Remuneration Committee report continued Annual statement continued
Grants of shares under a below-Board Restricted Share Plan to broaden colleague share ownership As a Board, we remain committed to broadening share ownership throughout the Group, both as a reward and retention tool. During the year, we made further grants to around 380 colleagues under our Restricted Share Plan (RSP), authorisation for which had been granted at the 2020 AGM. An increased number of colleagues were made a share award dependent on their continuing service within the Group for a period of up to three years. RSPs are extremely common in the technology sector in the USA, where we have increased our presence in the last few years, and we expect to continue to utilise this mechanism to support colleague retention. In addition, we also offered colleagues the opportunity to participate in our Save As You Earn/stock purchase share plans in the UK, the US, Canada, the Netherlands, Australia, Denmark and Spain. Once again, these proved popular with high take-up levels. During the year, we also approved a new Share Incentive Plan (SIP) for UK-based colleagues, further increasing our commitment to cost effective colleague share ownership. We will look to launch this towards the end of 2022. Non-Executive Director and Chairman’s fees In line with our Remuneration Policy, Non-Executive Director fees were reviewed (by the Company Chair, CEO and CFO) and modest increases were applied with effect from 1 June 2022. The Remuneration Committee also reviewed the Chairman’s fees using data provided by our remuneration consultants. As a result the Chairman’s fees were increased by 2.8% to £162,700. Details of these fees and allowances are given in the Annual Report on Remuneration on page 119 Performance related pay – annual bonus The annual bonus for the year ended 31 May 2022 for both the Chief Executive Officer and Chief Financial Officer was based on the satisfaction of stretching financial and strategic targets. The financial targets for the 2021/22 financial year were given a weighting of 75% of the bonus opportunity. The performance measures included Group operating profit and individual revenue targets for Assurance and Software Resilience. Strong revenue growth of 12% in Assurance resulted in the stretch target being achieved for this bonus element, but revenue growth in Software Resilience did not meet the threshold target, resulting in no bonus for that element. Overall, Group profit performance was strong with Adjusted operating profit towards the top end of the target range. This financial performance resulted in an award for the financial element of the bonus of 46.88% out of the maximum available of 75%. In assessing Group profit performance, the Committee applied discretion to ensure fair treatment of the transition costs relating to the change of CEO, as detailed in the report. For the 2021/22 financial year, the strategic objectives for both the CEO and CFO were given a weighting of 25% (this is a reduction from 2020/21 when the weighting on the strategic element was 40%). The bonus award for the strategic element of the bonus was 13% of base salary for the CEO and 19.5% for the CFO out of the maximum available of 25%.
The strategic objectives covered three areas: • Integration of Iron Mountain IPM division: this included specific targets for systems, people, customer and operating model integration • Strategic objectives within the existing business: these included specific targets for the development of the MDR and Remediation businesses • Sustainability objectives: these included objectives with respect to diversity targets, colleague engagement, and corporate social responsibility Further detail on performance against strategic objectives is provided later in the report. The total bonus earned was determined to be 59.88% of base salary for the CEO and 66.38% of base salary for the CFO. For both the CEO and CFO, 35% of the bonuses achieved will be deferred into shares and will vest after two years. Clawback and malus provisions are also in place for the annual bonus. For 2022/23, the Committee will continue with the annual bonus weightings being 75% financial and 25% non-financial. For 2022/23, we will continue to use revenue targets to complement the targets on Adjusted operating profit. Strategic targets for 2022/23 Strategic targets for the CEO will include reviewing the Group strategy and the following measures: • Strategic objectives within the Assurance business: specific revenue growth targets and to grow XDR sales orders (10% in total) • Strategic objective for the Software Resilience business: finalisation of the full operational review of the combined Software Resilience division to create additional Group contribution from FY24 (10% in total) • Sustainability and people objectives: these will include objectives relating to our colleague engagement, retention and corporate social responsibility (5% in total) For the CFO, the strategic objectives will be similar; however instead of strategic objectives within the Assurance business, he has objectives related to global finance reporting, systems, and improvements to meet the evolving needs of the business. Performance related pay – LTIP outcome The 2021–2024 LTIP was granted under the higher shareholder approved limits (i.e. 175% and 150% of salary for the CEO and CFO respectively) in November 2021. The awards will vest subject to demanding EPS, cash and relative TSR targets outlined later in this report. The LTIP outcome for those LTIPs granted in 2019 was a vesting equivalent to 59.33% of the maximum award. This was based on EPS growth of 10.68% p.a., relative TSR ranking above upper quartile and cash conversion of 106%.
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NCC Group plc — Annual report and accounts for the year ended 31 May 2022
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