REG - Rightmove Plc - Final Results <Origin Href="QuoteRef">RMV.L</Origin> - Part 5
23/02/2018 07:11
- Part 5: For the preceding part double click ID:nRSW7131Fd
such as death, ill health, disability,
redundancy, transfer or sale of the employing company, or other circumstances
at the discretion of the Committee. If defined as a 'good leaver', awards will
remain subject to performance conditions, which will be measured over the
performance period from grant to the original vesting date, unless the
Committee determine to assess performance from grant to the date of cessation,
and which will be reduced pro-rata to reflect the proportion of the
performance period actually served. The Committee retains the discretion to
disapply time pro-rating in exceptional circumstances and to accelerate the
vesting of awards for 'good leavers' in the event of death.
For awards granted under the DSP, 'good leaver' status may be determined for
reasons of death, injury, disability, redundancy, transfer or sale of the
employing company or other circumstances at the discretion of the Committee.
If defined as a 'good leaver', awards will be retained and vest on the
original vesting date, save as above in the event of death, when the Committee
has the discretion to accelerate vesting.
Scott Forbes' appointment may be terminated by either party giving to the
other not less than three months' notice in writing. The Company may also
terminate by making a payment in lieu of notice. Scott Forbes is not
contractually entitled to any other benefits on termination of his contract.
The Letters of Appointment for the non-executive directors provide for a term
of up to two three-year periods and a possible further three-year term
(subject to re-election by shareholders and subject to the director remaining
independent). The appointments may be terminated with a notice period of three
months on either side and the Letters of Appointment set out the time
commitments required to meet the expectations of their roles.
Copies are available for inspection on request to the Company Secretary.
Further details of all directors' contracts and Letters of Appointment are
summarised below:
Date of appointment Date of contract/Letter of Appointment Notice (months)
Length of service at 23 February 2018
Executive directors
Peter Brooks-Johnson((1)) 10 January 2011 22 February 2011 12 7 years 1 month
Robyn Perriss((2)) 30 April 2013 1 May 2013 12 4 years 10 months
Non-executive directors
Scott Forbes (Chairman) ((3)) 13 July 2005 21 February 2006 3 12 years 7 months
Ashley Martin 11 June 2009 9 June 2009 3 8 years 8 months
Peter Williams 3 February 2014 3 February 2014 3 4 years 1 month
Rakhi Goss-Custard 28 July 2014 28 July 2014 3 3 years 7 months
Jacqueline de Rojas 30 December 2016 10 October 2016 3 1 year 2 months
Andrew Findlay 1 June 2017 11 May 2017 3 9 months
Lorna Tilbian 1 February 2018 19 January 2018 3 1 month
(1) Peter Brooks-Johnson joined the Group on 9 January 2006 and was appointed
to the Board on 10 January 2011. His service with the Group at the date of
this report is 12 years and 1 month.
(2) Robyn Perriss joined the Group on 1 July 2007 and was appointed to the
Board on 30 April 2013. Her service to the Group at the date of this report is
10 years and 8 months.
(3) The Chairman's letter of appointment was transferred from Rightmove Group
Limited to Rightmove plc with effect from 28 January 2008 on completion of a
Scheme of Arrangement.
External appointments
With the approval of the Board in each case, executive directors may accept
one external appointment as a non-executive director of another listed or
similar company and retain any fees received. Neither of the executive
directors currently hold any outside directorships.
Annual Report on Remuneration
Remuneration Committee role and membership
Terms of reference
The primary role of the Committee is to make recommendations to the Board as
to the Company's overall policy and framework for the remuneration of the
executive directors and the Chairman of the Board. The remuneration and terms
of appointment of the non-executive directors are determined by the Board as a
whole.
In accordance with the Code, the Committee also recommends the structure and
monitors the level of remuneration for the first layer of management below
Board level. The Committee is also aware of, and advises on, the employee
benefit structures throughout the Group and ensures that it is kept aware of
any potential business risks arising from those remuneration arrangements.
The Committee has formal terms of reference which are reviewed annually and
updated as required. These are available on the Company's website at
plc.rightmove.co.uk or on request from the Company Secretary.
Membership
The following independent non-executive directors were members of the
Committee during 2017:
Peter Williams (Chairman of the Committee)
Rakhi Goss-Custard
Jacqueline de Rojas (from 9 May 2017)
Colin Kemp (to 9 May 2017)
During the year the Committee met six times and attendance at the meetings is
shown in the Corporate Governance Report on page 43.
The quorum for meetings of the Committee is two members. The Committee will
meet at such times as may be necessary but will normally meet at least five
times a year. The Company Secretary acts as Secretary to the Committee.
Only members of the Committee have the right to attend Committee meetings. The
Chairman of the Committee has requested that the Chairman of the Board attend
the meetings except during discussions relating to his own remuneration. The
Chief Executive Officer may also be invited to meetings and the Committee
takes into consideration his recommendations regarding the remuneration of
executive colleagues and management below Board level. No executive director
is involved in
deciding their own remuneration.
External advisors
New Bridge Street (NBS), a trading name of Aon Hewitt (part of Aon plc), which
is a member of the Remuneration Consultants Group and has signed up to its
Code of Conduct, has been retained as the Committee's remuneration advisor
since 2011. The terms of engagement between the Company and NBS are available
from the Company Secretary on request.
The total fees paid to NBS in respect of services to the Committee during the
year were £31,000.
