The Committee of the Board consists solely of independent non-executive Directors.
During the year ended 28 February 2015 the Chairman of the Committee was Breege O’Donoghue. Other members of the Committee were Richard Holroyd and Stewart Gilliland.
The Committee’s terms of reference are summarised on here.
The Chairman of the Board and the Chief Executive Officer are fully consulted on remuneration proposals but neither is present when his own remuneration is discussed.
The Committee has access to external advice from remuneration consultants on compensation when necessary. During the year ended 28 February 2015 the Committee obtained advice from Deloitte who were appointed by the Committee. Deloitte provided advice in relation to the changes to the executive long-term incentive schemes, the Joint Share Ownership Plan, the Directors’ remuneration report and the Directors’ remuneration policy. Deloitte’s fees for this advice amounted to €30,888 charged on a time or fixed fee basis. During the period, separate divisions of Deloitte advised the Group on commercial contract issues and tax issues.
Deloitte is a member of the UK Remuneration Consultants Group and, as such, voluntarily operates under a code of conduct. To safeguard objectivity, protocols are established to cover the basis for contact with executive management and to avoid potential conflict arising from other client relationships. The Committee is satisfied that the remuneration advice provided by Deloitte is objective and independent.
The Committee has also obtained advice from:
No Director is present when their own remuneration is discussed.
The Committee is committed to open and transparent dialogue with shareholders and consults with shareholders and governance bodies on proposals relating to remuneration structures. During the year, the Committee consulted with, and received good support from, significant shareholders regarding the new executive long-term incentive schemes.
Directors’ Remuneration Policy
This part of the report sets out the Group’s policy on Directors’ remuneration. The policy has been determined by the Committee of the Board of Directors (“the Committee”). The Directors’ remuneration policy will be subject to an advisory vote at the 2015 AGM and will take effect from that date.
The main aim of the Group’s policy on Directors’ remuneration is to attract, retain and motivate Directors of the calibre required to promote the long-term success of the Group. The Committee therefore seeks to ensure that Directors are properly, but not excessively, remunerated and motivated to perform in the best interests of shareholders, commensurate with ensuring shareholder value.
The Committee seeks to ensure that executive Directors’ remuneration is aligned with shareholders’ interests and the Group’s strategy. Share awards are therefore seen as the principal method of long-term incentivisation. Executive Directors are incentivised on a range of equity share structures, notably the significant share ownership held by Stephen Glancey and Kenny Neison through the Joint Share Ownership Plan. Similar principles are applied for senior management, several of whom have material equity holdings in the Company.
Annual performance-related rewards aligned with the Group’s key financial, operational and strategic goals and based on stretching targets are a further component of the total executive remuneration package. For senior management, mechanisms are tailored to local requirements.
The Group seeks to bring transparency to executive Directors’ reward structures through the use of cash allowances in place of benefits in kind. In setting executive Directors’ remuneration the Committee has regard to pay levels and conditions applicable to other employees across the Group.
Salary levels are determined by the Committee taking into account factors including:
Executive Directors are entitled to an annual review of their salary, but there is no entitlement to receive any increase.
The Committee may award salary increases to take account of individual circumstances such as:
In awarding increases, the Committee will have regard to the outcome of pay reviews for employees as a whole.
The base salaries effective as at 1 March 2015 are shown further down.
The Committee has not set an absolute maximum on the levels of benefits that may be awarded since this will depend upon the circumstances applicable to the relevant Director as well as the cost of any third party suppliers. The value of the cash allowance/benefit is set at a level which the Committee considers appropriate against the market and provides sufficient level of benefit based on individual circumstances.
See ‘Implementation’ section below for details of the benefits for FY2016.
Maximum cash allowance is 30% of salary. The value awarded is set at a level which the Committee considers appropriate against the market and provides sufficient level of benefit based on individual circumstances.
See ‘Implementation’ section below for details of the cash allowance in lieu of pension benefits for FY2016.
A discretionary scheme under which executive Directors are entitled to receive a variable reward contingent upon the achievement of performance targets.
The structure and value of the bonus scheme and the applicable performance measures are subject to annual approval by the Committee. Any pay-out is determined by the Committee after the year end, based on performance against the relevant targets.
The Committee has discretion to vary the bonus pay out should any formulaic output not reflect the Committee’s assessment of overall business performance.
The Committee has discretion to apply deferral to part of any bonus earned in the year and for such amount to be deferred into shares for a period of up to two years.
Malus and clawback provisions will apply to the annual bonus. See the ‘Malus and clawback’ section below for more details.
