REG - Rightmove Plc - Final Results <Origin Href="QuoteRef">RMV.L</Origin> - Part 4
23/02/2018 07:05
- Part 4: For the preceding part double click ID:nRSW7131Fc
Companies Act
2006, separate resolutions for the re-appointment of KPMG LLP as auditor of
the Group and for the Audit Committee to determine the auditor's remuneration
will be proposed at the 2018 AGM.
Audit information
So far as the directors in office at the date of signing of the report are
aware, there is no relevant audit information of which the auditor is unaware
and each such director has taken all reasonable steps to make themselves aware
of any relevant audit information and to establish that the auditor is aware
of that information.
Greenhouse gas emissions
Our report of greenhouse gas emissions in line with UK mandatory reporting
regulation is provided in the Corporate Responsibility section of the
Strategic Report on pages 31 to 32.
Fair, balanced and understandable
The Board has concluded that the 2017 Annual Report is fair, balanced and
understandable and provides the necessary information for shareholders and
other readers of the accounts to assess the Group's position and performance,
business model and strategy.
Responsibility statement of the directors in respect of the annual financial report
We confirm that to the best of our knowledge:
· the financial statements, prepared in accordance with the applicable
set of accounting standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company and the
undertakings included in the consolidation taken as a whole; and
· the management report required by DTR 4.1.8R (contained in the
Strategic Report and the Directors' Report) includes a fair review of the
development and performance of the business and the position of the Company
and the undertakings included in the Group taken as a whole, together with a
description of the principal risks and uncertainties they face.
We consider the annual report and accounts, taken as a whole, is fair,
balanced and understandable and provides the information necessary for
shareholders to assess the Group's position and performance, business model
and strategy.
Signed on behalf of the Board:
Peter Brooks-Johnson Robyn Perriss Chief Executive
Officer Finance Director
23 February 2018
GOVERNANCE- Statement of directors' responsibilities
The directors are responsible for preparing the Annual Report and the Group
and parent Company financial statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare Group and parent Company
financial statements for each financial year. Under that law they are required
to prepare the Group financial statements in accordance with International
Financial Reporting Standards as adopted by the European Union (IFRSs as
adopted by the EU) and applicable law and have elected to prepare the parent
company financial statements on the same basis.
Under company law the directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Group and parent Company and of their profit or loss for that
period. In preparing each of the Group and parent Company financial
statements, the directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and estimates that are reasonable, relevant and
reliable;
· state whether they have been prepared in accordance with IFRSs as
adopted by the EU;
· assess the Group and parent Company's ability to continue as a going
concern disclosing, as applicable, matters related to going concern; and
· use the going concern basis of accounting unless they either intend
to liquidate the Group or the parent Company or to cease operations, or have
no realistic alternative but to do so.
The directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the parent Company's transactions and disclose
with reasonable accuracy at any time the financial position of the parent
Company and enable them to ensure that its financial statements comply with
the Companies Act 2006. They are responsible for such internal control as they
determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error, and have
general responsibility for taking such steps as are reasonably open to them to
safeguard the assets of the Group and to prevent and detect fraud and other
irregularities.
Under applicable law and regulations, the directors are also responsible for
preparing a Strategic Report, Directors' Report, Directors' Remuneration
Report and Corporate Governance Statement that complies with that law and
those regulations.
The directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
GOVERNANCE - Directors' Remuneration
Report
Annual statement by the Chairman of the Remuneration Committee
Dear Shareholder
I am pleased to present our Directors' Remuneration Report for Rightmove (the
Company) together with its subsidiary companies (the Group) for the year ended
31 December 2017.
The report is divided into two sections, the Remuneration Policy Report and
the Annual Report on Remuneration, both of which are summarised in
'Remuneration at a glance' on pages 63 to 64. We do not propose any changes
to the Directors' Remuneration Policy, which received overwhelming support
from our shareholders at our 2017 AGM.
Performance and reward
The Committee considers that it is vital for the executive directors'
remuneration to fairly reflect the overall performance of the Group. As
described in the Strategic Report, Rightmove's 2017 results again show healthy
growth in revenue and underlying operating profit((1)), demonstrating the
strength of the Rightmove business model and the effectiveness of our
management team.
In accordance with the Remuneration Policy, the Committee has reviewed
achievement against the bonus plan objectives for 2017 and recommended an
annual bonus payment of 60%. This reflects the growth in revenue and
underlying operating profit((1)) of 11% and continued employee engagement with
90% of Rightmovers((2)) thinking that Rightmove is a great place to work.
Our audience growth, measured on a time basis in absolute terms, did not
outstrip the total of Rightmove's closest competitors and other revenue from
non-core businesses was not sufficiently strong to merit a bonus payout.
Achievement against these performance targets is set out on pages 86 to 87 and
reflected in the lower bonus payout for 2017, relative to 2016. Overall,
performance for the year outperformed the baseline business plan and the
Committee was therefore satisfied that it was appropriate to pay 60% of the
maximum bonus.
The Group's longer-term performance reflects strong organic growth over the
last three financial years. The 2015 Performance Share Plan awards (measuring
performance from 1 January 2015 to 31 December 2017) will vest in full in
March 2018 as a result of delivering underlying basic EPS((3)) growth of 63%
and TSR growth of 109% over the performance period, which exceeded the
respective growth targets set of 60% and FTSE 250 Index +25% over the
three-year period. The Committee tested the performance conditions, which were
set at the beginning of the performance period, and determined that the Group
had outperformed the maximum targets and was therefore satisfied that the
awards should vest in full.
Chief Executive Officer retirement
Following the AGM on 9 May 2017, Nick McKittrick retired as Chief Executive
Officer (CEO) and as a director of Rightmove. He was succeeded by Peter
Brooks-Johnson, former Chief Operating Officer and a Board director since
2011, who has had a successful year in his new role as CEO and delivered a
strong set of financial results in 2017. A summary of the remuneration
arrangements relating to Nick's retirement and Peter's promotion were
announced in May 2017 and are detailed on pages 88 to 90 of the Annual Report
on Remuneration.
Remuneration Policy
In 2017, following consultation with Rightmove's major investors, the
Committee proposed the Remuneration Policy, set out in the Remuneration Policy
Report on pages 65 to 77. The Policy was approved with overwhelming support
from our shareholders.
The Policy addresses the significant shortfall in executive directors' base
salaries compared with the Committee's assessment of an appropriate salary for
each role and the performance of the current directors. Increases of 3% in
excess of the average workforce rise have been awarded to the CEO and Finance
Director from January 2018, recognising the size and complexity of each role
and the present incumbents' experience and capabilities.
The Committee's objective is to retain a remuneration framework that rewards
and incentivises our management team to deliver Rightmove's longer-term
strategy with a clear emphasis on performance-related pay to reflect the
culture of the Group. The Remuneration Policy continues to provide below
market levels of fixed pay with above market levels of variable pay
opportunity, subject to the achievement of challenging performance measures
linked to the Group KPIs. Variable pay is geared towards long-term sustainable
performance, with a high level of annual bonus deferral into shares, long-term
incentive awards and appropriate share ownership guidelines.