During 2017 NBS also provided services to the Company in connection with the
valuation of share-based incentives (as required by IFRS 2) and confirmed
that, in its view, these services did not present a conflict of interest with
the other services provided to the Committee. The Committee reviews its
relationship with external advisors on a regular basis and continues to
believe that there are no conflicts of interest.
What has the Committee done during the year?
The Committee met six times during the year to consider and, where
appropriate, approve key remuneration items including:
Pay and incentive plan reviews
· annual review and approval of executive directors' base salaries and
benefits;
· approval of remuneration arrangements for Nick McKittrick on his
retirement as Chief Executive Officer;
· approval of a salary increase and additional award under the
Rightmove Performance Share Plan (PSP) for Peter Brooks-Johnson on his
promotion to Chief Executive Officer;
· review of 2017 business performance against relevant performance
targets to determine annual bonus payouts and vesting of long-term incentives;
· review and approval of appropriate benchmarks and performance
measures for the annual performance-related bonus and 2018 PSP awards to
ensure measures are aligned with strategy and that targets are appropriately
stretching;
· approval of share awards granted in March 2017 under the Deferred
Share Bonus Plan (DSP) and the PSP; and
· ongoing monitoring of senior management remuneration.
Governance and strategy
· review and approval of the Directors' Remuneration Report;
· submitting the Remuneration Policy for executive directors for
shareholder approval at the 2017 AGM;
· review of the 2017 AGM voting and feedback from institutional
investors;
· evaluation of the Committee's performance during the year; and
· review of the Committee's terms of reference.
Application of Policy for the year ending 31 December 2018
Salaries
The executive directors' salaries for the 2018 financial year are set out in
the table below:
Salary Salary Workforce increase plus Change
1( )January 2018 31 December 2017
Executive directors
Peter Brooks-Johnson £472,268 £445,536((1)) 3% 6%
Robyn Perriss £339,200 £320,000 3% 6%
(1) On 9 May 2017, Nick McKittrick stepped down from the Board as Chief
Executive Officer and retired from Rightmove on 30 June 2017. No payment was
made in lieu of any unexpired period of notice. The Board approved the
promotion of Peter Brooks-Johnson to Chief Executive Officer and the Committee
approved an increase in his base salary from £373,136 to £445,536, in line
with his predecessor and our 2017 Remuneration Policy, with effect from 9 May
2017.
The 6% increase in base salaries for the executive directors represents an
increase of 3% above the average workforce rise of 3% for 2018, primarily to
recognise the scale and complexity of those roles and to address the
relatively low pay of these executives compared with market norms. The
salaries remain well below the market median for executives in comparable
companies.
Pension and other benefits
The Group operates a stakeholder pension plan for all employees under which
the employer contributes 6% of base salary, subject to the employee
contributing a minimum of 3% of base salary. Peter Brooks-Johnson and Robyn
Perriss elected not to participate in the pension plan during the year. The
Company does not contribute to any personal pension arrangements.
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, the executive directors are members of the Group's medical cash
plan.
Annual bonus
The annual bonus for the 2018 financial year will be consistent with the
policy detailed on pages 68 to 69 of the Remuneration Policy section of this
report in terms of maximum bonus opportunity, deferral and clawback
provisions. The mechanism through which the clawback can be implemented
(enabling both the recovery and withholding of incentive pay) enables the
Committee to (i) reduce the cash bonus earned in a subsequent year and/or
reduce outstanding DSP/PSP share awards (i.e. withholding provisions may be
used to effect a recovery) or (ii) for the Committee to require that a net of
tax balancing cash payment be made to the Company. The performance measures
have been selected to reflect a range of financial and strategic targets that
continue to support the key objectives of the Group.
The performance measures and weightings will be as follows:
Measure As a % of maximum bonus opportunity
Financial targets 65%
Underlying operating profit ((1))
Strategic targets 15%
Traffic market share((2)) 15%
Other revenue((3)) 5%
Employee engagement((4))
(1) Operating profit before share-based payments and NI on share-based
incentives.
(2) Measured on a time on site basis by reference to comScore.
(3) Revenue excluding Agency and New Homes.
(4) Based on the results of the annual employee survey.
In relation to the financial target a challenging sliding scale will operate
with 25% of the maximum bonus opportunity payable at the threshold underlying
operating profit target relative to the 2018 business plan through to 100%
becoming payable for significant outperformance relative to the plan. A
greater proportion of the award will be paid for exceeding threshold
performance.
The weighting of all performance measures are unchanged from 2017.
The targets themselves, as they relate to the 2018 financial year, are deemed
to be commercially sensitive. However, retrospective disclosure of the targets
and performance against them will be provided in next year's Annual Report on
Remuneration to the extent that they do not remain commercially sensitive at
that time.
Long-term incentives
The award levels under the PSP, approved in 2017, remain at 200% of base
salary for both executive directors.
Consistent with current market practice and previous years, awards to the
executive directors under the PSP in 2018 will be subject to a mixture of EPS
(75% of awards) and relative TSR (25% of the awards) performance conditions.
The 2018 targets are as follows:
EPS performance condition
The Group's EPS growth will be measured over the period of three financial
years (2018 to 2020). The EPS figure used will be equivalent to the Group's
basic underlying EPS (before share-based payments, National Insurance on
share-based incentives and no related adjustment for tax). With a view to
ensuring appropriately stretching but achievable targets are set in light of
market expectations for the Group, the following range of targets will apply
to the 2018 awards:
Underlying basic EPS growth % of award vesting
from 2018 to 2020((1)) (maximum 75%)
Less than 20% 0%
20% 18.75%
50% 75%
Between 20% and 50% Straight-line vesting
(1) The benchmark underlying basic EPS for the financial year 2017 from which
these targets will be measured is 163.3p.
