the award is based on financial targets (of which 50% is based on adjusted EPS and 25% is based on ROIC) and 25% is based on personal and strategic goals. The Committee may choose alternative performance measures or may adjust the weighting of measures in future years to ensure that Executive Directors are appropriately incentivised to deliver key strategic goals. In any year, the financial performance metrics will always account for the majority of the award.
The Committee sets targets every year to ensure that they are appropriately stretching.
For further details of metrics for the FY16 annual bonus please see page 62.
Element of remuneration
Purpose and
link to strategy Operation Maximum opportunity Performance measures Performance
Share Plan (‘PSP’)
To create alignment between the interests of Executive Directors and shareholders through the delivery of rewards in Company shares. To incentivise Executive Directors to deliver long-term shareholder value creation and the achievement of financial targets.
Awards normally vest based on performance measured over a period of three years or such other period as the Committee may determine. Awards may be granted in the form of performance share awards (a conditional award of shares, a nil-cost option or a forfeitable share award).
The Committee determines the extent to which the performance measures have been met. The Committee will also consider the underlying financial performance of the business, as well as the value added to shareholders. The level of vesting may be adjusted where the Committee considers there is a material difference. In the event of a material misstatement of the Company’s audited results, a material failure of risk management, a material breach of health and safety regulations, or serious reputational damage to any member or business unit of the Group, the Committee may scale back, or impose additional conditions on awards prior to vesting. Dividend equivalents may be awarded. See page 51 for further details.
The maximum award level is 100% of salary in respect of a financial year.
Current awards vest based on Earnings per Share and Return on Invested Capital measures. These measures will generally be equally weighted however the Committee may determine that an alternative weighting is appropriate. The Committee shall have the discretion to determine that alternative financial performance measures may apply to future awards.
For threshold levels of performance, 25% of the award vests, increasing to 100% of the award for maximum performance. There is straight-line vesting of awards between these points. The Committee determines targets each year to ensure that targets are stretching and represent value creation for shareholders, whilst remaining motivational for management.
The Company also operates a shareholding guideline for Executive Directors, details of which can be found on page 59 of the Annual Remuneration Report.
The Committee reserves the right to make any remuneration payments and payments for loss of office (including the exercise of any discretion available to it in connection with such payments), notwithstanding that they may not be in line with the Policy where the terms of the payment were agreed either before the Policy came into effect or at a time when the relevant individual was not a Director of the Company and in the opinion of the Committee, the payment was not in consideration for the individual becoming a Director of the Company.
REPORT ON DIRECTORS’ REMUNERATION
continued
DIRECTORS’ REMUNERATION POLICY REPORT continued
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Greencore Group plc Annual Report & Financial Statements 2015
The Committee may make minor amendments to the Policy (for regulatory, exchange control, tax or administrative purposes or to take account of a change in legislation) without obtaining shareholder approval for that amendment.
Awards granted under the Deferred Bonus Plan and the PSP: (a) may be settled in cash;
(b) may incorporate the right to receive in cash or shares the value of dividends which would have been paid or allotted on the shares between grant and vesting. This may assume the reinvestment of those dividends in the Company’s shares on a cumulative basis; and
(c) may be adjusted in the event of a variation of the Company’s share capital or a demerger, delisting, special dividend, rights issue or other event, which may, in the Committee’s opinion, affect the current or future value of awards.
The Committee may amend or substitute performance conditions applicable to a PSP award if an event (or events) occurs which causes the Committee to consider that an amended or substituted performance condition would be more appropriate and would not be materially less difficult to satisfy.
The terms of the deferred bonus plan and PSP may be amended in accordance with the relevant plan rules (which in the case of the PSP, were approved by shareholders on 29 January 2013).