We are committed to maintaining an open and transparent dialogue with
shareholders. We have valued the engagement with and support of our
shareholders and we remain focused on disclosing clearly how much our
executive directors earn and how this links to the Group's performance.
Peter Williams Chairman of the Remuneration Committee
(1) Before share-based payments and NI on share-based incentives.
(2) Percentage of employees responding to the annual employee survey.
(3) Before share-based payments and NI on share-based incentives with no
related adjustment for tax.
Remuneration at a glance
2017 Financial Performance Revenue Underlying operating profit ((1)) Returns to shareholders
+11% +11% £140.4m
Long-term incentive plan - outcome against maximum targets:
100%
Underlying basic EPS((2)) Total Shareholder Return
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(http://www.rns-pdf.londonstockexchange.com/rns/7131F_1-2018-2-22.pdf) (http://www.rns-pdf.londonstockexchange.com/rns/7131F_1-2018-2-22.pdf)
Source: Thomson Reuters
75% of 2015 Performance Share Plan (PSP) awards vest on achievement of 25% of 2015 PSP awards vest in line with upper quartile relative TSR
three-year EPS growth of 63%. performance.
Annual bonus plan - outcome against maximum
targets: 60%
Underlying operating profit ((1)) Growth in absolute time on site in minutes relative to our nearest competitors Growth in Other revenue((3)) Employee survey respondents who think 'Rightmove is a great place to work'
Threshold target: £175.2m Threshold target: same absolute growth in time onsite in minutes as our Threshold target: 16% growth Threshold target: 90%
nearest competitors
Actual: £184.4m
Actual: 4% growth Actual: 90%
Actual: Lower growth in time in minutes year on year than our nearest
competitors
Pay and performance for 2017
Nick McKittrick Peter Brooks-Johnson Robyn Perriss
Salary £159,120 £420,103 £320,000
Benefits £666 £1,852 £1,406
Cash Bonus - £126,031 £96,000
Deferred Share Bonus - £189,046 £144,000
Long-term incentives £1,063,657 £1,155,196 £925,763
Total remuneration £1,223,443 £1,892,228 £1,487,169
Shareholder alignment
Shareholding Proportion of variable awards received in shares:
guidelines:
85% of performance-related pay is awarded in Rightmove shares
200% of salary for all executive directors
Remuneration Policy key elements
Fixed pay below comparative market median and variable incentive opportunity
above median
Base salaries executive directors receive inflationary adjustments to salaries
capped at 3% above wider workforce increases
Pension contributions up to 6% of base salary in line with the wider workforce
Annual bonus maximum 125% of salary, with 40% cash and 60% deferred into
Company shares for two years
Performance Share Plan awards granted at 200% of salary. No post-vesting
holding period for current executive directors
Clawback applies to deferred annual bonus awards and Performance Share Plan
awards
(1) Before share-based payments and NI on share-based incentives.
(2) Before share-based payments and NI on share-based incentives with no
related adjustment for tax.
(3) Other revenue is all revenue excluding Agency and New Homes.
Remuneration Policy Report (unaudited)
Introduction
This report sets out the Company's Policy on directors' remuneration for the
forthcoming year and for subsequent years, as well as information on
remuneration paid to directors for the financial year ended
31 December 2017. The report has been prepared in accordance with the
Companies Act 2006, the Large and Medium-sized Companies and Groups (Accounts
and Reports) (Amendment) Regulations 2013 (together the Act) and the UK
Corporate Governance Code (the Code).
In accordance with the Act this report comprises a Policy Report and an Annual
Report on Remuneration. The Remuneration Policy was approved by shareholders
at the 2017 AGM with 95.8% voting for the new Policy. The Annual Report on
Remuneration will be subject to an advisory vote at the 2018 AGM. The parts of
the report which have been audited have been highlighted.
Remuneration Policy Report (the Policy Report)
This part of the Directors' Remuneration Report sets out the Remuneration
Policy for the Company and has been prepared in accordance with the Act.
The Policy was developed in line with Rightmove's approach, that our executive
directors should be rewarded with demonstrably lower than market base salaries
and benefits and higher than market equity rewards subject to the achievement
of challenging performance targets. This approach accords with the views of
our major shareholders and with 'best practice' principles set out in the
Code.
The key principles of the Committee's policy are that executive remuneration
should:
· allow the Company to attract and retain talented individuals who are
critical to the success of the business;
· be simple to explain, understand and administer;
· be regarded as fair by both other employees and shareholders;
· be below market levels for base salary with minimal benefits (which
are made available on the same basis to all Rightmove employees) and above
market levels of variable pay potential;
· provide directors with the opportunity to receive a share in the
future growth and development of the Group;
· align the interests of the executive directors with the interests of
shareholders and reflect the dynamic, performance-driven culture of the Group;
· principally reward individuals for the overall success of the
business, measuring and incentivising directors against key short-term and
medium to long-term goals;
· not enable executive directors to gain significantly from short-term
successes, which subsequently prove not to be consistent with growing the
overall value of the business. Hence the majority of any bonus payable in
relation to short-term strategic goals in relation to the Deferred Share Bonus
Plan is required to be taken in the form of shares in the Company which are
deferred for a further two years after the bonus target has been achieved; and
· normally be reviewed against the market every three years, with
intervening pay reviews for executive directors directly linked to the
policies applied to all employees, specifically with regard to cost of living
rises in base salary and changes in benefits.
The following table provides an overview of the Committee's Remuneration
Policy, which has been designed to reflect the principles described above:
Remuneration Policy
Element of remuneration Purpose and link to strategy Operation Maximum opportunity Performance criteria
Salary To provide a base salary which will attract and retain high calibre executives Base salaries are normally reviewed annually. The timing of any change is at Directors' current salaries are set out on page 79. The Committee considers both individual and Group performance in a broad
to execute the Group's business strategy. the Committee's discretion and will usually be effective from 1 January.
context when determining base salary increases.
When considering the executive's eligibility for a salary increase, the
Committee considers the following points: These salary levels will be eligible for increases during the period that the
Remuneration Policy operates from the effective date.
· size and responsibilities of the role;
During this time, salaries may be increased each year (in percentage of salary
· individual and Group performance; terms) in line with those of the wider workforce and will be capped at the
average workforce increase plus 3%, subject to the Committee's consideration
· increases awarded to the wider workforce; and of the overall salary budget, individual and Group performance and factors in
the wider economy including inflation.
· broader economic and inflationary conditions.
Increases beyond those linked to the workforce (in percentage of salary terms)
will only be awarded where there is a change of incumbent, in responsibility,
experience or a significant increase in the scale of the role and/or size,
Executive directors' remuneration is benchmarked against external market data value and/or complexity of the Group.
periodically (generally every three years). Relevant market comparators are
selected for comparison, which include other companies of a similar size and
complexity. The Committee considers benchmark data, alongside a broad review
of the individual's skills and experience, performance and internal
relativities.
Benefits To provide simple, cost-effective, employee benefits which are the same as The executive directors are enrolled in the Group's private medical insurance The value of benefits may vary from year to year depending on the cost to the Not applicable
those offered to the wider workforce. scheme and receive life assurance cover equal to four times base salary. Company from third party providers.
Additionally, all executive directors are members of the Group's medical cash
plan.