As in prior years, the targets that are intended to operate for the 2018 PSP
awards were set to be appropriately demanding in light of the Group's internal
planning, external market expectations for future growth and the current
trading environment, the targets are considered to provide a realistic
incentive at the lower end of the performance range but require exceptional
performance to achieve full vesting. On this basis, the Committee is satisfied
that the range of targets are appropriately demanding, and no less challenging
than the range of targets set for the 2017 awards.
Relative TSR performance condition
The vesting schedule for the relative TSR element of executive directors' 2018
PSP awards is set out below. Relative TSR will be assessed against the FTSE
350 Index, reflecting the Company's size in terms of market capitalisation.
Performance will be measured over three financial years.
TSR performance of the Company relative to the FTSE 350 Index((1)) % of award vesting
(maximum 25%)
Less than the Index 0%
Equal to the Index 6.25%
25% higher than the Index 25%
Intermediate performance Straight-line vesting
(1) If the FTSE 350 Index's TSR was 50% over the three-year performance
period, then the Company's TSR would have to be at least 75% for all 25% of
the PSP shares to vest.
Chairman and non-executive directors' fees
The Chairman and non-executive directors' fees were last reviewed in a market
context in 2015 and increased to current levels. In line with our Policy they
are benchmarked and reviewed periodically, usually every three years. The next
review is scheduled for 2018 with any increase taking effect in 2019.
The basic non-executive fee is £50,000 with an additional £10,000 fee per
annum paid for the chairing of the Audit and Remuneration Committees and a
further £5,000 fee paid to the Senior Independent Director as detailed in the
table below:
Annual fee 1( )January 2018 Annual fee 31 December 2017
Scott Forbes (Chairman) £170,000 £170,000
Ashley Martin £60,000 £60,000
Peter Williams £65,000 £65,000
Rakhi Goss-Custard £50,000 £50,000
Jacqueline de Rojas £50,000 £50,000
Andrew Findlay £50,000 £29,166((1))
(1) Fee for seven months, from 1 June 2017.
Statement of shareholder voting at AGM
At the AGM on 9 May 2017, shareholders overwhelmingly voted in favour of the
Directors' Remuneration Report and the new Directors' Remuneration Policy. The
Committee believes this illustrates the strong level of shareholder support
for the remuneration framework. The table below shows full details of the
voting outcomes for the Directors' Remuneration Report and the Policy:
Votes for % Votes for Votes against % Votes against Votes withheld((1))
Directors' Remuneration Report 72,340,405 98.54 1,075,197 1.46 17,491
Directors' Remuneration Policy 70,332,275 95.83 3,064,143 4.17 36,674
(1) A vote withheld is not a vote in law and is not counted in the
calculation of the proportion of votes cast 'For' and 'Against' a resolution.
In line with the Company's commitment to ongoing dialogue with its
shareholders, the Committee corresponds with major shareholders and meetings
are offered, where appropriate, to understand the reasons for any potential or
actual opposition to the Company's Remuneration Policy. Changes are made to
our Policy where it is considered appropriate to do so.
Review of past performance
Share price performance
In 2017, the Company's share price ended the year at £45.00 up 15% year on
year (the FTSE 250 Index was up 18% and the FTSE 350 Index was up 13%). On a
three-year basis the share price has increased by 100% and has continued to
outperform both the FTSE 250 and FTSE 350 Indices over that period as shown in
the graphs on page 83.
Total shareholder return (TSR)
The first graph below compares the TSR of Rightmove's shares against the FTSE
250 Index and the FTSE 350 Index for the three-year period from 1 January 2015
to 31 December 2017. TSR is the product of movements in the share price plus
dividends reinvested on the ex-dividend date. TSR provides a useful, widely
used benchmark to illustrate the Company's performance over the last three
years. Specifically, it illustrates the value of £100 invested in Rightmove's
shares and in the FTSE 250 Index and the FTSE 350 Index over that period.
As required by the Act, the Company's TSR performance is required to be shown
against a recognised broad-based share index. Since 2016, as Rightmove
continues to be ranked towards the top of the FTSE 250 Index in terms of
market capitalisation, the FTSE 350 Index is felt to be more appropriate for
the purpose of comparing TSR performance and therefore this will be used as
the criteria applied to 25% of the PSP awards to be granted in February 2018.
The graphs below illustrate, for statutory purposes, the TSR of Rightmove's
shares against the FTSE 250 Index and the FTSE 350 Index for the three and
nine years to 31 December 2017.
TSR Graph - three years
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)
TSR Graph - nine years
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)
Total remuneration for the Chief Executive Officer The table below shows the
total remuneration figure for the Chief Executive Officer over a nine-year
performance period. The total remuneration figure includes the annual bonus
and long-term incentive awards that vested based on performance in those
years.
Annual bonus outturn (% of maximum)
Long-term incentive outturn (% of maximum)
Total single figure
Year Executive £
2017 Peter Brooks-Johnson((1)) 504,557 1,223,443 60% n/a 100% 100%
Nick McKittrick((1))
2016 Nick McKittrick 2,126,923 92% 100%
2015 Nick McKittrick 2,300,349 100% 100%
2014 Nick McKittrick 1,599,610 70% 92%
2013 Nick McKittrick Ed Williams((2)) 531,371 85% 100%
1,531,515 n/a 100%
2012 Ed Williams 2,219,882 90% 100%
2011 Ed Williams 4,934,942 100% 100%
2010 Ed Williams 652,800 100% -((3))
2009 Ed Williams 627,641 100% -((3))
(1) Nick McKittrick was Chief Executive Officer and a director until 9 May
2017 and retired from Rightmove on 30 June 2017. Peter Brooks-Johnson was
appointed Chief Executive Officer on 9 May 2017.