The Committee reserves the right to vary, amend, replace or discontinue the bonus scheme at any time depending on business needs and/or financial viability or as appropriate by reference to any changes in corporate structure during the financial year.
Maximum opportunity is 100% of base salary.
However, for FY2016 executive Directors are entitled to a maximum bonus opportunity of 80% of base salary.
Measures and targets are set annually reflecting the Company’s strategy and aligned with key financial, operational, strategic and/or individual objectives.
Targets, whilst stretching, do not encourage inappropriate business risks to be taken.
The relevant measures and the respective weightings may vary each year based upon the Company’s priorities.
If applicable, as the bonus is subject to performance measures, any deferred bonus is not subject to further performance conditions.
See ‘Implementation’ section below for details of the bonus conditions for FY2016.
Subject to shareholder approval at the 2015 AGM, a new Long Term Incentive Plan (“LTIP 2015”) and a new Executive Share Option Scheme (“ESOS 2015”) will be adopted. Awards will not be granted under the new arrangements until FY2017.
Subject to the plan limits set out below the Committee has the discretion to determine the appropriate mix of LTIP 2015 and ESOS 2015 awards each year in the context of the Company’s business cycle and its future growth plans save where the executive has a contractual entitlement. Malus and clawback provisions will apply to both the LTIP 2015 and the ESOS 2015. See the “Malus and clawback” section below for more details.
Options/awards will be granted under the existing ESOS and the LTIP (Part I) in FY2016 (see Implementation section below).
Awards are usually made annually by the Committee following the release of full year financial results but can be made after release of the interim results and exceptionally at other times.
The Committee may grant options to acquire shares in the Company at a market related exercise price. The Committee has discretion to grant ESOS 2015 awards to reward sustained value creation by averaging the value of the shares at grant and the point of exercise across an extended period of up to six months.
The vesting of options is subject to meeting a specific performance target set by the Committee and measured over a period of three years. Options will not normally be exercisable until after the assessment of the performance condition following the end of the performance period.
Early vesting may be available for certain qualifying leavers. See policy on payment for loss of office further down for more details.
Options vest early on a change of control (or other relevant event), taking into account the performance conditions. Options may be adjusted in the event of a variation of share capital in accordance with the scheme rules.
The Committee has the discretion to grant ESOS and ESOS 2015 options as tax-advantaged options as permitted by the UK Revenue authorities and allows grants of options over shares with a market value of up to the value prescribed by the applicable tax legislation (currently £30,000) to be made on a tax efficient basis to employees who are UK taxpayers. Tax-advantaged options will be subject to the same performance conditions as non-tax-advantaged ESOS options.
The maximum ESOS 2015 award is 150% of base salary in respect of any financial year if granted in combination with a LTIP 2015 award equal to 100% of salary.
Other than in exceptional circumstances the limit on ESOS 2015 awards would be 300% of salary if no LTIP 2015 awards are granted in respect of the same financial year.
This is subject to the overall exceptional circumstances limit set out above.
Contractual entitlements to be granted in FY2016 under the current ESOS are:
Stephen Glancey - ESOS: 150% of base salary
Kenny Neison - ESOS: 150% of base salary
Joris Brams - ESOS: 150% of aggregate base salary
See ‘Implementation’ section below for details of the performance conditions for FY2016.
See further down and note 4 to the financial statements for details of the performance conditions for FY2015.
Under the LTIP (Part I) awards are granted in the form of nominal cost options to acquire shares or conditional awards. Under the LTIP 2015, awards of conditional shares, restricted stock or nil cost or nominal cost options (or similar cash equivalent) can be made.
The vesting of awards is subject to meeting specific performance targets set by the Committee and measured over a period of three years. Awards will not normally vest until after the assessment of the performance condition following the end of the performance period.
The Committee may decide that a participant has a right to ‘dividend equivalents’ whereby the participant receives additional value equivalent to that which accrues to shareholders by way of dividends that would have been paid on the underlying shares during the vesting period. This value can be paid as cash or shares.
Early or pro-rata vesting may be available for certain qualifying leavers. See policy on payment for loss of office further down for more details.
Awards vest early on a change of control (or other relevant event) taking into account the performance conditions and pro-rating for time, although the Committee has discretion not to apply time pro-rating. Awards may be adjusted in the event of a variation of share capital in accordance with the scheme rules.
The maximum LTIP 2015 award is 100% of base salary in respect of any financial year if granted in combination with an ESOS 2015 award equal to 150% of salary.