Executive directors will be entitled to receive new benefits on the same terms
as those introduced for the whole workforce.
Pension To provide a The Group operates a stakeholder pension plan for employees under which the 6% of base salary Not applicable
employer contributes 6% of base salary subject to the employee contributing a
basic, cost-effective, long-term retirement benefit. minimum of 3% of base salary. The Company does not contribute to any personal
pension arrangements.
The Company may introduce a cash alternative to a pension contribution where
this would be more tax efficient for the individual.
Whilst executives are not obliged to join, the Company operates a pension
salary exchange arrangement whereby executives can exchange part of their
salary for Company paid pension contributions. Where executives exchange
salary and this reduces the Company's National Insurance Contributions the
Company credits the full saving to the executive's pension.
Annual bonus including Deferred Share Bonus Plan (DSP) To incentivise and recognise execution of the business strategy on an annual The annual bonus comprises a cash award (40% of any bonus earned) and a DSP Maximum (% salary): The bonus is determined by and based on performance against a range of key
basis. award (60% of any bonus earned). A greater proportion of the annual bonus may
performance indicators which will be selected and weighted to support delivery
be deferred in future years at the Committee's discretion. 125% of base salary of the business strategy.
Deferred shares will vest after two years and be potentially forfeitable The primary bonus metric will be profit-based (e.g. underlying operating
Rewards the achievement of annual financial and operational objectives. during that period.
profit) with targets set in relation to a carefully considered business plan
and requiring significant out-performance of that plan to trigger maximum
Payments under the annual bonus plan may be subject to clawback in the event
payments.
of a material misstatement of the Group's financial results or misconduct.
A minority of bonus will also be earned based on pre-set targets drawn from
the Group's other key performance indicators relating to underlying drivers of
long-term revenue growth.
Details of the performance measures used for the current year and the targets
set for the year under review and performance against them is provided on
pages 80 and 86 to 87.
25% of the awards vest for achieving the threshold performance target. Bonus
is earned on a linear basis from threshold to maximum performance levels.
Performance Share Plan (PSP) To incentivise and reward executives for the achievement of superior returns The PSP was established in 2011 and permits annual awards of nil cost options, Maximum (% salary): 200% of base salary Awards vest based on three-year performance against challenging financial
to shareholders over a three-year period, and to retain key individuals and contingent shares and forfeitable shares which vest after three years subject
targets for EPS and relative TSR performance.
align interests with shareholders. to continued service and the achievement of challenging performance
conditions.
Financial targets will determine vesting in relation to at least half of an
award.
25% of the awards vest for achieving the threshold performance target. Awards
The Committee has discretion to introduce a two-year post-vesting holding vest on a linear basis from threshold to maximum performance levels.
period for future executive appointments to the Board.
The performance period for financial targets and relative TSR targets is three
financial years, starting with the year in which the award is granted.
A dividend equivalent provision operates enabling dividends to be paid (in
cash or shares) on shares at the time of vesting.
PSP awards may be subject to clawback in the event of a material misstatement
of the Group's financial results or misconduct.
All-employee Sharesave Plan Provides all employees with the opportunity to become owners in the Company on Executive directors are entitled to participate on the same terms as all other Participation limits are set by HMRC from time to time. None
similar terms. employees in the Group's Sharesave Plan, which has standard terms.
Share Incentive Plan (SIP) To provide all employees the opportunity to own shares in the Company on equal Executive directors are entitled to participate in the SIP on the same terms Participation in the SIP is based on HMRC rules. Share awards are None
terms. as all other employees. The SIP has standard terms and currently only free discretionary and made within the SIP rules.
shares are offered. However, executive directors routinely forfeit their
entitlement to any free share awards.
The Committee may award free shares to employees, subject to the continued
strong Group performance. Share awards will typically be made annually in
January and will be modest in value, historically 50 shares per employee,
although this will differ with the market value of the shares.
Share ownership guidelines To provide alignment Executive directors are required to retain at least half of any share awards Shareholding guideline: 200% of base salary for all executive directors. Not applicable
vesting or exercised (after selling sufficient shares to meet the exercise
between the executive directors price and to pay any tax liabilities due) until they have met the shareholding
guideline.
and shareholders.
The Committee will regularly monitor progress towards the guideline.
Non-executive directors To provide a competitive fee which will attract and retain high calibre The fees for non-executive directors (including the Company Chairman) are Fees for the Chairman and non-executive directors were last reviewed in 2015 None
individuals and reflects their relevant skills and experience. reviewed periodically (generally every three years). and are set out on page 81.
The Committee will consider the Chairman's fee, whilst the non-executive
directors' fee is considered by the wider Board, excluding the
non-executives. Fee increases may take place if fee levels are considered to have become out
of line with the responsibilities and time commitments of individual roles.
Fee levels for each role are determined after considering the responsibility
of the role, the skills and knowledge required and the expected time Flexibility is retained to increase the above fee levels in the event that it
commitments. is necessary to recruit a new Chairman or non-executive director of an
appropriate calibre in future years.
Periodic benchmarking against relevant market comparators, reflecting the size
and complexity of the role, is used to provide context when setting fee
levels.
In exceptional circumstances, where the normal time commitment has been
substantially exceeded, an additional fee may be paid at the Board's
discretion.
Business expenses To reimburse directors for reasonable business expenses. Directors may claim reasonable business expenses within the terms of the Expenses vary from year to year according to each director's responsibilities, Not applicable
Group's expenses policy and be reimbursed on the same basis as all business activity and location.
employees. The Group may reimburse business expenses which are in future
classified as taxable benefits by HMRC.
Discretions maintained by the Committee in operating the incentive plans
The Committee will operate the annual bonus plan, PSP, Sharesave Plan and SIP
according to their respective rules and in accordance with the Listing Rules
and HMRC rules where relevant.
The Committee retains discretion, consistent with market practice, in a number
of regards to the operation and administration of these plans. These
discretions include, but are not limited to, the following:
· the selection of participants in the respective plan;
· the timing of grant of an award (if any) and payments;
· the size of an award and/or a payment (with limits as described in
the table above);
· the extent of vesting based on the achievement of performance targets
and applicable exercise periods where relevant;
· how to deal with a change of control (e.g. the timing of testing
performance targets) or restructuring of the Group;
· determination of a 'good'/'bad' leaver for incentive plan purposes
based on the rules of each plan and the appropriate treatment chosen including
the timing of the delivery of shares;
· adjustments (if any) required in certain circumstances (e.g. rights
issues, corporate restructuring events and special dividends); and
· the annual review of performance measures, targets and weightings for
the annual bonus plan and PSP from year to year.
The Committee also retains the ability to adjust the targets and/or set
different measures for the annual bonus plan and PSP if events occur (e.g. a
material divestment or acquisition) which cause it to determine that the
conditions are no longer appropriate and an amendment is required so that the
conditions achieve their original purpose and are not materially less
difficult to satisfy.
Any use of the above discretions would, where relevant, be detailed in the
Annual Report on Remuneration and if appropriate, the subject of prior
communication with the Company's major shareholders.
For the avoidance of doubt, all previous commitments or entitlements agreed
prior to the approval of this Policy or appointment to the Board will be
permitted to payout on their original terms or in line with the Policy in
force at the time they were agreed.