(2) Ed Williams was Chief Executive Officer until his retirement on 30 April
2013. Nick McKittrick was appointed Chief Executive Officer at this time.
(3) The table above includes share-based incentive awards
in the period that the associated performance conditions, excluding service
conditions are satisfied. Certain pre-float share option awards prior to 2006,
which had only service conditions and no performance conditions would have
been included in the single figure remuneration table in the year of grant in
accordance with Schedule 8 of the Act. The table above therefore excludes
£4,151,532 and £2,026,674 of awards with no performance conditions, which
vested in 2010 and 2009 respectively.
Directors' remuneration (audited)
The information included below up to and including page 94 is audited.
The remuneration of the directors of the Company during 2017 for time served
as a director is as follows:
Fixed Pay Performance-related pay
Long-term incentives ((3)) £
Fixed pay subtotal £ Performance-related pay subtotal £ Total remuneration in 2017 £
Salary/ Annual bonus((2)) £
Fee £ Benefits((1)) £
Executive directors
Nick McKittrick((4)) 159,120 666 159,786 - 1,063,657 1,063,657 1,223,443
Peter Brooks-Johnson((5)) 420,103 1,852 421,955 315,077 1,155,196 1,470,273 1,892,228
Robyn Perriss 320,000 1,406 321,406 240,000 925,763 1,165,763 1,487,169
Non-executive directors
Scott Forbes 170,000 - 170,000 - - - 170,000
Colin Kemp 18,012 - 18,012 - - - 18,012
Ashley Martin 60,000 - 60,000 - - - 60,000
Peter Williams 65,000 - 65,000 - - - 65,000
Rakhi Goss-Custard
50,000 - 50,000 - - - 50,000
Jacqueline de Rojas 50,000 - 50,000 - - - 50,000
Andrew Findlay((6)) 29,166 - 29,166 - - - 29,166
(1) Benefits in kind for the executive directors relate to private medical
insurance and the medical cash plan.
(2) The annual bonus amount relates to the accrued payment in respect of the
full year results for the year ended 31 December 2017 including the deferred
element (60% of annual bonus).
(3) The value of the long-term incentives includes:
· nil cost PSPs where vesting is calculated by taking the number of
nil cost options expected to vest in March 2018 (including dividend roll up),
which are dependent on the three-year performance period ended 31 December
2017 and multiplying by the year end closing share price of £45.00; and
· the notional capital gain on Sharesave options exercisable on 1
November 2017 which reflects the difference between the option grant price of
£19.72 and £41.39, being the market value of shares on the date they vested.
(4) Reflects base salary through to resignation as Chief Executive Officer and
director on 9 May 2017 together with pro rata vesting of PSPs awarded in March
2015.
(5) Reflects base salary of £373,136 as Chief Operating Officer to 9 May 2017
and increased annual salary of £445,536 as Chief Executive Officer from 10
May 2017.
(6) Fee for seven months from 1 June 2017 to 31 December 2017.
The remuneration of the directors of the Company during 2016 was:
Fixed pay Performance related pay
Long-term incentives ((3)) £
Fixed pay subtotal £ Performance- related pay subtotal £ Total remuneration in 2016 £
Salary/ Annual bonus((2)) £
Fee £ Benefits((1)) £ Pension £
Executive directors
Nick McKittrick 424,320 1,973 - 426,293 487,968 1,212,662 1,700,630 2,126,923
Peter Brooks-Johnson 355,368 1,973 15,849 373,190 408,673 1,015,601 1,424,274 1,797,464
Robyn Perriss 281,112 1,240 13,233 295,585 323,279 803,392 1,126,671 1,422,256
Non-executive directors
Scott Forbes 170,000 - - 170,000 - - - 170,000
Colin Kemp 50,000 - - 50,000 - - - 50,000
Ashley Martin 60,000 - - 60,000 - - - 60,000
Peter Williams 65,000 - - 65,000 - - - 65,000
Rakhi Goss-Custard
50,000 - - 50,000 - - - 50,000
Jacqueline de Rojas 274((4)) - - 274 - - - 274
(1) Benefits in kind for the executive directors relate to private medical
insurance and the medical cash plan.
(2) The annual bonus amount relates to the accrued payment in respect of the
full year results for the year ended 31 December 2016 including the deferred
element of 60%.
(3) The value of the nil cost PSPs vesting is calculated by taking the number
of nil cost options expected to vest in March 2017 (including dividend roll
up), which are dependent on the three-year performance period ended 31
December 2016 and multiplying by the year end closing share price of £39.03.
(4) Fee for two days from appointment on 30 December 2016 to year end.
Defined contribution pension
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. None of the directors elected to participate in
the pension plan during 2017. The Company does not contribute to any personal
pension arrangements.
How was pay linked to performance in 2017?
Annual bonus plan
The incentive for the financial year ended 31 December 2017 was in the form of
a cash bonus of up to 50% of salary and a DSP bonus of up to 75% of salary
(i.e. 125% in total). The bonus (both cash and DSP elements) was determined by
a mixture of underlying operating profit performance (65%) and key performance
indicators (35%) relating to underlying drivers of long-term revenue growth.