The maximum LTIP 2015 award is 150% of base salary in respect of any financial year if no ESOS 2015 award is granted in respect of the same financial year.
This is subject to the overall exceptional circumstances limit set out above.
Contractual entitlements to be granted in FY2016 under the current LTIP are:
Stephen Glancey - LTIP (Part I): 100% of base salary
Kenny Neison - LTIP (Part I): 100% of base salary
Joris Brams - LTIP (Part I): 100% of aggregate base salary
See ‘Implementation’ section below for details of the performance conditions for FY2016.
See further down and note 4 to the financial statements for details of the performance conditions for FY2015.
Performance conditions will be attached to the LTIP 2015 awards by taking into account the business priorities prevailing at the time of grant and the Company’s strategy. Such conditions may include, but are not limited to, EPS growth and cash conversion and return on capital.
The C&C Profit Sharing Scheme is an all-employee share scheme and has two parts. Part A relates to employees in ROI and has been approved by the Irish Revenue Commissioners (the Irish APSS). Part B relates to employees in the UK and is a HMRC qualifying plan of free, partnership, matching or dividend shares (or cash dividends) with a minimum three year vesting period for matching shares (the UK SIP). UK resident executive Directors are eligible to participate in Part B only.
There is currently no equivalent plan for Directors resident outside of Ireland or the UK.
Fees paid to non-executive Directors are determined and approved by the Board as a whole. The Committee recommends the remuneration of the Chairman to the Board.
Fees are reviewed from time to time and adjusted to reflect market positioning and any change in responsibilities.
Non-executive Directors receive a basic fee and an additional fee for further duties (for example chairmanship of a committee or senior independent Director responsibilities).
Non-executive Directors are not eligible to participate in the annual bonus plan or share-based schemes and do not receive any benefits (including pension) other than fees in respect of their services to the Company.
Non-executive Directors may be eligible to receive certain benefits as appropriate such as the use of secretarial support, travel costs or other benefits that may be appropriate.
Fees are based on the level of fees paid to non-executive Directors serving on Boards of similar-sized Irish and UK-listed companies and the time commitment and contribution expected for the role.
The Articles of Association provide that the ordinary remuneration of Directors (i.e. Directors’ fees, not including executive remuneration) shall not exceed a fixed amount or such other amount as determined by an ordinary resolution of the Company. The current limit was set at the Annual General Meeting held in 2013, when it was increased to €1.0 million in aggregate.
The fees effective as at 1 March 2015 are shown further down.
In line with the recently updated UK Corporate Governance Code malus and clawback provisions will apply to all elements of performance-based variable remuneration (i.e. annual bonus, ESOS 2015 and LTIP 2015) for the executive Directors with effect from 1 March 2016. The circumstances in which malus and clawback will be applied are if there has been in the opinion of the Committee a material mis-statement of the Group’s published accounts; or the Committee reasonably determines that a participant has been guilty of gross misconduct. The clawback provisions will apply for a period of two years following the end of the performance period.
At the 2015 AGM, shareholders are being asked to approve a resolution extending the exercise period of the LTIP (Part I). Currently the rules of the Plan are drafted such that executives have a six month window in which to exercise options vesting under the LTIP (Part I). If the executives are prohibited from exercising their options because the Company is in a close period, then the options will lapse. This is not the intention of the Plan, which should allow for the exercise period to be extended in this situation and we are therefore seeking to amend the rules to provide this flexibility by extending this window from six months to three years from vesting.
The Committee recognises the importance of ensuring that the outcomes of the Group’s executive pay arrangements properly reflect the Group’s overall performance over the performance period. It is the Committee’s intention that the mechanistic application of performance conditions relating to awards will routinely be reviewed to avoid outcomes which could be seen as contrary to shareholders’ expectations.
To the extent provided for in accordance with any relevant amendment power under the rules of the share plans or in the terms of any performance condition, the Committee may alter the performance conditions relating to an award or option already granted if an event occurs (such as a material acquisition or divestment or unexpected event) which the Committee reasonably considers means that the performance conditions would not, without alteration, achieve their original purpose. The Committee will act fairly and reasonably in making the alteration so that the performance conditions achieve their original purpose and the thresholds remain as challenging as originally imposed. The Committee will explain and disclose any such alteration in the next remuneration report.
The Committee reserves the right to make any remuneration payment or any payment for loss of office without the need to consult with shareholders or seek their approval, notwithstanding that it is not in line with the policy set out above, where the terms of the payment were agreed either:
For these purposes: the term ‘payment’ includes any award of variable remuneration; in relation to an award over shares, the terms of the payment are ‘agreed’ at the time the award is granted.