Selection of performance measures and how targets are set The performance
metrics that are used for annual bonus and long-term incentive plans are a
subset of the Group's key performance indicators.
For the annual bonus, underlying operating profit is the primary performance
metric used as it is aligned to the Group's strategy of delivering profitable
growth and is a key financial performance indicator used within the business.
Consistent with previous years, operating profit is measured on an underlying
basis, to exclude any volatility in relation to the Company's share price in
connection with the IFRS 2 valuation and National Insurance charge on
share-based incentives granted. The underlying operating profit target is set
on a sliding scale based around the business plan for the year, with 25%
payable for threshold performance.
The annual bonus also considers performance against other operational metrics,
including a traffic market share target, growth in Other revenue and an
employee engagement target, for a minority of the bonus, with a sliding scale
used to determine performance against each measure.
Market share is a measure of the size and engagement of our audience and the
value which Rightmove brings to our customers and therefore a challenging
target to increase Rightmove's share of this audience is considered
appropriate by the Committee.
The Other revenue target measures growth in revenue from businesses other than
Agency and New Homes. Since some of these businesses will be at an early stage
of development, we consider growth in revenue rather than in operating profit
to be the appropriate measure and note that this element of the bonus is only
a small proportion of the total bonus opportunity.
For the PSP, awards are subject to a combination of underlying basic earnings
per share (EPS) and relative TSR performance conditions. EPS is considered the
most appropriate financial metric for Rightmove at this stage in its
development (since it is the measure of profitability that is most closely
aligned with shareholders' interests and monitored on an ongoing basis within
the business). The Policy also recognises that relative TSR should also be a
performance measure in order for there to be a clear alignment of executive
directors' and shareholder interests. EPS targets are set based on sliding
scales that take account of internal financial planning and external analyst
forecasts. Only 25% of the EPS element will payout for threshold performance
levels, with the maximum award requiring substantial out-performance. For TSR,
the range of targets measure how successful the Company is in out-performing
the FTSE 350 Index with 25% of this part of the award vesting at the threshold
performance level, through to full vesting for 25% out-performance of the
Index over the three-year performance period. For historic PSP awards,
performance against the FTSE 250 Index was the selected measure, however, the
Company has resided in the top quartile of the FTSE 250 for some time and the
wider index is now considered more appropriate for comparison purposes.
Performance targets do not apply to Sharesave or SIP awards since these awards
are structured to encourage employees to become share-owners and to maintain
tax-favoured status the awards must operate on a consistent basis for all
employees.
The Company does not at the present time take account of the ratio of CEO to
employee pay but will keep this under review as market and best practice
develops and as regulations evolve.
How the views of employees are taken into account
The Company has not to date felt it necessary to consult directly with
employees on executive remuneration matters. However, the Committee is kept
aware of pay and employment conditions within the wider workforce when setting
executive directors' remuneration Policy.
Remuneration Policy for executive directors compared to other employees
The Committee will consider the proposed salary budget for the whole Group
when it is deciding on salary increases for executive directors specifically.
In line with the Company's strategy to keep remuneration simple and
consistent, benefits and pension arrangements provided to executive directors
are the same as those offered to all Group employees.
The extent to which annual bonuses are offered varies by level of employee
within the Group, with the quantum and performance metrics used determined by
the nature of the role and responsibilities and market rates at that level.
Long-term incentive awards such as the DSP, are only offered to senior
management as those awards are more heavily weighted towards
performance-related pay and have a stronger visibility on the value created
for shareholders and the reward for participants.
Shareholders' views
The Committee considers it vitally important to maintain open and transparent
communication with the Company's shareholders. The Committee consulted major
shareholders representing over 50% of the Company's share ownership on
proposed changes and continued suitability of the Remuneration Policy. The
shareholders who were consulted were overwhelmingly supportive of the Policy
proposals and commented constructively in relation to several areas, including
future rises in basic salary and post-vesting holding periods for long-term
incentives. Shareholder feedback was considered by the Committee and
contributed to the development of the overall Remuneration Policy.
Most recently, in late 2017, the Committee engaged with shareholders regarding
the salary increases awarded to the executive directors in 2018.
Reward scenarios
The Company's Remuneration Policy (as previously outlined) is illustrated
below using three different performance scenarios: minimum, on-target and
maximum:
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(http://www.rns-pdf.londonstockexchange.com/rns/7131F_1-2018-2-22.pdf)
Assumptions:
1. Minimum = fixed pay only (salary + benefits + pension).
2. On-target = 55% payable of the 2018 annual bonus and 62.5% vesting of
the 2018 PSP awards being the midpoint between threshold vesting of 25% and
maximum vesting of 100%.
3. Maximum = 100% payable of the 2018 annual bonus and 100% vesting of the
2018 PSP awards.
Base salary is as set at 1 January 2018. The value of taxable benefits is
based on the cost of supplying those benefits (using the cost as disclosed on
page 85) for the year ended 31 December 2017. The executive directors have
elected not to participate in the Company's pension arrangements.
The executive directors can participate in the Sharesave Plan and SIP on the
same basis as other employees. The value that may be received under these
schemes is subject to tax approved limits. For simplicity, the value that may
be received from participating in these schemes has been excluded from the
above charts.
As required by the regulations no assumption is made as to future share price
growth for reward elements (deferred bonus and long-term incentives) that are
delivered in shares.
Amounts have been rounded to the nearest £1,000.
Recruitment and promotion policy
The Committee proposes an executive director's remuneration package for new
appointments in line with the principles outlined in the table below:
Element of remuneration Policy
Base salary Base salary levels will be set based on the roles and responsibilities of the
individual together with their relevant skills and experience, taking into
account the market rates for companies of comparable size and complexity and
internal Company relativities. In some circumstances (e.g. to reflect an
individual's limited experience at a PLC board level) it may be considered
appropriate to set initial salary levels below the perceived market
competitive rate. Phased increases, potentially above inflation, may then be
offered to achieve the desired market positioning over time, subject to an
individual's continued performance and development in the role.
Benefits Benefits as provided to current executive directors. Where necessary the
Committee may approve the payment of relocation expenses to facilitate
recruitment, and flexibility is retained for the Company to pay legal fees and
other costs incurred by the individual in relation to their appointment.
Pension Defined contributions or a cash alternative at the level provided to current
executive directors.
Annual bonus An annual bonus would operate in the same manner as outlined for the current
executive directors (as described above and in the Annual Report on
Remuneration), although it would be pro-rated to reflect the employment period
during the bonus year. Flexibility will be retained to set equivalent
objectives for any new executive joining part way through a year.
The maximum bonus potential would not exceed 125% of base salary.
It would be expected that the bonus for a new appointment would be assessed on
the same performance metrics as that for the current executive directors on an
ongoing basis. However, depending on the timing and nature of appointment it
may be necessary to set tailored performance criteria for their first bonus
plan.
Long-term incentives A new appointment will be eligible to receive PSP awards as outlined in the
Policy table.
Share awards may be granted shortly after an appointment (subject to the
Company not being in a closed period) and would be measured against the same
performance criteria as the current executives. However, any award granted
outside the normal award and performance cycle may be pro-rated at the
Committee's discretion. The Committee may introduce post-vesting holding
periods under the PSP for new executives if it considers this an appropriate
commitment in conjunction with the shareholding guidelines.