When comparing performance against the 2017 bonus targets set, the Committee
determined that 60% of the maximum achievable cash and DSP bonus should be
paid to the executive directors. Accordingly, a cash bonus of 30% of base
salary will be paid to the executives and 45% of base salary will be granted
to the executive directors under the DSP, which will be deferred until March
2020. More details are provided in the table below:
Measure Hurdle As a % of maximum bonus opportunity Actual performance achieved Resulting bonus
% achieved
Financial targets
Underlying operating profit ((1)) Targets: 65% Underlying operating profit achieved: £184.4m 59%
· £175.2m: 25% payout
· £185.7m: 100% payout The 2017 underlying operating profit represented growth of 11% on 2016
Strategic targets
Traffic market share Growth in time in minutes spent on Rightmove platforms as measured by comScore 15% There was a lower growth in time in minutes spent on Rightmove platforms year 0%
relative to nearest competitors on year than our nearest competitors
· Same absolute growth: 25% payout
· 50% higher absolute growth: 100% payout
Other revenue((2)) · Growth of 16%: 25% payout 15% Revenue increased from £17.8m to £18.6m, an increase below the minimum 0%
threshold
· Growth of 24%: 100% payout
Employee engagement ((3)) Percentage of respondents to the employee survey who say 'Rightmove is a great 5% 90% of respondents say 'Rightmove is a great place to work' 1%
place to work':
· 90%: 25% payout
· 95%: 100% payout
Total 100% 60%
(1) Operating profit before share-based payments and NI on share-based
incentives.
(2) The targets relate to all revenue streams except Agency and New Homes.
(3) Based on the results of the annual employee survey.
Long-term incentives vesting during the year
The PSP awards granted in March 2015 were subject to EPS (75% of the awards)
and relative TSR (25% of the awards) performance conditions that related to
the three-year period ended 31 December 2017.
The vesting schedule for the relative TSR element of executive directors' 2015
PSP awards is set out below:
% of award vesting
Relative TSR condition (maximum 25%)
Less than the Index 0%
Equal to the Index 6.25%
25% higher than the Index 25%
Intermediate performance Straight-line vesting
At the end of the performance period, Rightmove's TSR was 109.2% compared to
39.2% for the FTSE 250 Index. As this level of outperformance is 70% higher
than the Index, these options will vest in full on 2 March 2018.
Rightmove's EPS growth is measured over a period of three financial years
(2015 to 2017). The EPS figure used is equivalent to Rightmove's reported
underlying basic EPS (before share-based payments, NI on share-based
incentives and no related adjustment for tax) and the vesting schedule is set
out below:
Underlying basic EPS growth % of award vesting
from 2015 to 2017 (maximum 75%)
Less than 30% 0%
30% 18.75%
60% 75%
Between 30% and 60% Straight-line vesting
At the end of the performance period, underlying basic EPS was 163.3p which
from an underlying basic EPS base of 100.3p results in growth of 63%,
exceeding the maximum 60% EPS growth target and will result in full vesting of
this part of the award (maximum of 75%) from 2 March 2018.
Share awards granted during the year
On 1 March 2017 Peter Brooks-Johnson and Robyn Perriss were awarded shares
under the PSP, which vest in March 2020, and are subject to a mixture of EPS
(75% of the awards) and TSR relative to the FTSE 350 Index (25% of the awards)
performance with the greater weighting on EPS to reflect its particular
relevance to the performance of the business.
Executive director Basis of grant Number of shares Face value of award((1))
Peter Brooks-Johnson 200% of base salary 18,691 746,273
Robyn Perriss 200% of base salary 16,029 640,000
(1) Based on the average mid-market share price for the three consecutive days
prior to grant, taken from the Daily Official List, of £39.93.
On 9 May 2017, the Committee approved a top-up award of performance shares for
Peter Brooks-Johnson, following his promotion to CEO. The award was over
3,457 ordinary shares of 1p each, reflecting the increase in his base salary
from £373,136 to £445,536. The performance shares are exercisable for a
period of 2 years from 9 May 2020 and are subject to the same performance
criteria as the original award granted on 1 March 2017. The number of
additional shares was based on the average mid-market share price for the
three consecutive days prior to grant, taken from the Daily Official List, of
£41.90.
The vesting schedule for the relative TSR element of executive directors' 2017
PSP awards is set out below. It is consistent with the TSR condition used for
previous grants under the share option scheme. Performance will be measured
over three financial years.
% of award vesting
Relative TSR condition (maximum 25%)
Less than the Index 0%
Equal to the Index 6.25%
25% higher than the Index 25%
Intermediate performance Straight-line vesting
Rightmove's EPS growth will be measured over a period of three financial years
(2017-2019). The EPS figure used will be equivalent to the Group's underlying
basic EPS (before share-based payments, NI on share-based incentives and no
related adjustments for tax).
The following vesting schedule will apply for executive directors' awards
granted in 2017:
Underlying basic EPS growth % of award vesting
from 2017 to 2019 (maximum 75%)
Less than 20% 0%
20% 18.75%
50% 75%
Between 20% and 50% Straight-line vesting
The benchmark underlying basic EPS for the financial year 2016 from which
these targets will be measured is 142.8p.
Retirement arrangements for Nick McKittrick
Nick McKittrick retired as a director and Chief Executive Officer following
the AGM on 9 May 2017. His employment with the Group ended on 30 June 2017.
