Recruitment terms for new CEO (Mike Maddison) Mike Maddison joined us as our new CEO on 7 July 2022. Mike’s remuneration has the same structure as Adam Palser’s and consists of a base salary of £500,000, an annual bonus opportunity of 125% of salary, and an annual LTIP grant of 175% of salary. The base salary level for Mike is substantially less than in his previous role. Mike’s benefits will be the same as Adam’s, except Mike will not receive a car allowance and Mike will be entitled to a pension contribution or allowance of 4.5% of salary, which aligns with our wider workforce. In recognition that the remuneration offer from NCC would otherwise be substantially below his prior remuneration in his previous role, and to replace remuneration foregone on leaving his previous role, the Board will grant a Special Replacement Award of £500k worth of shares, vesting in 2024. The award will be granted in accordance with Listing Rule 9.4.2(R) and the details of the award will be fully disclosed in next year’s Remuneration Report. Leaving arrangements for outgoing CEO (Adam Palser) As previously reported, Adam Palser stepped down as CEO on 17 June 2022 and his exit terms follow his service contract and our Directors’ Remuneration Policy. The full terms of Adam’s exit arrangements can be found on our website (www.nccgroupplc.com/ media/dfsdz5ix/adam-palser-section-430-2b-of-the-companies- act-statement.pdf); in summary, during his notice period Adam will continue to be paid his monthly salary, and while he remains a colleague, will also receive cash in lieu of pension, car allowance and other benefits in monthly instalments (his notice period will end on 9 May 2023). If Adam wishes to take up alternative employment before the end of his notice period, the Committee may cease the monthly payments. Adam will receive his 2021/22 bonus (subject to the normal performance conditions and 35% deferral into shares) but will not receive a bonus for the 2022/23 year, nor an LTIP grant for 2022. Adam’s 2019–2022 LTIP grant will not be prorated for service (as he will serve the full three years required) and will vest in the normal manner in September/October 2022 subject to the normal performance conditions. Adam’s 2020 and 2021 LTIP grants will be prorated for time served from the date of grant until the termination date (9 May 2023), then vest in the usual manner subject to performance conditions at the normal vesting date. The two year post-vesting holding period will apply to all LTIPs. Post-employment shareholding requirements will apply to the 2021 LTIP and the 2022 deferred annual bonus plan, in accordance with the Directors’ Remuneration Policy. Remuneration adviser retender During the year it was decided to undertake a review of the Committee’s remuneration adviser, with the Committee recognising the length of time that the current adviser (Alvarez and Marsal (A&M)) had been in place. A&M and two other advisory firms of comparable calibre and experience were invited to tender for the advisory role. The Committee received pitches from all three advisers at the May 2022 Remuneration Committee meeting. Following a thorough scoring and review process and robust Committee debate, it was agreed that Alvarez and Marsal remain the Committee’s adviser.
holds a number of colleague engagement sessions during the year in which colleagues are invited to provide feedback and comments on any issue, including executive remuneration and broader remuneration policies. The Committee also receives regular feedback from the Chief People Officer and Director of Reward and HR Operations on how colleagues perceive NCC’s remuneration policies and practices in the context of recruitment, retention and motivation. This information is used by the Committee in its monitoring and development of remuneration policies. Remuneration Policy for 2021–2024 During the 2021/22 financial year, we initially operated within the Remuneration Policy that was approved by shareholders at the 2020 AGM, then switched to the Remuneration Policy that was approved by shareholders at the 2021 AGM in November 2021. The 2021–2024 Directors’ Remuneration Policy received 87.43% of votes in favour and I thank shareholders for their support. As a reminder, with the arrival of the Covid-19 pandemic, changes to the Remuneration Policy in October 2020 were minimal and we, instead, submitted a more significant set of changes at the November 2021 AGM. The aim of these changes was to reflect the strong performance of the business and development of the senior team over a number of years and ensure that the remuneration of our senior team is appropriately positioned against a highly competitive market for talent within the sectors in which NCC Group operates. We refined some changes with our remuneration consultants and then undertook a period of consultation with shareholders in March and April 2021, who were supportive of our approach. Our 2021–2024 Remuneration Policy can be found in this report. Its main features were to make phased increases to the variable pay opportunity for our CEO and CFO. The first of the changes took place in November 2021 with increased levels of LTIP grants made to the CEO (of 175% of salary) and the CFO (of 150% of salary) (compared with previous grants of 100% for both the CEO and CFO respectively). The implementation of the second increase will take place in 2022/23 when the annual bonus opportunity for both the CEO and CFO will increase from 100% to 125% of salary. The Committee considered this phased approach to be appropriate in the current environment and these increases are balanced by: a reduction in the threshold vesting level for the LTIP; a reduction of Executive Director pension contributions to the workforce level of 4.5%; and the adoption of a more demanding post-employment shareholding policy. Total remuneration remains below the market benchmark level. Further details can be seen in this report. Base salaries For the 2021/22 financial year, average salaries in the Group rose by approximately 3.1% but we decided to increase the salary of the CEO by 3%, taking effect from 1 June 2021, taking his salary to £465,000. For 2022/23, average salaries in the Group increased by an average of 5.3% and we have not made any increases to the CEO’s salary as he is leaving the Group. For the CFO, recognising that his salary was below the appropriate level given the size and nature of the role and the incumbent’s experience, we consulted with shareholders to increase his pay over a two year period. This plan was fully explained in the Committee Chair’s introduction to last year’s Remuneration Report. In June 2021 his salary increased to £308,000, representing an increase of 4.9% pts above the average workforce increase (i.e. 8% in total). In June 2022, we implemented the second stage of the planned salary change and increased his salary by 2.9% pts above the average workforce figure. Despite these increases, the salary remains below the relevant benchmark.
NCC Group plc — Annual report and accounts for the year ended 31 May 2022
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