The Committee may, without the need to consult with shareholders or seek their approval, make minor changes to this Policy to aid in its operation or implementation taking into account the interests of shareholders.
Remuneration packages for executive Directors and for employees as a whole reflect the same general remuneration principle that individuals should be rewarded on their contribution to the Group and its success, and the reward they receive should be competitive in the market in which they operate without paying more than is necessary to recruit and retain them.
The remuneration package for executive Directors reflects their role of leading the strategic development of the Group. Accordingly there is a strong alignment with shareholders’ interests, through long term performance-based share rewards. Senior management are similarly rewarded.
These rewards are not appropriate for all employees but it is the Committee’s policy that employees in general should be afforded an opportunity to participate in the Group’s success through holding shares in the Company through all-employee schemes.
Executive Directors are incentivised through an annual cash bonus to achieve shorter term objectives and all employees are similarly incentivised.
For executive Directors the remuneration package reflects the demands of a global market. For employees generally remuneration and reward are tailored to the local market in which they work. It is the Committee’s policy that all employees should share in the success of the business divisions towards whose success they have contributed.
As described above, when setting the policy for executive Directors’ remuneration, the Committee applies the same core principle as applied for the pay and employment conditions of other Group employees. When reviewing Directors’ remuneration, the Committee has regard to the outcome of pay reviews for employees as a whole.
The Committee did not directly consult with employees when formulating the Directors’ remuneration policy set out in this report and no remuneration comparison measurements comparing executive Directors remuneration with employees generally were used.
The Group has regular contact with employee representatives on matters of pay and remuneration for employees covered by collective bargaining or consultation arrangements.
The charts below show the level of remuneration and the relative split of remuneration between fixed pay (base salary, benefits and cash allowance in lieu of pension) and variable pay (annual bonus, ESOS and LTIP (Part I)) for each executive Director on the basis of minimum remuneration, remuneration receivable for performance in line with the Company’s expectations and maximum remuneration (not allowing for any share price appreciation).
For the purposes of the above charts, the following assumptions have been made:
The average exchange rate for FY2015 has been used for ease of comparison.
In illustrating the potential reward the following assumptions have been made:
When recruiting a new executive Director, the Committee will typically seek to use the policy detailed in the table above to determine the appropriate remuneration package to be offered. To facilitate the hiring of candidates of the appropriate calibre required to implement the Group’s strategy, the Committee retains the discretion to make payments or awards which are outside the Policy subject to the principles and limits set out below.
In determining appropriate remuneration, the Committee will take into consideration all relevant factors (including the quantum and nature of remuneration) to ensure the arrangements are in the best interests of the Group and its shareholders. This may, for example, include (but is not limited to) the following circumstances:
The Committee may also alter the performance measures, performance period and vesting period of the annual bonus or long-term incentive, if the Committee determines that the circumstances of the recruitment merit such alteration. The rationale will be clearly explained.
The Committee may make an award to compensate the prospective employee for remuneration arrangements forfeited on leaving a previous employer. In doing so the Committee will take account of relevant factors regarding the forfeited arrangements which may include the form of any forfeited awards (e.g. cash or shares), any performance conditions attached to those awards (and the likelihood of meeting those conditions) and the time over which they would have vested. These awards or payments are excluded from the maximum level of variable remuneration referred to below; however, the Committee’s intention is that the value awarded or paid would be no higher than the expected value of the forfeited arrangements.
Recruitment awards will normally be liable to forfeiture or ‘clawback’ on early departure (i.e. within the first 12 months of employment).
It would be the Committee’s policy that a significant portion of the remuneration package (including any introductory awards) would be variable and linked to stretching performance targets and continued employment. The maximum level of variable remuneration that may be granted to new Directors (excluding buy-out arrangements) is 5 times base salary.
For the avoidance of doubt, if it were necessary to make an introductory cash award which was not performance-based, such as a guaranteed bonus payment, the Committee would include such an award within the overall limit of 5 times base salary. Where a position is filled internally, any pre-appointment remuneration entitlements or outstanding variable pay elements shall be allowed to continue according to the original terms.
Fees payable to a newly-appointed Chairman or non-executive Director will be in line with the fee policy in place at the time of appointment.