The Committee determined that he should continue to be paid his salary and
normal package of benefits up to 30 June 2017 and receive a bonus in respect
of the 2016 financial year as detailed below. In line with the Remuneration
Policy, 40% of the 2016 bonus was paid in cash with the balance deferred in
shares for a period of two years. Nick did not receive a bonus for the six
months to 30 June 2017 and was not awarded performance shares under the PSP in
March 2017.
The Committee also determined that Nick would be treated as a good leaver in
relation to his outstanding PSP and DSP awards, with these awards vesting in
line with the relevant plan rules and the Remuneration Policy set out on pages
66 to 71. Outstanding PSP awards would also be subject to the achievement of
performance conditions and vest pro-rata in accordance with the plan rules.
Full details of the remuneration arrangements were published on the Company's
website in accordance with Section 430(2B) of the Companies Act following the
AGM and details of share awards are set out below.
Rightmove Performance Share Plan
In accordance with our Policy, unvested PSP awards were pro-rated to 30 June
2017 and vest on the original vesting dates, subject to the achievement of TSR
and EPS performance criteria. These awards will be exercisable for 12 months
from the original vesting dates. PSP awards which have already vested but
remain unexercised will be exercisable until 30 June 2018, being 12 months
from Nick's leaving date.
Details of unexercised PSP awards as at the date of Nick's retirement (based
on the maximum possible vesting if EPS and TSR performance conditions are
fully met) are set out in the table below:
Award Date Performance Period Normal Vesting Date Award (number of shares) Pro-rated award (number of shares)
8 March 2013 1 January 2013 to 31 December 2015 8 March 2016 33,465((1)) 33,465((1))
3 March 2014 1 January 2014 to 31 December 2016 3 March 2017 31,070((2)) 31,070((2))
2 March 2015 1 January 2015 to 31 December 2017 2 March 2018 29,321 22,805((3))
1 March 2016 1 January 2016 to 31 December 2018 1 March 2019 21,912 9,739((3))
(1) No pro-rating applies; includes rolled up dividend of
1,186 shares.
(2) No pro-rating applies; includes rolled up dividend of
1,052 shares.
(3) Pro-rated to 30 June 2017 and subject to TSR and EPS
related performance conditions.
Rightmove Deferred Share Bonus Plan
In accordance with our Policy, DSP awards granted in respect of prior years'
performance remain capable of vesting in full:
· vested but unexercised DSP awards may be exercisable for 12
months from 30 June 2017; and
· unvested DSP awards will vest on the original vesting dates and
be exercisable for 12 months from vesting.
Award Date Performance Period Normal Vesting Date Award (number of shares)
2 March 2015 1 January 2014 to 31 December 2014 2 March 2017 7,546
1 March 2016 1 January 2015 to 31 December 2015 1 March 2018 7,901
1 March 2017 1 January 2016 to 31 December 2016 1 March 2019 7,333
Rightmove Sharesave Plan (SAYE)
Nick held options over 760 shares in total under the all-employee SAYE, which
lapsed following his retirement in accordance with the SAYE rules.
Share-based incentives held by the directors and not exercised as at 31
December 2017
Date Share-based incentives held 1 January Granted Exercise price Exercised in year Average share price at date of exercise Share-based incentives held at 31 December 2017 Vesting date Expiry date
granted 2017 in year/ dividend roll-up
Executive directors
Peter 10/10/2007 75,000 - £5.22 75,000((8)) £41.03 - 15/3/2011 9/10/2017
Brooks-Johnson (Unapproved)
5/3/2009 139,286 - £2.24 - - 139,286 5/3/2012 4/3/2019
(Unapproved)
5/3/2010 52,553 - £6.66 - - 52,553 5/3/2013 4/3/2020
(Unapproved)
8/3/2013 (PSP) 24,210 889 £0.00 25,099((1)) £41.03 - 8/3/2016 7/3/2018
3/3/2014 25,140 - £0.00 - - 25,140 3/3/2017 2/3/2019
(PSP)
1/10/2014 456((6)) - £19.72 456((10)) £40.15 - 1/11/2017 30/4/2018
(Sharesave)
2/3/2015 6,320 (-) £0.00 6,320((7)) £41.20 - 2/3/2017 1/3/2018
(DSP)
2/3/2015 24,556 (-) £0.00 - - 24,556 2/3/2018 1/3/2020
(PSP)
1/10/2015 304 (-) £29.60 - - 304 1/11/2018 30/4/2019
(Sharesave)
1/3/2016 6,617 (-) £0.00 - - 6,617 1/3/2018 28/2/2019
(DSP)
1/3/2016 18,351 (-) £0.00 - - 18,351 1/3/2019 28/2/2021
(PSP)
1/3/2017 - 6,141((3)) £0.00 - - 6,141 1/3/2019 29/2/2020
(DSP)
1/3/2017 - 18,691((4)) £0.00 - - 18,691 1/3/2020 28/2/2022
(PSP)
9/5/2017 - 3,457((5)) £0.00 - - 3,457 9/5/2020 8/5/2022
(PSP)
1/10/2017 - 273((9)) £32.89 - - 273 1/11/2020 30/4/2021
(Sharesave)
Total 372,793 29,451 106,875 295,369
Robyn Perriss 8/3/2013 (PSP) 14,928 548 £0.00 15,476((1)) £40.62 - 8/3/2016 7/3/2018
3/3/2014 4,353 (-) £0.00 4,353((2)) £40.61 - 3/3/2016 2/3/2017
(DSP)
3/3/2014 19,887 697 £0.00 20,584((6)) £43.26 - 3/3/2017 2/3/2019
(PSP)
1/10/2014 912 (-) £19.72 912((10)) £40.15 - 1/11/2017 30/4/2018
(Sharesave)
2/3/2015 4,999 (-) £0.00 4,999((7)) £43.12 - 2/3/2017 1/3/2018
(DSP)
2/3/2015 19,425 (-) £0.00 - - 19,425 2/3/2018 1/3/2020
(PSP)
1/3/2016 5,234 (-) £0.00 - - 5,234 1/3/2018 28/2/2019
(DSP)
1/3/2016 14,516 (-) £0.00 - - 14,516 1/3/2019 28/2/2021
(PSP)
1/3/2017 - 4,858((3)) £0.00 - - 4,858 1/3/2019 29/2/2020
(DSP)
1/3/2017 - 16,029((4)) £0.00 - - 16,029 1/3/2020 28/2/2022
(PSP)
1/10/2017 - 547((9)) £32.89 - - 547 1/11/2020 30/4/2021
(Sharesave)
84,254 22,679 ( ) 46,324 60,609
Total
(1) On 8 March 2013, the executive directors were awarded nil cost
options under the PSP which vested in 2016 subject to EPS and relative TSR
performance measures, which were met in full.