The ongoing maximum award would not exceed 200% of base salary.
For an internal hire, existing awards would continue over their original
vesting period and remain subject to their terms as at the date of grant.
The new appointment would be eligible to participate in the Sharesave Plan and
the SIP under the same terms as all other employees.
Buy-out awards To facilitate an external recruitment, it may be necessary to buy-out
remuneration which would be forfeited on leaving their previous employer. When
determining the quantum and structure of any buy-out awards the Committee
will, as a minimum, take into account the following factors:
· the form of remuneration (cash or shares);
· timing of expected payment/vesting; and
· expected value (i.e. taking into account the likelihood of
achieving the existing performance criteria).
Buy-out awards, if used, will be granted using the Company's existing share
plans to the extent possible, although awards may also be granted outside of
these schemes if necessary and as permitted under the Listing Rules.
Directors' service contracts and non-executive directors' terms of appointment
The Committee's policy on service agreements for executive directors is that
they should provide for 12 months' notice of termination by the Company and by
the executive. Any proposals for the early termination by the Company of the
service agreements of directors are considered by the Committee.
The service agreements for the executive directors allow for lawful
termination of employment by making a payment in lieu of notice or by making
phased payments over any remaining unexpired period of notice. The phased
payments may be reduced if, and to the extent that, the executive finds an
alternative remunerated position.
In addition, any statutory entitlements or sums to settle or compromise claims
in connection with the termination would be paid as necessary. The Company may
also provide a contribution toward reasonable legal fees or outplacement
services.
Peter Brooks-Johnson and Robyn Perriss are entitled to a payment in lieu of
notice, restricted to base salary and benefits. In good leaver circumstances a
bonus may be paid at the normal time subject to achievement of the performance
conditions and pro-rating for the period worked in the year.
For awards granted under the PSP 'good leaver' status may be determined, in
certain prescribed circumstances,
- More to follow, for following part double click ID:nRSW7131Fe sidered potential conflicts of interest for non-executive directors appointed to other boards;
· reviewed and considered actions to address the Group's gender pay gap; and
· conducted an annual review of its terms of reference.
Board induction and training
All new non-executive directors joining the Board undertake a tailored induction including meetings with key members of the
management team. Directors are also encouraged to spend a day on the road with a sales director meeting our customers.
New directors receive a comprehensive induction pack of corporate information and a briefing from the Company Secretary
covering corporate governance, Group policies and relevant regulations.
Individual Board members have access to training and can seek advice from independent professional advisers, at the Group's
expense, where specific expertise or training is required in furtherance of their duties.
Board succession and independence
At the end of 2016, the Committee confirmed the candidate profile identified through the Board Strategy review process and
initiated the search for a non-executive director with suitable skills and experience to replace Ashley Martin, when he
retires from the Board and as Audit Committee Chairman in May 2018. Following an external search, facilitated by Korn
Ferry, the Committee recommended the appointment of Andrew Findlay as an experienced Finance Director with suitable
financial skills and experience to Chair the Audit Committee.
With due consideration to the conclusions of the Board Strategy Review (externally facilitated by Korn Ferry in 2015), the
current Board composition and the Group's strategic plan, the Committee agreed that a director with a broader media
industry background would benefit the business. Following a process including Korn Ferry, the Board recruited and then
agreed to appoint Lorna Tilbian as an independent non-executive director, following her retirement from Numis Corporation
PLC (Numis) in December 2017.
As Numis is Rightmove's joint corporate broker together with UBS, the Board is aware that there may be a perception that a
material relationship could exist or continue to exist that might impair Lorna's independence. Therefore, Rightmove not
only conducted a rigorous review to evaluate Lorna's independence, as it does for every director, but the Board also sought
independent legal advice to ensure compliance with Code requirements. The Committee concluded that no material relationship
existed with Numis over the past three years, no material ongoing relationship exists and that Lorna is independent in
character and judgment. In addition to Lorna's media sector experience, her capital markets experience will be a great
asset to Rightmove and the Board.
The Board considered the primary tests under the Code: whether there is a material financial relationship between Numis and
Rightmove and whether that relationship would influence Lorna's judgement. Numis Securities receives a standard commission
from Rightmove for the share buyback programme and there is no retainer or special fees agreement in relation to brokerage
or research; the commission payments of c£100,000 per annum are immaterial to Rightmove. Lorna retired from the Numis Board
in September 2017. The Board carefully considered Lorna's prior dealings with the Rightmove management team, which were
meetings in the ordinary course of business with our former Chief Executive Officer. The Board therefore determined that
Lorna is independent in character and judgement and there are no other factors that are likely to impair her judgement or
prevent her from fulfilling her duties and responsibilities as a non-executive director effectively.
Board effectiveness and evaluation
The Board is committed to undertaking annual reviews of its own performance and also the performance of its Committees and
individual directors.
The Board again completed an internal self-assessment during 2017. Directors were invited to provide feedback via the
Company Secretary on Board and Committee performance and answer key questions relating to the Board's strengths,
improvements during the year and which business risks and development opportunities should receive more focus. The whole
Board discussed the feedback at the Committee meeting in December 2017 and concluded that the Board and its Committees
continue to operate effectively with an open and effective Board dynamic resulting in effective challenge and collaboration
between non-executive and executive directors. The Board also agreed initiatives to further improve board effectiveness
including a greater variety of business presentations from senior management covering a wide range of company business
operations.
An externally facilitated review of the performance of the Board and its Committees will be conducted in 2018.
GOVERNANCE - Directors' report
The directors submit their report together with the audited financial statements for the Company and its subsidiary
companies (the Group) for the year ended 31 December 2017.
Pages 56 to 59, comprise the Directors' Report, which has been drawn up and presented in accordance with English company
law and the liabilities of the directors in connection with the report shall be subject to the limitations and restrictions
provided by such law.
Rightmove plc (the Company) is incorporated as a public limited company registered in England number 6426485 with a
registered office at Turnberry House, 30 Caldecotte Lake Drive, Caldecotte, Milton Keynes MK7 8LE.
Strategic Report
The Strategic Report can be found on pages 1 to 32. This report sets out the development and performance of the Group's
business during the financial year, the position of the Group at the end of the year and a description of the principal
risks and uncertainties facing the Group.
Dividend
An interim dividend of 22.0p (2016: 19.0p) per ordinary share was paid in respect of the half year period on 3 November
2017, to shareholders on the register of members at the close of business on 6 October 2017. The directors are recommending
a final dividend for the year of 36.0p (2016: 32.0p) per ordinary share, which together with the interim dividend, makes a
total for the year of 58.0p (2016: 51.0p), amounting to £32,758,000 (2016: £29,696,000). Subject to shareholders' approval
at the Annual General Meeting (AGM) on 4 May 2018, the final dividend will be paid on 1 June 2018 to shareholders on the
register of members at the close of business on 4 May 2018.
