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Remuneration Committee


Overview of remuneration and link to strategy
The focus of our remuneration strategy is on rewarding performance – the majority of executive remuneration (approximately 70% at maximum) is variable and only payable if demanding performance targets are met. The performance measures are firmly linked to our strategy and ultimately aligned with shareholders’ interests to deliver earnings growth and improved shareholder value in the medium-term. The majority of variable pay is payable in the form of shares.

Further information on how executive directors’ annual bonus and LTIP arrangements are aligned with our strategy is set out in the 2018/19 Directors' Remuneration Report which can be found by following the link below.

Share ownership and retention periods
To align executive directors’ interests with those of shareholders they are expected to retain 50% of shares from vested awards under the DBP and the LTIP (other than sales to settle any tax or NICs due) until they reach a value at least equal to their annual salary (valued at the time of purchase or vesting). In addition, to encourage a focus on the long-term sustainable development of the business, retention periods have been introduced for both the annual bonus scheme and Long-Term Incentive Plan. One-third of any annual bonus award is deferred into shares for three years under the Deferred Bonus Plan. In addition, any shares which vest under LTIP awards granted since 2018 will be deferred for a further two-year period.

Risk, discretion and judgement
The Committee seeks to ensure that targets for annual bonus and long-term incentives are aligned with the Group’s strategy and the long-term sustainable development of the business. Targets are reviewed to ensure they reflect the overall risk appetite set by the Board and do not encourage inappropriate behaviours or excessive risk taking.

The Committee retains discretion to override formulaic outcomes produced by the performance conditions where, in the Committee’s view, they do not reflect the performance of the business over the period, individual performance or where events happen that cause the Committee to determine the conditions are unable to fulfil their original intended role.

Malus and clawback
Recovery provisions apply to both the cash and share elements of the annual bonus plan and recovery and withholding provisions apply to the LTIP.

Non-executive directors
Fees payable to non-executive directors are determined by the Board. The level of fee is set in the context of the time commitment and responsibilities required by the role. As a result, additional fees are payable to the Chairs of the Audit and Remuneration committees and also for the role of Senior Independent Director. These are reviewed on an annual basis, no change has been made to the basic NED fee since 2009.

Senior management and the wider workforce
Remuneration for executive directors is set within the wider context of the Group’s remuneration policy for the wider workforce. The key differences of quantum and structure in pay arrangements across the Group reflect the different sizes of roles and levels of accountability required for the role and that executive directors and senior management have a much greater emphasis on performance-based pay through the annual bonus and the LTIP.

Salaries for management grades are normally reviewed annually (currently in July each year) and take account of both business and personal performance. Specific arrangements are in place at each site and these may be annual arrangements or form part of a longer-term arrangement and the Board is kept regularly updated on these arrangements.

The Committee reviews the level of salary increases for colleagues not involved in collective bargaining and also reviews and approves the annual bonus plan for the general management population. Financial objectives for executive directors and the management population are aligned and strategic objective cascaded down the management structure. During the year, the Committee approved changes to the management scheme to make it more competitive and aid recruitment and retention. Senior management participate in long-term incentive arrangements reflecting their contribution to Group performance and enhancing shareholder value. All employees are encouraged to own shares in the Company via the Sharesave Plan and executive directors through our shareholding guidelines. In line with the recommendations of the new UK Governance Code, published in 2018, the Committee is currently reviewing how it engages with colleagues across the business.

A copy of the 2018/19 Director's Remuneration Report is available here:

Directors' Remuneration Report 2018/19

A copy of our current Directors' Remuneration Policy, which was approved at the AGM on 20 July 2017 and took effect from that date is available here:

2017 Directors' Remuneration Policy