Robyn Perriss exercised the nil cost option over 15,476
shares (which included a dividend roll-up of 548 shares) on 27 February 2017,
sold 11,375 upon exercise at an average market price of £40.62 and retained
the balance of 4,101 shares.
Peter Brooks-Johnson exercised the nil cost option over
25,099 shares (which included a dividend roll-up of 889 shares) on 31 October
2017 and sold all the shares at an average market price of £41.03 per share.
(2) The nil cost deferred shares granted under the DSP on 3 March
2014, were exercisable from 3 March 2016 subject to annual bonus targets which
were met in full. Robyn Perriss exercised the nil cost option over 4,353
shares on 27 February 2017 and sold 3,199 shares at an average market price of
£40.61 per share to satisfy the resulting tax liability and retained the
balance of 1,154 shares.
(3) On 1 March 2017, the executive directors were awarded nil cost
options under the DSP, which vest in March 2019. The average mid-market
share price for the three consecutive preceding days, used to calculate the
number of shares awarded, was £39.93.
(4) On 1 March 2017, the executive directors were awarded nil cost
shares under the PSP, which vest in March 2020. Further details are set out
on pages 88 to 89.
(5) On 9 May 2017, a top-up award of nil cost shares under the PSP was
made to Peter Brooks-Johnson, which vest in May 2020. Further details are
set out on page 88.
(6) On 3 March 2014, the executive directors were awarded nil cost
options under the PSP which vested in 2017 subject to EPS and relative TSR
performance measures, which were met in full. Robyn Perriss exercised the
nil cost option over 20,584 shares (which included a dividend roll-up of 697
shares) on 31 May 2017, sold 15,129 upon exercise at an average market price
of £43.26 and retained the balance of 5,455 shares.
(7) The nil cost deferred share awards granted under the DSP on 2
March 2015, were exercisable from 2 March 2017 subject to annual bonus targets
which were met in full.
Robyn Perriss exercised the nil cost option over 4,999 shares
on 31 May 2017 and sold 3,674 shares at an average market price of £43.12 per
share and retained the balance of 1,325 shares.
Peter Brooks-Johnson exercised the nil cost option over 6,320
shares on 3 October 2017 and sold all the shares at an average market price of
£41.20 per share.
(8) Peter Brooks-Johnson was granted an unapproved option over 75,000
shares at an exercise price of £5.22 which vested in 2011. On 3 October 2017,
he exercised the option, which the Company net settled, he sold 30,907 shares
at an average market price of £41.03 per share to satisfy the resulting tax
liability and retained the balance of 34,574 shares.
(9) On 29 September 2017, Peter Brooks-Johnson and Robyn Perriss were
granted Sharesave options over 273 and 547 shares respectively at an exercise
price of £32.89. The options will be exercisable from November 2020.
(10) In October 2014, Peter Brooks-Johnson and Robyn Perriss were granted
Sharesave options over 456 and 912 shares respectively, which vested in
November 2017 at an exercise price of £19.72. On 28 November 2017, both
directors exercised their options in full and retained the shares.
Dilution
All existing executive share-based incentives can be satisfied from shares
held in the Rightmove Employees' Share Trust (EBT) and shares held in
treasury. It is intended that the 2017 share-based incentive awards will also
be settled from shares currently held in the EBT or from shares held in
treasury without any requirement to issue further shares.
During 2017, treasury shares were used to satisfy vested PSP awards and
unapproved options over 379,269 shares, representing 0.42% of issued share
capital (less treasury shares) as at 31 December 2017.
Directors' interests in shares The interests (both beneficial and family
interests) of the directors in office at the date of this report in the share
capital of the Company were as follows:
Interests in ordinary shares of £0.01 Interests in share-based incentives
At 1 January 2017
PSP & DSP awards (unvested) PSP & DSP awards (vested but unexercised)
Options (vested but unexercised)
At Options (unvested)
31 December 2017
Executive directors
Peter Brooks-Johnson
90,716 55,146 77,813 25,140 577 191,839
Robyn Perriss 18,780 5,833 60,062 - 547 -
Non-executive directors
Scott Forbes 219,300 319,300 - - -
-
Ashley Martin 2,060 2,060 - - - -
Peter Williams 3,728 3,728 - - - -
Rakhi Goss-Custard
544 544 - - - -
Jacqueline de Rojas
188 188 - - - -
Andrew Findlay
- - - - - -
Total 335,316 386,799 137,875 25,140 1,124 191,839
· The Company's shares in issue (including 1,892,456 shares held in
treasury) as at 31 December 2017 comprised 93,266,207 (2016: 95,490,266)
ordinary shares of £0.01 each.
