6 In 2021/22, Jennifer Duvalier received an extra £5,000 per annum to reflect her additional responsibilities for engaging with colleagues on behalf of the Board. Jennifer handed this role over to Julie Chakraverty when she joined the Board on 1 January 2022. Jennifer also took over from Jonathan Brooks as Remuneration Committee Chair on 1 February 2022. 7 J ulie Chakraverty joined the Board on 1 January 2022 and took over from Jennifer Duvalier as the designated Non-Executive Director for engaging with colleagues on behalf of the Board. 8 Jonathan Brooks stepped down from the Board and as Remuneration Committee Chair on 27 January 2022. 9 O ptions over 10,273 shares vested on 1 October 2021 to Adam Palser and Tim Kowalski under the all-colleague SAYE scheme. These awards have been valued at the date of vesting using the share price on that date of £2.60. 10 S ingle total figure of remuneration for the year ended 31 May 2022 excludes accrued costs in relation to Adam Palser’s contractual 12 month notice period that commenced on the date of announcement, 9 May 2022. See page 115 for further details in relation to leaving arrangements of Adam Palser.
Additional information in respect of the single total figure of remuneration Pension and benefits
Effective 1 December 2021, the CEO’s and CFO’s pension provision reduced from 5% of base salary and 10% of base salary, respectively, to the level of the wider workforce, which is currently 4.5%. These contributions are cash payments in lieu of formal pension contributions. Annual bonus 2021/22 annual bonus (audited) For the year ended 31 May 2022, the maximum potential bonus opportunity for Adam Palser was 100% of salary. For Tim Kowalski, the maximum potential bonus opportunity was also 100% of salary. For the year ended 31 May 2022, bonuses of 59.88% and 66.38% of base salary respectively were payable. The actual bonus awarded to Adam Palser was £278,442 and to Tim Kowalski was £204,450 based on the achievement of the performance conditions set out below. 35% of each payment will be deferred into nominal cost share options for two years, with the remaining 65% paid in cash. The performance measures and targets are set out below. Financial targets – up to 75% of the bonus Performance targets Adam Palser Tim Kowalski 31 May 2022 Adjusted proforma operating profit * Threshold £51.5m Weighting (% of salary) 7.50% 7.50% Maximum £54.5m Weighting (% of salary) 37.50% 37.50% Actual £53.5m * Payout (% of salary) 28.13% 28.13%
Threshold
2%
Weighting (% of salary)
3.25%
3.25%
Revenue constant currency 1 growth – Software Resilience
Maximum
5%
Weighting (% of salary)
18.75% 18.75%
Actual
(0.6%)
Payout (% of salary)
0%
0%
Threshold
9%
Weighting (% of salary)
3.25%
3.25%
Revenue constant currency 1 growth – Assurance
Maximum
12%
Weighting (% of salary)
18.75% 18.75%
Actual
12.1%
Payout (% of salary)
18.75% 18.75%
Weighting (% of salary)
25.00% 25.00%
Strategic targets
The strategic targets were set individually for the Executive Directors based on key strategic objectives for the year in their area of responsibility – see below
Payout (% of salary)
13.00% 19.50%
Total payout
59.88% 66.38%
Total bonus
£278,442
£204,450
Amount paid in cash
£180,987
£132,892
Amount deferred in shares
£97,455
£71,558
* F ollowing the acquisition of IPM, goodwill and intangible assets were recognised amounting to £68.6m and £92.6m respectively. Management is required to recognise all assets and liabilities at fair value, giving rise to a fair value adjustment on the level of deferred revenue acquired of £12.1m. This has resulted in a downward adjustment to the book value of IPM’s deferred revenues reflecting the fair value of service still to be delivered. If the fair value adjustment had not applied, revenue would be £4.4m higher for the 12 months ended 31 May 2022. On this basis, proforma Adjusted operating profit of £52.5m represents Adjusted operating profit 1 of £48.1m and the fair value adjustment of £4.4m (see page 10). A djusted proforma operating profit of £52.5m (see page 10) has been amended to £53.5m to exclude accrued CEO transition cost of £1.0m that have not been treated as Individually Significant Items in the Financial Statements. The Remuneration Committee considered that the fair treatment of the unplanned and accelerated costs related to the CEO transition was that most of these should not impact bonuses for FY22. However, the Committee has determined that, for balance, the payment-in-lieu costs for the departing CEO will impact FY23 bonuses for those executives who benefited from the adjustment made in FY22. This will be achieved by raising the FY23 profit targets for these executives by £0.5m. 1 S ee Note 3 for an explanation of Alternative Performance Measures (APMs) and adjusting items. Further information is also contained within the Chief Financial Officer’s Review and the Glossary of terms on pages 56 to 63 and 203 and 204 respectively.
NCC Group plc — Annual report and accounts for the year ended 31 May 2022
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