80 JUST GROUP PLC Annual Report and Accounts 2020
Directors’ remuneration report continued
The LTIP awards made in 2018 are due to vest in March 2021 with reference to performance to 31 December 2020. The threshold TSR performance target was not achieved and the adjusted EPS measure was achieved at 39.5%. 19.75% of the 2018 LTIP awards will therefore vest in March 2021. Further detail can be found on page 83. The Committee felt that outturns under the STIP and LTIP in 2020 were appropriate and did not exercise discretion. CEO loan Our Group CEO originally joined Partnership Assurance Group in 2012 when it was a privately owned, private equity-backed company, prior to its initial public offering in 2013. These long-standing arrangements involved the company making loans to the executives to enable them to purchase shares in Partnership Assurance Group. On the merger of Partnership Assurance Group and Just Retirement Group in 2016 to form the current Group, this loan was assumed and the related shares were converted into shares in the Company. The loan accrues interest at a rate of 4% per annum, which is added each year to the principal owed, with £389k due as at 31 December 2020. The loan relates to 334,712 shares in the Company, with David required to repay any proceeds of sale from such shares up to the amount due. Arrangements require the balance of the loan to be written off if sale proceeds are insufficient to repay the loan, which would generate a taxable (if notional) receipt for David which the Company would settle on a grossed-up basis. This has been reported in the accounts since 2016 as a Directors’ loan. However, it has not been reported in the Directors’ Remuneration Report as a potential liability or a qualification to the number of shares in which David has an interest. To ensure full disclosure, details of the loan have been disclosed in the remuneration report and a footnote to Directors’ interests on page 85 of this report. Summary of remuneration for David Richardson in respect of 2020
IMPLEMENTATION OF THE REMUNERATION POLICY FOR 2021 For the reasons set out as part of the policy review, the Remuneration Committee considers that the arrangements remain clear, simple, predictable, proportionate, aligned to culture and mitigate risk (particularly through the emphasis on surplus capital), as required by paragraph 40 of the Corporate Governance Code. This will be kept under periodic review. The Remuneration Committee agreed that David Richardson and Andy Parsons would not receive a salary increase with effect from 1 April 2021. The salary increase budget available for senior management and the general employee population eligible to be considered for an increase was 0.5%, with individual increases varying within a range, depending on a number of factors. The maximum STIP opportunity continues to be 150% of base salary for Executive Directors, subject to stretching corporate financial and personal non-financial measures. From 2020 the element of the STIP which is deferred was increased to 40%. The core bonus opportunity is determined through a basket of financial and strategic performance measures and is then distributed to Executive Directors against their achievement of their personal objectives. This means personal objectives are no longer weighted separately within the scorecard. While not expected in the normal course, the Committee retains the flexibility to pay up to 20% of the maximum bonus opportunity based on personal performance only. The Committee anticipates making awards under the LTIP over shares worth 150% of salary in 2021, although the Committee will take into consideration the prevailing share price at the time of grant when finalising its decision on award levels.
Performance will continue to be measured over a three year period.
The Policy allows the Remuneration Committee some discretion to make adjustments to the performance conditions and weightings from year-to-year but, for awards made in 2021, it is intended that three performance conditions will continue to apply and the associated targets will be disclosed at the time of the LTIP vest. The weightings have been amended for the 2021 LTIP award: • Organic capital generation (37.5%), with a solvency ratio underpin for this measure. • Adjusted earnings per share (37.5%). • Relative TSR (25%) vs FTSE 250. This combination of measures is felt to reflect the business strategy and objectives over the next three year period. I hope that you will be able to support the resolution to approve the Annual Report on Remuneration at the forthcoming AGM.
(£’000)
Salary
594
Deferred variablE
Benefits Pension
24 59
24% fixed casH 45%
STIP – cash
304 457
STIP – deferred
variable casH 31%
LTIP
57
Summary of remuneration for Andy Parsons in respect of 2020
(£’000)
Salary
415
Deferred variablE
Benefits Pension
47 42
20% fixed casH 50%
STIP – cash
199 299
STIP – deferred
variable casH 30%
This chart excludes buy-out awards, as those relate to compensation for awards lost on leaving a former employer and do not relate to 2020 remuneration at Just Group.
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