REG - Science in Sport PLC - Management Incentive Plan

Science in SportAnnouncement

05/07/2024 07:15

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240705:nRSE2491Va&default-theme=true

RNS Number : 2491V  Science in Sport PLC  05 July 2024

Science in Sport plc

("Science in Sport", the "Group" or the "Company")

Management Incentive Plan

Overview

 

The Company is proposing to adopt the Growth Plan to incentivise management
and to closely align their interests with Shareholders, subject to the
approval of shareholders at the General Meeting. It is proposed that one-off
awards will be made to Daniel Wright (Executive Chairman), Daniel Lampard
(Chief Operating Officer), Christopher Welsh (Chief Financial Officer) and
certain other members of executive management.

 

Background

 

As set out in the Proposed Placing and Retail Offer announcement released on 4
July 2024, the Company has been extensively restructured since Daniel Wright
was appointed Executive Chairman in October last year. Whilst there is still
much work to be done ambitious targets have been set to ensure that Science in
Sport delivers sustainable cash generative growth in the medium term.
Initially management's focus has been on cash management and restructuring the
operational focus of the Company to ensure that there is a strong platform for
growth.  The Company proposes to introduce a growth plan which reflects in
Tranche 1 some of the foundation work undertaken to date and in Tranche 2 the
ambitious growth targets that the broader senior leadership team are tasked
with delivering pursuant to the turnaround.

 

In designing the Growth Plan, the Remuneration Committee wanted to ensure that
remuneration should be geared towards long term variable elements rather than
short term cash remuneration and that the value creation targets should be
truly rewarding to shareholders, taking into account the illiquid nature of
the asset class and the risk premium that investors should expect for
supporting growth companies.

 

As part of this alignment, Dan Wright has undertaken to cap his salary at
£80,000 for the duration of the Growth Plan and the leadership team receiving
awards under the Growth Plan have reduced their contractual annual
discretionary bonus entitlements to no more than 50% of base salary and
forfeited any accrued or accruing bonus entitlements under existing STIP or
LTIP arrangements.

 

The Growth Plan covers the value created over the next three years and will be
measured by reference to the difference in market capitalisation of the
Company following the Placing calculated by reference to the Enlarged Issued
Share Capital at the Issue Price and measured against the 60 day volume
weighted average share price after three years post grant (the "Growth in
Market Capitalisation").  A summary of the Growth Plan is set out below and
importantly no value will accrue to recipients beneath a 20% return and in
order for full value to be delivered, the management team must deliver a
return of 300% over the next three years, which would equate to a share price
of 68p per Ordinary Share.

 

The maximum dilution to existing Shareholders under the Growth Plan and all
other employee share schemes will not exceed 10% of the Company's issued
ordinary share capital.

 

Mechanism of the Growth Plan

 

The Company will procure the issue and allotment to the Growth Plan
Participants of 20,000,000 Ordinary Shares in the capital of SIS (Science in
Sport) Limited (a wholly owned subsidiary of the Company). The Growth Shares
will attract value in accordance with agreed performance conditions as
described in more detail below.

 

The Growth Shares will be subject to the operation of a put and call option
(the "Put and Call Option") pursuant to which:

 

(a)          the Company will grant put options to the Growth Plan
Participants permitting them to sell some or all of Growth Shares to the
Company in certain circumstances; and

 

(b)           Growth Plan Participants will grant the Company a
corresponding call option.

 

Upon reaching the crystallisation events as set out in the table below (these
differ for Tranche 1 and Tranche 2 (as defined below)) the Company and or the
Growth Plan Participants can exercise the Put and Call Option pursuant to
which the Growth Shares will be sold to the Company for consideration to be
satisfied either by the allotment and issue of Ordinary Shares or by the
payment of cash to the equivalent value at the discretion of the Remuneration
Committee of the Company.

 

Performance Conditions

 

The Performance Conditions will be tested at the earlier of (i) the end of
three years from the date of issue of the Growth Shares or (ii) a takeover of
the Company by way of an offer or scheme of arrangement.

 

Tranche 1 - if the Growth in Market Capitalisation is 20% or more,
participants will be eligible to share in 2.5% of the growth created,
increasing to a fixed rate of 3% on reaching a hurdle of 45% growth.
Thereafter participants will share in any additional value creation by
reference to the number of shares that they would have become entitled to upon
attaining the 45% growth hurdle.

 

The Growth Shares can be realised by the Growth Scheme Participants on the
earlier of (1) the end of the measurement period (being 3 years plus 60
Business Days) or (2) a takeover of the Company by offer or scheme of
arrangement.

 

Tranche 2 - if the Growth in Market Capitalisation is 20% or more, Growth
Scheme Participants will be eligible to share in 4% of the value created,
increasing to 6.25% up to growth of 85% and increasing pro-rata to a maximum
of 7.70% up to growth of 300%.  Above 300% growth the Growth Scheme
Participants will be entitled to a fixed 7.7%

 

The Participants will be restricted from selling any Ordinary Shares received
pursuant to Tranche 2 of  the Growth Plan, save in order to meet any tax
liabilities, for a further 2 year holding period.  During this period 50%
will be released from the Holding Period on the first anniversary of the
Measurement Date and 50% on the second anniversary, in other words 4 and 5
years respectively from the award.