Share capital
The shares in issue, including 1,892,456 shares held in treasury (2016: 2,271,725) at the year-end amounted to 93,266,207
(2016: 95,490,266) ordinary shares of £0.01, with a nominal value of £932,662 (2016: £954,902). The holders of ordinary
shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at general
meetings of the Company. Movements in the Company's share capital and reserves in the year are shown in Note 22 and Note 23
to the financial statements. Information on the Group's share-based incentive schemes is set out in Note 24 to the
financial statements. Details of the share-based incentive schemes for directors are set out in the Directors' Remuneration
Report on pages 61 to 94.
Share buyback
The Company's share buyback programme continued during 2017. Of the 10% authority given by shareholders at the 2017 AGM, a
total of 2,224,059 (2016: 2,251,711) ordinary shares of £0.01 each were purchased in the year to 31 December 2017, being
2.4% (2016: 2.4%) of the shares in issue (excluding shares held in treasury) at the time the authority was granted. The
average price paid per share was £40.83 (2016: £39.12) with a total consideration paid (excluding all costs) of £90,809,000
(2016: £88,083,000). Since the introduction of the new parent company in January 2008, a total of 38,639,201 shares had
been purchased as at 31 December 2017 of which 1,892,456 are held in treasury with the remainder having been cancelled. A
resolution seeking to renew this authority will be put to shareholders at the AGM on 4 May 2018.
Shares held in trust
As at 31 December 2017, 263,767 (2016: 343,275) ordinary shares of £0.01 each in the Company were held by The Rightmove
Employees' Share Trust (EBT) for the benefit of Group employees. These shares had a nominal value at 31 December 2017 of
£2,638 (2016: £3,433) and a market value of £11,870,000 (2016: £13,398,000). The shares held by the EBT may be used to
satisfy share-based incentives for the Group's employee share plans. During the year, 77,008 (2016: 50,082) shares were
transferred to Group employees following the exercise of share-based incentives. Additionally, 17,500 shares were purchased
by the EBT for transfer to the Rightmove Share Incentive Plan Trust (SIP). The terms of the EBT provide that dividends
payable on the shares held by the EBT are waived.
As at 31 December 2017, 67,700 (2016: 50,150) ordinary shares of £0.01 each in the Company were held by the SIP for the
benefit of Group employees. These shares had a nominal value at 31 December 2017 of £677 (2016: £502) and a market value of
£3,047,000 (2016: £1,957,000). The shares held by the SIP are awarded as free shares to eligible employees in January of
each year and are held in trust for a period of three years before an employee is entitled to take ownership of the shares.
During the year, 2,450 (2016: 600) shares were released early from the SIP in relation to good leavers and retirees under
the SIP rules.
Substantial shareholdings
As at the date of this report, the following beneficial interests in 3% or more of the Company's issued ordinary share
capital (excluding shares held in treasury) on behalf of the organisations shown in the table below, had been notified to
the Company pursuant to Rule 5.1 of the Disclosure Guidance and Transparency Rules. The information provided below was
correct as at the date of notification, where indicated this was not in the 2017 financial year. It should be noted that
these holdings are likely to have changed since notified to the Company. However, notification of any change is not
required until the next applicable threshold is crossed.
Shareholder Nature of holding Total voting rights % of total voting rights(1)
BlackRock Inc (3) IndirectContracts for difference (CFD)Stock Lending 5,068,2431,668,0801,025,280 5.57%1.83%1.13%
Marathon Asset Management LLP(2) Indirect 5,930,755 6.52%
Baillie Gifford & Co(2) Indirect 5,873,614 6.45%
Caledonia (Private) Investments Pty Limited(3) Direct 4,561,397 5.01%
Generation Investment Management LLP Indirect 4,583,127 5.04%
Axa Investment Managers SA IndirectContracts for difference (CFD) 4,441,37837,662 4.88%0.04%
Standard Life Investments IndirectStock Lending 4,356,376362,089 4.79%0.40%
UBS Investment BankUBS Group AG(3) IndirectEquity SwapsStock Lending 2,572,7372,916,5191,021 2.83%3.21%0.00%
(1) The above percentages are based upon the voting rights share capital (being the shares in issue less shares held in
treasury) of 90,995,551 as at 22 February 2018.
(2) Date of notification preceded the 2017 financial year.
(3) Date of notification followed the 2017 financial year end.
Directors
The directors of the Company as at the date of this report are named on pages 33 to 36 together with their profiles.
The Articles of Association of the Company require directors to submit themselves for re-appointment where they have been a
director at each of the preceding two AGMs and were not appointed or re-appointed by the Company at, or since, either such
meeting. Following the provisions of the UK Corporate Governance Code, all directors who have served during the year and
remain a director as at 31 December 2017 will retire and offer themselves for re-election at the forthcoming AGM with the
exception of Ashley Martin, who has notified the Company of his retirement from the Board as at this date.
Andrew Findlay and Lorna Tilbian will offer themselves for election, this being the directors' first AGM following their
appointments to the Board as non-executive directors on 1 June 2017 and 1 February 2018 respectively.
The Board is satisfied that the directors retiring and standing for re-election are qualified for re-appointment by virtue
of their skills, experience and contribution to the Board. The executive directors have service contracts with the Company
which can be terminated on 12 months' notice. The appointments for the non-executive directors can be terminated on three
months' notice.
The interests of the directors in the share capital of the Company as at the date of this report, the directors' total
remuneration for the year and details of their service contracts and Letters of Appointment are set out in the Directors'
Remuneration Report on pages 61 to 94. At the date of this report, the executive directors were deemed to have a
non-beneficial interest in 245,441 ordinary shares of £0.01 each held by the EBT.
Research and development
The Group undertakes research and development activity in order to develop new products and to continually improve the
existing property platforms. Further details are disclosed in Note 2 to the financial statements on page 109.
Political donations
During the year the Group did not make any donations to any political party or other political organisation and did not
incur any political expenditure within the meanings of sections 362 to 379 of the Companies Act 2006.
Annual General Meeting
The AGM of the Company will be held at the offices of UBS Limited at 5 Broadgate, London, EC2M 2QS on 4 May 2018 at 10am.
The Notice of Annual General Meeting will be published in March 2017.
The resolutions being proposed at the 2018 AGM are general in nature, including the renewal for a further year of the
limited authority of the directors to allot the unissued share capital of the Company and to issue shares for cash other
than to existing shareholders (in line with the Pre-Emption Group's Statement of Principles). A resolution will also be
proposed to renew the directors' authority to purchase a proportion of the Company's own shares. The Company will again
seek shareholder approval to hold general meetings (other than AGMs) at 14 days' notice. Resolutions will be proposed to
renew these authorities, which would otherwise expire at the 2018 AGM.
Auditor
KPMG LLP has confirmed its willingness to continue in office as auditor of the Group. In accordance with section 489 of the
Companies Act 2006, separate resolutions for the re-appointment of KPMG LLP as auditor of the Group and for the Audit
Committee to determine the auditor's remuneration will be proposed at the 2018 AGM.
Audit information
So far as the directors in office at the date of signing of the report are aware, there is no relevant audit information of
which the auditor is unaware and each such director has taken all reasonable steps to make themselves aware of any relevant
audit information and to establish that the auditor is aware of that information.
Greenhouse gas emissions
Our report of greenhouse gas emissions in line with UK mandatory reporting regulation is provided in the Corporate
Responsibility section of the Strategic Report on pages 31 to 32.