· The closing share price of the Company was £45.00 as at
29 December 2017 (the last day of trading in 2017). The lowest and highest
share prices during the year were £38.89 and £45.25 respectively.
· The executive directors are regarded as being interested, for the
purposes of the Companies Act 2006, in 263,767 (2016: 343,275) ordinary shares
of £0.01 each in the Company currently held by the EBT at 31 December 2017 as
they are, together with other employees, potential beneficiaries of the EBT.
· The directors' beneficial holdings represent 0.4% of the Company's
shares in issue as at 31 December 2017 (2016: 0.6%) (excluding shares held
in treasury).
· There have been no changes to the above interests between the year
end and the date of this report.
Executive director share ownership guidelines are set out in the Remuneration
Policy Report on page 70. The interests of the executive directors in office
at 31 December 2017 in the share capital of the Company as a percentage of
base salary were as follows:
Number of shares held at 31 December 2017 Value of shares at 31 December 2017 Value of shares as a % of base salary
Base salary 1 January 2018
Executive directors
Peter Brooks-Johnson £472,268 90,176 £4,057,920 860%
Robyn Perriss £339,200 18,780 £845,100 250%
Percentage increase in the remuneration of the Chief Executive Officer
The table below shows the
- More to follow, for following part double click ID:nRSW7131Ff -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 to shareholders over a three-year period, and to retain key individuals and align interests with shareholders. The PSP was established in 2011 and permits annual awards of nil cost options, contingent shares and forfeitable shares which vest after three years subject to continued service and the achievement of challenging performance conditions. The Committee has discretion to introduce a two-year post-vesting holding period for future executive appointments to the Board. 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. Maximum (% salary): 200% of base salary Awards vest based on three-year performance against challenging financial targets for
EPS and relative TSR performance.
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 vest
on a linear basis from threshold to maximum performance levels.
The performance period for financial targets and relative TSR targets is three
financial years, starting with the year in which the award is granted.
All-employee Sharesave Plan Provides all employees with the opportunity to become owners in the Company on similar terms. Executive directors are entitled to participate on the same terms as all other employees in the Group's Sharesave Plan, which has standard terms. Participation limits are set by HMRC from time to time. None
Share Incentive Plan (SIP) To provide all employees the opportunity to own shares in the Company on equal terms. Executive directors are entitled to participate in the SIP on the same terms as all other employees. The SIP has standard terms and currently only free 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. Participation in the SIP is based on HMRC rules. Share awards are discretionary and made within the SIP rules. None
Share ownership guidelines To provide alignment between the executive directors and shareholders. Executive directors are required to retain at least half of any share awards vesting or exercised (after selling sufficient shares to meet the exercise price and to pay any tax liabilities due) until they have met the shareholding guideline. The Committee will regularly monitor progress towards the guideline. Shareholding guideline: 200% of base salary for all executive directors. Not applicable
Non-executive directors To provide a competitive fee which will attract and retain high calibre individuals and reflects their relevant skills and experience. The fees for non-executive directors (including the Company Chairman) are reviewed periodically (generally every three years). 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 levels for each role are determined after considering the responsibility of the role, the skills and knowledge required and the expected time commitments. 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. Fees for the Chairman and non-executive directors were last reviewed in 2015 and are set out on page 81. 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. Flexibility is retained to increase the above fee levels in the event that it is necessary to recruit a new Chairman or non-executive director of an appropriate calibre in future years. None
Business expenses To reimburse directors for reasonable business expenses. Directors may claim reasonable business expenses within the terms of the Group's expenses policy and be reimbursed on the same basis as all employees. The Group may reimburse business expenses which are in future classified as taxable benefits by HMRC. Expenses vary from year to year according to each director's responsibilities, business activity and location. Not applicable
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:
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, such as
death, ill health, disability, redundancy, transfer or sale of the employing company, or other circumstances at the
discretion of the Committee. If defined as a 'good leaver', awards will remain subject to performance conditions, which
will be measured over the performance period from grant to the original vesting date, unless the Committee determine to
assess performance from grant to the date of cessation, and which will be reduced pro-rata to reflect the proportion of the
performance period actually served. The Committee retains the discretion to disapply time pro-rating in exceptional
circumstances and to accelerate the vesting of awards for 'good leavers' in the event of death.
For awards granted under the DSP, 'good leaver' status may be determined for reasons of death, injury, disability,
redundancy, transfer or sale of the employing company or other circumstances at the discretion of the Committee. If defined
as a 'good leaver', awards will be retained and vest on the original vesting date, save as above in the event of death,
when the Committee has the discretion to accelerate vesting.
Scott Forbes' appointment may be terminated by either party giving to the other not less than three months' notice in
writing. The Company may also terminate by making a payment in lieu of notice. Scott Forbes is not contractually entitled
to any other benefits on termination of his contract.
The Letters of Appointment for the non-executive directors provide for a term of up to two three-year periods and a
possible further three-year term (subject to re-election by shareholders and subject to the director remaining
independent). The appointments may be terminated with a notice period of three months on either side and the Letters of
Appointment set out the time commitments required to meet the expectations of their roles.
Copies are available for inspection on request to the Company
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