 

The following tables illustrate target value thresholds and both the value
that would be delivered to Shareholders and the value attributing to the
Growth Scheme Participants, assuming the Placing and the Retail Offer is
subscribed in full:

 

 

 Tranche1                    Increase in Measurement Value  Growth in Market Capitalisation  Indicative share price (pence)  % to Growth Plan  Value of Growth Plan  No of shares in the Company*  % of Enlarged Issued Share Capital*
 Base vesting value          20%                            £7,897,269                       20.4                            2.50%             £197,432              967,803                       0.41%
 Full vesting value          45%                            £17,768,854                      24.65                           3.00%             £533,066              2,162,538                     0.92%
 Full vesting above hurdle   300%                           £118,459,030                     68.0                            1.24%             £1,470,526            2,162,538                     0.92%
 Tranche 2
 Base vesting                20%                            £7,897,269                       20.4                            4.00%             £315,891              1,548,484                     0.66%
 Mid vesting                 85%                            £33,563,392                      31.45                           6.25%             £2,097,712            6,669,990                     2.79%
 Full vesting                300%                           £118,459,030                     68.0                            7.70%             £9,121,345            13,413,743                    5.46%
 Tranche 1 & 2 Combined
 Base vesting                20%                            £7,897,269                       20.4                            6.50%             £513,322              2,516,287                     1.07%
 Full vesting                300%                           £118,459,030                     68.0                            8.94%             £10,591,871           15,576,281                    6.28%

 

*figures assume that the issued share capital remains the same.  These
numbers will be adjusted for any new issues of ordinary shares, share buybacks
or similar event during the period of the Growth Plan).

 

                                                    Base Vesting @ 20%                                                Full Vesting @ 300%
 Name               % of Tranche 1  % of Tranche 2  Indicative aggregate value  Indicative PLC Share Entitlement      Indicative aggregate value  Indicative PLC Share Entitlement
 Daniel Wright      59%             35%             £226,760                    1,111,566                             £4,059,261                  5,969,501
 Daniel Lampard     27%             23%             £127,350                    624,266                               £2,528,735                  3,718,728
 Christopher Welsh  0%              22%             £68,832                     337,413                               £1,987,530                  2,922,839
 Others             14%             20%             £90,380                     443,042                               £2,016,345                  2,965,214

 Total              100%            100%            £513,322                    2,516,287                             £10,591,871                 15,576,281

 

If there is a variation of share capital of the Company, or in the event of a
demerger, special dividend or other event determined by the Board, the Board
may make such adjustments as it may determine to the Growth Plan, its
allocation and measurements in order to achieve the same intention and an
equitable effect for the Company the Growth Plan Participants.

Change of control of the Company

 

On a change of control of the Company by way of takeover or scheme of
arrangement, the Growth Shares will vest immediately with their value to be
determined by the relevant offer price per Ordinary Share that forms part of
the offer or scheme.

 

Leaving employment

 

Growth Plan Participants who cease to be employees of the Company during the
performance assessment period of 3 years will forfeit their entitlement unless
they are deemed to be 'Good Leavers', being those who cease to be an employee
of a Group Company as a result of death, ill health, injury or disability, a
relevant transfer within the meaning of the TUPE Regulations or the company in
which the Growth Plan Participant is employed ceasing to be under the control
of the Company.

 

Growth Shares held by Growth Plan Participants who are Good Leavers prior to a
vesting date will vest at the discretion of the Remuneration Committee of the
Company on the normal vesting date and will be pro-rated for time to reflect
the proportion of time between acquisition of the Growth Shares and the date
on which the relevant performance condition is/was satisfied during which the
Good Leaver was an employee.

 

Malus and clawback

 

The Growth Plan provides for customary clawback and malus provisions, which
allow the Remuneration Committee of the Company discretion to require
repayment in defined circumstances.

 

Taxation

 

It is a condition of being granted awards that Growth Plan Participants agree
to indemnify the Group in respect of tax (including income tax and employee
national insurance contributions) which falls due or payable in connection
with the Growth Plan.

 

 

Corporate governance

 

The Directors place considerable value on corporate governance.

 

The Company continues to operate in line with the QCA Code.  In line with the
QCA Code and the QCA Remuneration Guide, the Directors consider that it is
good practice to seek the consent of Shareholders in creating any new share
scheme that may be dilutive and are therefore seeking such consent at the
General Meeting to be held on 24 July 2024.  A circular will be posted to
shareholders shortly.

 

The principles at the heart of the Growth Plan reflect the overarching
objectives of the Remuneration Committee of the Company to:

 

·      develop remuneration packages which motivate directors and
support the delivery of business objectives in the short, medium and
long-term;

 

·      align the interests of the executive team with the interests of
long-term Shareholders;

 

·      encourage executive and senior team members to operate within the
risk parameters set by the Board; and

 

·      ensure that the Company can recruit and retain high-quality
executives through packages which are fair and attractive, but not excessive.