Each of the executive Directors is employed on a service contract. Details of the service contracts of the executive Directors in office during the year are as follows:
As set out in last year’s annual report, changes were made during the year to the structure of Joris Brams’ service contract to reflect his greater focus on the United States following our acquisition of VHCC and services being provided by his service company in respect of Belgian brand development. His service contract was split into a USA contract with VHCC and an amended contract with Wm. Magner Limited, with the same aggregate base salary and other terms but with no cash allowance in lieu of pension provision. In addition, C&C IP Sàrl (‘CCIP’) entered into a contract for services effective as of 1 April 2014 with Joris Brams BVBA (‘JBB’), (a company wholly owned by Joris Brams and family), under which JBB agreed to provide to CCIP brand development services in relation to Belgian products and CCIP agreed to pay monthly fees totalling €91,540 on an annual basis.
The service contracts of the executive Directors do not contain any pre-determined compensation payments in the event of termination of office or employment other than payment in lieu of notice.
The principles on which the compensation for loss of office would be approached are summarised below:
The vesting of share based awards is governed by the rules of the relevant incentive plan.
Under the ESOS and LTIP (Part I), ESOS 2015 and LTIP 2015 ‘good leavers’ typically include leavers due to death, injury, ill-health, disability, redundancy, retirement with the consent of the Company or business disposal or any other reason as determined by the Committee.
Under the ESOS and LTIP (Part I) the extent to which an award vests for a good leaver will be determined taking into account the extent to which any performance conditions have been satisfied in the period from the grant date to the date of vesting.
Under the ESOS 2015 and LTIP 2015 the provisions for ‘good leavers’ provide that awards will vest at the normal vesting point and taking account of the performance over the period and subject to pro-rating for time. The Committee has the discretion to accelerate vesting to the date of cessation of employment and to waive pro-rating for time.
For any deferred annual bonus, the deferred bonus share award would be released as soon as practicable following termination (unless the Committee determines otherwise).
Payments may be made under the Company’s all employee share plans which are governed by the Irish Revenue Commissioners and HMRC tax-advantaged plan rules and which cover leaver provisions. There is no discretionary treatment of leavers under these plans.
Where on recruitment a buy-out award had been made outside the ESOS 2015 or LTIP 2015, then the applicable leaver provisions would be specified at the time of the award.
The Committee reserves the right to make additional exit payments where such payments are made in good faith in discharge of an existing legal obligation (or by way of damages for breach of such an obligation) or by way of settlement or compromise of any claim arising in connection with the termination of a Director’s office or employment. In doing so, the Committee will recognise and balance the interests of shareholders and the departing executive Director, as well as the interests of the remaining Directors. Where the Committee retains discretion it will be used to provide flexibility in certain situations, taking into account the particular circumstances of the Director’s departure and performance.
Each of the non-executive Directors in office during the financial year was appointed by way of a letter of appointment. Each appointment was for an initial term of three years, renewable by agreement (but now subject to annual re-election by the members in General Meeting). The letters of appointment are dated as follows:
The letters of appointment are each agreed to be terminable by either party on one month’s notice and do not contain any pre-determined compensation payments in the event of termination of office or employment.
Implementation of the Remuneration Policy for the Year Ending 28 February 2016
Information on how the Company intends to implement the policy for the financial year ending 28 February 2016 is set out below.
The fundamental structure of the remuneration of Stephen Glancey, Kenny Neison and Joris Brams remains unchanged from the previous year. Specifically there are no changes to their salary, the maximum rate of the annual bonus, the ESOS and LTIP (Part I) opportunity or the rate of the cash allowance in lieu of pension or benefits in kind.
The Company’s approach on base salary continues to be to provide a fixed remuneration component which reflects the experience and capabilities of the individual in the role, the demonstrated performance of the individual in the role, and which is competitive in the markets in which the Company operates.
Under their service contracts the base salaries of Stephen Glancey and Kenny Neison are expressed and payable in pounds sterling. The base salary of Joris Brams is expressed and payable in euro.
The salary levels of executive Directors are normally reviewed together with those of senior management annually in January. The salary levels were reviewed in respect of FY2016 and no change is being made to the base salaries of Stephen Glancey and Kenny Neison for the year ending 28 February 2016. Their base salaries have remained unchanged since 2008 other than by reason of promotion. No change is proposed to the base salary of Joris Brams.
The base salaries are as follows:
The executive Directors receive a cash allowance of 7.5% of base salary in lieu of benefits such as company car. The Group provides death-in-service cover of four times annual base salary and permanent health insurance (or reimbursement of premiums paid into a personal policy). Directors may also benefit from medical insurance under a Group policy (or the Group will reimburse premiums).