Fair, balanced and understandable
The Board has concluded that the 2017 Annual Report is fair, balanced and understandable and provides the necessary
information for shareholders and other readers of the accounts to assess the Group's position and performance, business
model and strategy.
Responsibility statement of the directors in respect of the annual financial report
We confirm that to the best of our knowledge:
· the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair
view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the
consolidation taken as a whole; and
· the management report required by DTR 4.1.8R (contained in the Strategic Report and the Directors' Report) includes a
fair review of the development and performance of the business and the position of the Company and the undertakings
included in the Group taken as a whole, together with a description of the principal risks and uncertainties they face.
We consider the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group's position and performance, business model and strategy.
Signed on behalf of the Board:
Peter Brooks-Johnson Robyn Perriss
Chief Executive Officer Finance Director
23 February 2018
GOVERNANCE- Statement of directors' responsibilities
The directors are responsible for preparing the Annual Report and the Group and parent Company financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare Group and parent Company financial statements for each financial year. Under
that law they are required to prepare the Group financial statements in accordance with International Financial Reporting
Standards as adopted by the European Union (IFRSs as adopted by the EU) and applicable law and have elected to prepare the
parent company financial statements on the same basis.
Under company law the directors must not approve the financial statements unless they are satisfied that they give a true
and fair view of the state of affairs of the Group and parent Company and of their profit or loss for that period. In
preparing each of the Group and parent Company financial statements, the directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and estimates that are reasonable, relevant and reliable;
· state whether they have been prepared in accordance with IFRSs as adopted by the EU;
· assess the Group and parent Company's ability to continue as a going concern disclosing, as applicable, matters
related to going concern; and
· use the going concern basis of accounting unless they either intend to liquidate the Group or the parent Company or to
cease operations, or have no realistic alternative but to do so.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent
Company's transactions and disclose with reasonable accuracy at any time the financial position of the parent Company and
enable them to ensure that its financial statements comply with the Companies Act 2006. They are responsible for such
internal control as they determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the directors are also responsible for preparing a Strategic Report, Directors'
Report, Directors' Remuneration Report and Corporate Governance Statement that complies with that law and those
regulations.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the
Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
GOVERNANCE - Directors' Remuneration Report
Annual statement by the Chairman of the Remuneration Committee
Dear Shareholder
I am pleased to present our Directors' Remuneration Report for Rightmove (the Company) together with its subsidiary
companies (the Group) for the year ended 31 December 2017.
The report is divided into two sections, the Remuneration Policy Report and the Annual Report on Remuneration, both of
which are summarised in 'Remuneration at a glance' on pages 63 to 64. We do not propose any changes to the Directors'
Remuneration Policy, which received overwhelming support from our shareholders at our 2017 AGM.
Performance and reward
The Committee considers that it is vital for the executive directors' remuneration to fairly reflect the overall
performance of the Group. As described in the Strategic Report, Rightmove's 2017 results again show healthy growth in
revenue and underlying operating profit(1), demonstrating the strength of the Rightmove business model and the
effectiveness of our management team.
In accordance with the Remuneration Policy, the Committee has reviewed achievement against the bonus plan objectives for
2017 and recommended an annual bonus payment of 60%. This reflects the growth in revenue and underlying operating profit(1)
of 11% and continued employee engagement with 90% of Rightmovers(2) thinking that Rightmove is a great place to work. Our
audience growth, measured on a time basis in absolute terms, did not outstrip the total of Rightmove's closest competitors
and other revenue from non-core businesses was not sufficiently strong to merit a bonus payout. Achievement against these
performance targets is set out on pages 86 to 87 and reflected in the lower bonus payout for 2017, relative to 2016.
Overall, performance for the year outperformed the baseline business plan and the Committee was therefore satisfied that it
was appropriate to pay 60% of the maximum bonus.
The Group's longer-term performance reflects strong organic growth over the last three financial years. The 2015
Performance Share Plan awards (measuring performance from 1 January 2015 to
31 December 2017) will vest in full in March 2018 as a result of delivering underlying basic EPS(3) growth of 63% and TSR
growth of 109% over the performance period, which exceeded the respective growth targets set of 60% and FTSE 250 Index +25%
over the three-year period. The Committee tested the performance conditions, which were set at the beginning of the
performance period, and determined that the Group had outperformed the maximum targets and was therefore satisfied that the
awards should vest in full.
Chief Executive Officer retirement
Following the AGM on 9 May 2017, Nick McKittrick retired as Chief Executive Officer (CEO) and as a director of Rightmove.
He was succeeded by Peter Brooks-Johnson, former Chief Operating Officer and a Board director since 2011, who has had a
successful year in his new role as CEO and delivered a strong set of financial results in 2017. A summary of the
remuneration arrangements relating to Nick's retirement and Peter's promotion were announced in May 2017 and are detailed
on pages 88 to 90 of the Annual Report on Remuneration.
Remuneration Policy
In 2017, following consultation with Rightmove's major investors, the Committee proposed the Remuneration Policy, set out
in the Remuneration Policy Report on pages 65 to 77. The Policy was approved with overwhelming support from our
shareholders.
The Policy addresses the significant shortfall in executive directors' base salaries compared with the Committee's
assessment of an appropriate salary for each role and the performance of the current directors. Increases of 3% in excess
of the average workforce rise have been awarded to the CEO and Finance Director from January 2018, recognising the size and
complexity of each role and the present incumbents' experience and capabilities.
The Committee's objective is to retain a remuneration framework that rewards and incentivises our management team to
deliver Rightmove's longer-term strategy with a clear emphasis on performance-related pay to reflect the culture of the
Group. The Remuneration Policy continues to provide below market levels of fixed pay with above market levels of variable
pay opportunity, subject to the achievement of challenging performance measures linked to the Group KPIs. Variable pay is
geared towards long-term sustainable performance, with a high level of annual bonus deferral into shares, long-term
incentive awards and appropriate share ownership guidelines.
We are committed to maintaining an open and transparent dialogue with shareholders. We have valued the engagement with and
support of our shareholders and we remain focused on disclosing clearly how much our executive directors earn and how this
links to the Group's performance.
Peter Williams
Chairman of the Remuneration Committee
(1) Before share-based payments and NI on share-based incentives.
(2) Percentage of employees responding to the annual employee survey.
(3) Before share-based payments and NI on share-based incentives with no related adjustment for tax.
Remuneration at a glance
2017 Financial Performance Revenue Underlying operating profit (1)+11% Returns to shareholders£140.4m
+11%
Long-term incentive plan - outcome against maximum targets: 100%
Underlying basic EPS(2) Total Shareholder Return
http://www.rns-pdf.londonstockexchange.com/rns/7131F_1-2018-2-22.pdf 75% of 2015 Performance Share Plan (PSP) awards vest on achievement of three-year EPS growth of 63%. http://www.rns-pdf.londonstockexchange.com/rns/7131F_1-2018-2-22.pdfSource: Thomson Reuters25% of 2015 PSP awards vest in line with upper quartile relative TSR performance.
