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Remuneration committee

Directors’ Remuneration Report
Committee Chairman’s Letter
Dear shareholder,
On behalf of your Board, I am pleased to present the Directors’ Remuneration report for the period ended 1 April 2017.
Overview of remuneration 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.
2017 Remuneration Policy
The Committee's main focus over the year has been to approve the Company's new Remuneration Policy. During the design of the new policy, the Committee consulted with the major shareholders. As Chairman of the Committee, I wrote to the Company's largest shareholders, the Investment Association (IA) and Institutional Shareholder Services (ISS) in order to update them on the proposed changes and seek feedback.
The main principles applied to the review process were to simplify remuneration arrangements, ensure arrangements were in line with general market practice and to retain flexibility to respond to future requirements. No increases to overall quantum or opportunity have been proposed and as a result there are no material changes in remuneration arrangements.
Annual bonus plan
The current opportunity is 150% of salary for the CEO of which 25% is paid in shares (not subject to compulsory deferral) and a total of 105% of salary for the CFO which comprises 75% of salary under the annual bonus plan and 30% under the 2011 Deferred Share Bonus Plan ('DSBP') which is subject to the same performance conditions as the element under the annual bonus plan but deferred for two years. To simplify the bonus structure, it is proposed that the annual bonus and DSBP are consolidated with no change in quantum so that the annual bonus opportunity is 150% of salary for the CEO and 105% for the CFO.
At the same time the Committee intends to introduce bonus deferral for all executive directors, with not less than 1/3rd of the total bonus awarded being deferred into Premier Foods' shares for three years. This will increase alignment between executive directors and shareholders and will increase the bonus payable in shares as a percentage of salary for both CEO and CFO (which is currently 25% and 28.5%, respectively). In order to facilitate this deferral the Company is seeking shareholder approval to introduce a new Deferred Bonus Plan (DBP) at the 2017 AGM.
The deferred amount will be subject to recovery provisions. Executive directors are required to retain 50% of post-tax shares from the vesting of LTIP awards until such time as their shareholding guidelines have been met. Shares from the DBP will be subject to the same retention requirement.
Long-Term Incentive Plan ('LTIP')
The current LTIP is comprised of performance shares and matching shares. There have been annual grants of performance shares under the current plan, however, matching shares have not been granted in recent years. Given matching shares are minority practice, to simplify the structure and align with market practice, matching shares will be removed from the plan under the new policy.
In addition, to further align with best practice, a two year post vesting holding period will apply and current recovery provisions will be extended to recovery and withholding provisions.
Executive shareholdings and external directorships
Finally, the Company's guidelines on executive directors' shareholdings and external directorships have been incorporated into the Remuneration Policy.
Performance outcome for 2016/17
The Committee reviewed the CEO’s and CFO’s performance over the financial period and assessed the extent to which their annual bonus targets had been achieved. Whilst significant progress was made in respect of key Strategic and Personal objectives, trading performance was below target. No bonus awards have been made for the financial period, details of the performance assessments are set out on pages 43 to 45 of the 2016/17 annual report.
Arrangements for the coming period
Targets for the annual bonus and LTIP awards for 2017/18 are aligned with the Group's strategic priorities highlighted in the Chief Executive's review on page 05 of the 2016/17 annual report.
As part of the Company's cost reduction programme it was agreed that there would be no salary increase for colleagues not involved in collective bargaining for 2017/18 and consequently no salary increases are proposed for the CEO and CFO. The CEO's salary therefore remains unchanged since his appointment in 2013.
I look forward to your continuing support.
Jennifer Laing
Remuneration Committee Chairman
16 May 2017

Directors' Remuneration Policy and Annual Report on Remuneration 2016/17

You can find a copy of our proposed new Directors' Remuneration Policy along with the Annual Report on Remuneration for 2016/17 by following the links below.

Directors' Remuneration Report 2016/17

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 by following the link below.


The full text of annual report 2016/17 can be downloaded from the results centre

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