Details of the deferred payments due by Stephen Glancey and Kenny Neison under the JSOP, as described further down, and which give rise to a taxable benefit-in-kind, are unchanged.
The Committee has reviewed the performance measures and targets for the annual bonus to ensure that they remain appropriately stretching in the current environment and continue to be aligned with the business strategy.
For FY2016, the Committee has approved a bonus scheme for executive Directors by reference to Group adjusted operating profit, under which executive Directors will be entitled to a bonus of 30% of salary for on target performance, and a further bonus on a tapering basis in respect of performance above this level up to a maximum of 80% of base salary.
The Company is not disclosing the actual Group bonus profit target prospectively as, in the opinion of the Board, this target is commercially sensitive. The Board believes that disclosure of this commercially sensitive information could adversely impact the Company’s competitive position by providing competitors with insight into the Company’s business plans and expectations. However, the Company will disclose how the bonus pay out delivered relates to performance against target on a retrospective basis.
In FY2015, the maximum bonus opportunity for the executive Directors was 80% of salary. Target bonus was 30% of salary (37.5% of the maximum opportunity). In FY2015, 100% of the bonus was based on the financial performance of the Group. Further details of how bonuses are earned are provided in the table below.
The service contracts of the executive Directors in office at the date of this report entitle them to an annual grant under the ESOS with a face value equal to 150% of base salary and an annual award under the LTIP (Part I) with a face value equal to 100% of base salary.
With respect to awards for FY2016, options/awards will be granted under the existing ESOS and the LTIP (Part I). Subject to shareholder approval at the 2015 AGM, a new Long Term Incentive Plan (“LTIP 2015”) and a new Executive Share Option Scheme (“ESOS 2015”) will be adopted. Awards will not be granted under the new arrangements until FY2017.
The executive Directors will be granted options with a face value of 150% of base salary with an exercise price equal to the share price at the date of grant. The cliff vesting schedule for the ESOS will be replaced with a more balanced EPS performance schedule for options granted in FY2016 as follows: if adjusted EPS growth is 3% per annum over the performance period then 50% of the ESOS award vests and if adjusted EPS growth is 6% per annum or more over the performance period the ESOS award vests in full. There will be straight line vesting between the points and no reward for below threshold performance. This broadly maintains the level of stretch required for full vesting and recognises that CPI is a less relevant reference point given the international reach of the business. The threshold level of vesting has been set at 50% of the award to reflect the fact that, in contrast to LTIP awards, ESOS awards only deliver value above the share price at the date of grant and only if the threshold EPS target has been achieved.
The executive Directors will be granted awards to acquire shares with a face value of 100% of base salary. Awards in FY2016 will have the same performance conditions attaching as in FY2015. 75% of the award is based on earnings per share and 25% of the award is based on total shareholder return against the ISEQ as detailed further down.
No executive Director accrues any benefits under a defined benefit pension scheme. Under their service contracts executive Directors other than Joris Brams will receive a cash payment of 25% of base salary, in order to provide their own pension benefits, inclusive in Kenny Neison’s case of a fixed sterling payment into a personal pension plan.
See note 4 (Share-based Payments) to the financial statements regarding payments that may fall due under or in respect of the Joint Share Ownership Plan.
The fees paid to non-executive Directors are set at a level to attract individuals with the necessary experience and ability to make a significant contribution to the Group. The annual fees, which were last reviewed by the Board in May 2014 and are unchanged from FY2015, are as follows:
Annual Report on Remuneration for the Year Ended 28 February 2015
The following parts of the Remuneration Report are subject to audit and have been audited.
Details of the remuneration for each Director who served during the year ended 28 February 2015 are given below. The comparative figures included for last year have been presented on a consistent basis with the current year.
The valuation methodologies used in this report are those required by the 2013 UK Regulations on remuneration disclosure, which we have chosen to apply on a voluntary basis, and are different from those applied within the financial statements, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”).
Further details on the valuation methodologies applied are set out in the notes relating to columns (a) to (e) below. Details of the overall Directors’ remuneration charged to the Group income statement are shown in note 26 (Related Party Transactions) to the financial statements.
The table below reports the total remuneration receivable in respect of qualifying services by each Director during the year ended 28 February 2015 and the prior year.
(1) The amounts shown are the amounts earned in respect of the financial year.
(2) The Board released Joris Brams to serve on the Board of Democo as a non-executive Director. He received and retained an annual fee of €5,000 in relation to this role.