Annual bonus plan - outcome against maximum targets: 60%
Underlying operating profit (1) Growth in absolute time on site in minutes relative to our nearest competitors Growth in Other revenue(3) Employee survey respondents who think 'Rightmove is a great place to work'
Threshold target: £175.2mActual: £184.4m Threshold target: same absolute growth in time onsite in minutes as our nearest competitors Actual: Lower growth in time in minutes year on year than our nearest competitors Threshold target: 16% growth Actual: 4% growth Threshold target: 90%
Actual: 90%
Pay and performance for 2017
Nick McKittrick Peter Brooks-Johnson Robyn Perriss
Salary £159,120 £420,103 £320,000
Benefits £666 £1,852 £1,406
Cash Bonus - £126,031 £96,000
Deferred Share Bonus - £189,046 £144,000
Long-term incentives £1,063,657 £1,155,196 £925,763
Total remuneration £1,223,443 £1,892,228 £1,487,169
Shareholder alignment
Shareholding guidelines: Proportion of variable awards received in shares:85% of performance-related pay is awarded in Rightmove shares
200% of salary for all executive directors
Remuneration Policy key elements
Fixed pay below comparative market median and variable incentive opportunity above median
Base salaries executive directors receive inflationary adjustments to salaries capped at 3% above wider workforce increases
Pension contributions up to 6% of base salary in line with the wider workforce
Annual bonus maximum 125% of salary, with 40% cash and 60% deferred into Company shares for two years
Performance Share Plan awards granted at 200% of salary. No post-vesting holding period for current executive directors
Clawback applies to deferred annual bonus awards and Performance Share Plan awards
(1) Before share-based payments and NI on share-based incentives.
(2) Before share-based payments and NI on share-based incentives with no related adjustment for tax.
(3) Other revenue is all revenue excluding Agency and New Homes.
Remuneration Policy Report (unaudited)
Introduction
This report sets out the Company's Policy on directors' remuneration for the forthcoming year and for subsequent years, as
well as information on remuneration paid to directors for the financial year ended
31 December 2017. The report has been prepared in accordance with the Companies Act 2006, the Large and Medium-sized
Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 (together the Act) and the UK Corporate Governance
Code (the Code).
In accordance with the Act this report comprises a Policy Report and an Annual Report on Remuneration. The Remuneration
Policy was approved by shareholders at the 2017 AGM with 95.8% voting for the new Policy. The Annual Report on Remuneration
will be subject to an advisory vote at the 2018 AGM. The parts of the report which have been audited have been
highlighted.
Remuneration Policy Report (the Policy Report)
This part of the Directors' Remuneration Report sets out the Remuneration Policy for the Company and has been prepared in
accordance with the Act.
The Policy was developed in line with Rightmove's approach, that our executive directors should be rewarded with
demonstrably lower than market base salaries and benefits and higher than market equity rewards subject to the achievement
of challenging performance targets. This approach accords with the views of our major shareholders and with 'best practice'
principles set out in the Code.
The key principles of the Committee's policy are that executive remuneration should:
· allow the Company to attract and retain talented individuals who are critical to the success of the business;
· be simple to explain, understand and administer;
· be regarded as fair by both other employees and shareholders;
· be below market levels for base salary with minimal benefits (which are made available on the same basis to all
Rightmove employees) and above market levels of variable pay potential;
· provide directors with the opportunity to receive a share in the future growth and development of the Group;
· align the interests of the executive directors with the interests of shareholders and reflect the dynamic,
performance-driven culture of the Group;
· principally reward individuals for the overall success of the business, measuring and incentivising directors against
key short-term and medium to long-term goals;
· not enable executive directors to gain significantly from short-term successes, which subsequently prove not to be
consistent with growing the overall value of the business. Hence the majority of any bonus payable in relation to
short-term strategic goals in relation to the Deferred Share Bonus Plan is required to be taken in the form of shares in
the Company which are deferred for a further two years after the bonus target has been achieved; and
· normally be reviewed against the market every three years, with intervening pay reviews for executive directors
directly linked to the policies applied to all employees, specifically with regard to cost of living rises in base salary
and changes in benefits.
The following table provides an overview of the Committee's Remuneration Policy, which has been designed to reflect the
principles described above:
Remuneration Policy
Element of remuneration Purpose and link to strategy Operation Maximum opportunity Performance criteria
Salary To provide a base salary which will attract and retain high calibre executives to execute the Group's business strategy. Base salaries are normally reviewed annually. The timing of any change is at the Committee's discretion and will usually be effective from 1 January. Directors' current salaries are set out on page 79. These salary levels will be eligible for increases during the period that the Remuneration Policy operates from the effective date. During this time, salaries may be increased each year (in percentage of salary terms) in line with those of the wider workforce and will be capped at the average workforce increase plus 3%, subject to the Committee's consideration of the overall salary budget, individual and Group performance and factors in the wider economy including inflation. Increases beyond those linked to the workforce (in percentage of salary terms) will only be awarded where there is a change of incumbent, in responsibility, experience or a significant increase in the scale of the role and/or size, value and/or complexity of the Group. The Committee considers both individual and Group performance in a broad context when
When considering the executive's eligibility for a salary increase, the Committee considers the following points:· size and responsibilities of the role;· individual and Group performance;· increases awarded to the wider workforce; and· broader economic and inflationary conditions. Executive directors' remuneration is benchmarked against external market data periodically (generally every three years). Relevant market comparators are selected for comparison, which include other companies of a similar size and complexity. The Committee considers benchmark data, alongside a broad review of the individual's skills and experience, performance and internal relativities. determining base salary increases.
Benefits To provide simple, cost-effective, employee benefits which are the same as those offered to the wider workforce. The executive directors are enrolled in the Group's private medical insurance scheme and receive life assurance cover equal to four times base salary. Additionally, all executive directors are members of the Group's medical cash plan. Executive directors will be entitled to receive new benefits on the same terms as those introduced for the whole workforce. The value of benefits may vary from year to year depending on the cost to the Company from third party providers. Not applicable
Pension To provide abasic, cost-effective, long-term retirement benefit. The Group operates a stakeholder pension plan for employees under which the employer contributes 6% of base salary subject to the employee contributing a minimum of 3% of base salary. The Company does not contribute to any personal pension arrangements. The Company may introduce a cash alternative to a pension contribution where this would be more tax efficient for the individual. Whilst executives are not obliged to join, the Company operates a pension salary exchange arrangement whereby executives can exchange part of their salary for Company paid pension contributions. Where executives exchange salary and this reduces the Company's National Insurance Contributions the Company credits the full saving to the executive's pension. 6% of base salary Not applicable
Annual bonus including Deferred Share Bonus Plan (DSP) To incentivise and recognise execution of the business strategy on an annual basis. Rewards the achievement of annual financial and operational objectives. The annual bonus comprises a cash award (40% of any bonus earned) and a DSP award (60% of any bonus earned). A greater proportion of the annual bonus may be deferred in future years at the Committee's discretion.Deferred shares will vest after two years and be potentially forfeitable during that period. Payments under the annual bonus plan may be subject to clawback in the event of a material misstatement of the Group's financial results or misconduct. Maximum (% salary):125% of base salary The bonus is determined by and based on performance against a range of key
performance indicators which will be selected and weighted to support delivery of the
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