 

The Remuneration Committee of the Company considered various alternative
including:

 

(a)           structures across share options, restricted shares and
value creation plans; and

 

(b)           performance measures based on revenue, profits/
earnings and non-financial measures.

 

It was agreed that the Growth Plan is the most suitable option for the Company
at this stage in its growth journey. It is further noted that the Growth Plan
will only produce rewards for the executive team if the Company's share price
increases.

 

Directors' Related Party Transactions

Daniel Wright (Executive Chairman), Daniel Lampard (Chief Operating Officer)
and Christopher Welsh (Chief Financial Officer) are considered to be related
parties of the Company for the purposes of Rule 13 of the AIM Rules for
Companies by virtue of their status as Directors.

The Independent Directors (who exclude Daniel Wright, Daniel Lampard and
Christopher Welsh), having consulted with the Company's Nominated Adviser,
Panmure Liberum, consider that the terms of the Growth Plan are fair and
reasonable insofar as the shareholders of the Company are concerned.

Capitalised terms used but not defined in this announcement are set out on the
Definitions section below.

For further information:

 Science in Sport plc                                                      T: 020 7400 3700
 Daniel Wright, Executive Chairman

 Daniel Lampard, Chief Operating Officer

 Christopher Welsh, Chief Financial Officer

 Panmure Liberum Limited (Nominated Adviser, Broker and Sole Bookrunner)   T: 020 3100 2000
 Richard Lindley

 John More

 Anake Singh

 

About Science in Sport plc

Headquartered in London, Science in Sport plc is a leading sports nutrition
business that develops, manufactures, and markets innovative nutrition
products for professional athletes, sports and fitness enthusiasts and the
active lifestyle community. The Company has two highly regarded brands, PhD
Nutrition, a premium active-nutrition brand targeting the active lifestyle
community, and SiS, a leading endurance nutrition brand among elite athletes
and professional sports teams.

The two brands sell through the Company's phd.com and scienceinsport.com
digital platforms, third-party online sites, including Amazon and eBay, and
extensive retail distribution in the UK and internationally, including major
supermarkets, high street chains and specialist sports retailers. This
omnichannel footprint enables the Company to address the full breadth of the
sports nutrition market.

PhD is one of the UK's leading active nutrition brands with a reputation for
high quality and product innovation. The brand has grown rapidly since its
launch in 2005. The range now comprises powders, bars, and supplements,
including the high protein, low sugar range, PhD Smart.

SiS, a leading endurance nutrition business founded in 1992, has a core range
comprising gels, powders and bars focused on energy, hydration, and recovery.
SiS is an official endurance nutrition supplier to over 320 professional
teams, organisations, and national teams worldwide. SiS supplies more than 150
professional football clubs in the UK, Europe, and the USA.

SiS is Performance Solutions partner to Ineos Grenadiers cycling team, and
Tottenham Hotspur and CGC Nice football clubs.

For further information, please visit phd.com and scienceinsport.com

DEFINITIONS

 

The following definitions apply throughout this announcement, unless the
context requires otherwise:

 

 

 

"Board" or "Directors"
 
the board of directors of the Company

 

"Broker" or "Panmure
Liberum"
Panmure Liberum Limited, a company registered in England and Wales with
company number 04915201 and whose registered office is at Ropemaker Place,
Level 12, 25 Ropemaker Street, London, EC2Y 9LY

 

"Business
Day"
a day on which banks in the City of London are open for business (excluding
Saturdays, Sundays and public holidays in England)

 

"Enlarged Issued Share
Capital"
the entire issued share capital of the Company following completion of the
Placing and the Retail Offer on Admission, assuming no other Ordinary Shares
are issued between the date of this announcement and Admission

 

"Growth Plan"
 
the proposed Growth Plan of the Group in relation to ordinary shares in the
capital of SIS (Science in Sport) Limited

 

"Growth Plan
Participants"
the participants in the Growth Plan will initially be Daniel Wright, Daniel
Lampard, Christopher Welsh and other senior management with flexibility for
further Growth Shares to be issued to other management and key personnel of
the Group in the future

 

"Growth
Shares"
the shares in SIS (Science in Sport) Limited to be allotted and issued to the
Growth Plan Participants

 

"Issue Price"
 
17 pence per Ordinary Share

 

"Ordinary Shares"
 
ordinary shares of 10 pence each in the capital of the Company

 

"QCA
Guide"
the third edition of the QCA Corporate Governance Code published by the Quoted
Companies Alliance

 

"QCA Remuneration
Guide"
the remuneration committee guide published by the Quoted Companies Alliance in
2020

 

 "Shareholders"
 
the holders of Ordinary Shares for the time being, each individually a
"Shareholder"

 

"TUPE Regulations"
                  Transfer of Undertakings (Protection of
Employment) Regulations 2006 (as amended)

 

"UK" or "United Kingdom"
 
the United Kingdom of Great Britain and Northern Ireland

 

"VWAP"
                the volume weighted average share price

 

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  MSCLZLLBZDLZBBQ