(3) In addition to the amounts shown above, pursuant to a contract for services effective as of 1 April 2014 between C&C IP Sàrl (‘CCIP’) and Joris Brams BVBA (‘JBB’), (a company wholly owned by Joris Brams and family), CCIP paid fees in the financial year of €83,912 to JBB in respect of brand development services provided by JBB to CCIP in relation to Belgian products.
(4) The fees payable in respect of the following non-executive Director roles are shown below.
(1) The executive Directors received a cash allowance of 7.5% of base salary. The Group provided death-in-service cover of four times annual base salary and permanent health insurance (or reimbursement of premiums paid into a personal policy). Stephen Glancey and Kenny Neison also availed of medical insurance under a Group policy.
(2) When an award is granted to an executive under the Joint Share Ownership Plan, its value is assessed for tax purposes with the resulting value being deemed to fall due for payment on the date of grant. Under the terms of the Plan, the executive paid the Entry Price at the date of grant and, if the tax value of the award (i.e. the initial unrestricted market value) exceeds the Entry Price, the executive must pay a further amount, equating to the amount of such excess, before a sale of the awarded Interests. The deferral of the payment of the further amount is considered to be an interest-free loan by the Company to the executive and a taxable benefit-in-kind arises, charged at Revenue stipulated rates (Ireland 13.5%; UK 4.0% for the period up to and including 5 April 2014 and 3.25% for the period from 6 April 2014). The resulting loans by the Company to the executive Directors are required to be disclosed under the Companies Act 1990. The balances of the loans outstanding to the executive Directors as at 28 February 2015 and 28 February 2014 are as follows:
When the further amount is paid, the Company compensates the executive for the obligation to pay this further amount by paying him an equivalent amount, which is, however, subject to income tax and social security in the hands of the executive.
Further details of the Joint Share Ownership Plan are given in note 4 (Share-based Payments) to the financial statements. No further awards can be made. All extant awards are fully vested.
(1) The amounts shown are the total bonus earned under the annual bonus scheme in respect of the financial year.
(2) For the year ended 28 February 2015, the annual bonus for executive Directors was based on performance against a Group adjusted operating profit target. The maximum bonus opportunity was 80% of salary. No bonus was paid to the executive Directors for the year ended 28 February 2015.
(1) The amounts shown in respect of long term incentives are the values of awards where final vesting is determined as a result of the achievement of performance measures or targets relating to the financial year and is not subject to achievement of further measures or targets in future financial years.
(2) For the year ended 28 February 2015, no amounts will vest in respect of the LTIP (Part I) and ESOS awards granted in May 2012 and which would otherwise vest in May 2015. The performance conditions for these awards are detailed below and the Remuneration Committee has determined that threshold performance has not been met under any of the measures and accordingly the awards have lapsed.
In respect of options granted in May 2012, if the growth in EPS (before exceptional or extraordinary items and including any other adjustments authorised by the Remuneration Committee) in the three years to 28 February 2015 is at least 5% per annum compound plus Irish CPI then the awards vest in full. If this growth is not achieved then all options lapse.
In respect of awards granted in May 2012:
There is straight line vesting between the points.
For the TSR element, growth in EPS over the performance period must be at least 5% per annum plus Irish CPI before any amount vests. The comparator group consists of the following companies; A.G. BARR plc, Anheuser-Busch InBev, N.V., Carlsberg Breweries A/S, Constellation Brands Inc, Diageo plc, Heineken Holding N.V., Molson Coors Brewing Company, Remy Cointreau SA, SABMiller plc, Britvic plc, Greene King plc, Marstons plc, Young & Co’s Brewery plc.
(3) For the year ended 28 February 2014, the amount shown is the actual market value of the LTIP (Part I) awards granted during February 2012 that partly vested in February 2015. The figures disclosed for the LTIP which vested with respect to FY2014 is different to the figures provided last year because the market price at the date of vesting was, at the time of publication of the accounts, not yet ascertainable such that an estimated value was provided for the market price at the date of vesting based on the average share price over the quarter ending 28 February 2014.
No executive Director accrued any benefits under a defined benefit pension scheme. Under their service contracts executive Directors other than Joris Brams received a cash payment of 25% of base salary, in order to provide their own pension benefits, inclusive in Kenny Neison’s case of a fixed sterling payment into a personal pension plan.
As disclosed in last year’s annual report, the following fees that were payable to Joris Brams BVBA (JBB), (a company wholly owned by Joris Brams and family) under an agreement effective 30 January 2012 made between C&C IP Sàrl and JBB and which was terminated on 31 August 2012 were payable to JBB in respect of the year ended 28 February 2015.
(a) A deferred introductory incentive fee was paid on 1 February 2015, with no performance conditions attached, by the payment of a sum equal to 98,600 notional units multiplied by the closing price of C&C Group plc shares on the dealing day before the settlement date. Payment of the fee is subject to the rules of the C&C Group Recruitment and Retention Plan.
(b) A long term incentive fee payable in cash was awarded on 17 May 2012 and comprised 87,943 notional units. The award was made subject to the rules of the LTIP (Part I). Vesting of the award is subject to the achievement of performance conditions equivalent to those applicable for grants made in FY2013 under the LTIP (Part I). As the performance conditions applicable for grants made in FY2013 under the LTIP (Part I) were not met, no fee will be payable to JBB In respect of this award.
No payments were made to past Directors during the year ended 28 February 2015 in respect of services provided to the Company as a Director.
There were no payments made to Directors for loss of office during the year ended 28 February 2015.
The Company has introduced a shareholding guideline for the current executive Directors. The CEO will be expected to maintain a personal shareholding of at least two times salary. For the other executive Directors this will be set at one times salary. Executive Directors would be expected to retain 50% of the after tax value of vested share awards until at least the shareholding guideline has been met. Stephen Glancey and Kenny Neison have significant shareholdings in the Company as set out below, currently representing as at year end approximately 27 times and 19 times their respective base salary.
The interests of the Directors and the Company Secretary in office at 28 February 2015 in the share capital of Group companies at the beginning of the year (or date of appointment if later) and the end of the year were:
(i) All the above holdings are beneficial interests except as stated in (ii) below.
(ii) The interests of Stephen Glancey and Kenny Neison include Interests in shares acquired and jointly held with the trustees of the C&C Employee Benefit Trust under the Company’s Joint Share Ownership Plan, which at 28 February 2015 and at 28 February 2014 comprised 3,413,334 shares in respect of Stephen Glancey and 2,560,000 shares in respect of Kenny Neison (see note 4 to the financial statements for further details).
The Directors and the Company Secretary have no beneficial interests in any of the Group’s subsidiary undertakings.
There was no movement in the Directors’ or the Company Secretary’s interests in C&C Group plc ordinary shares between 28 February 2015 and 13 May 2015.
The table below sets out the scheme interests awarded to executive Directors’ during the year ended 28 February 2015.
1) The ESOS awards were granted in the form of market value share options over €0.01 ordinary shares in C&C Group plc. The ESOS awards have an exercise price of €4.621 per share being the closing price on the dealing day before the date of grant. If adjusted EPS growth is 5% per annum or more in excess of Irish CPI over the performance period then the ESOS award vests in full, if growth is below 5% all options lapse.
2) The LTIP (Part I) awards were granted in the form of nil cost options over €0.01 ordinary shares in C&C Group plc. The LTIP (Part I) awards are subject to the following two performance conditions:
For any of the TSR element to vest average annual EPS growth must be at least 5%.
3) The face value of awards is based on the number of shares under award multiplied by the closing share price on the date of grant being €4.563.
4) As disclosed in the FY2104 remuneration report Joris Brams was granted an LTIP (Part I) award to acquire shares, with a face value of 200% of his aggregate base salary, this being an exceptional award to enable him to build up a material equity interest in the Company.
Key: ESOS - Executive Share Option Scheme; LTIP (Part I) - Long Term Incentive Plan (Part I).
No price was paid for any award of options. The price of the Company’s ordinary shares as quoted on the Irish Stock Exchange at the close of business on 28 February 2015 was €3.861 (2014 €4.922). The price of the Company’s ordinary shares ranged between €3.23 and €4.94 during the year.
There was no movement in the interests of the Directors in options over C&C Group plc ordinary shares between 28 February 2015 and 13 May 2015.
The following sections of the Remuneration Report are not subject to audit.
This graph shows the value, at 28 February 2015, of €100 invested in the Company on 28 February 2009 compared to the value of €100 invested in the ISEQ General Index. The relevant index has been selected as a comparator because the Company is a member of that index.
The following table sets out information on the remuneration of the Chief Executive Officer for the six years to 28 February 2015:
John Dunsmore retired as Chief Executive Officer on 31 December 2011 and Stephen Glancey was appointed with effect from 1 January 2012, having previously been Chief Operating Officer. The salary, benefits and bonus figures are calculated for the period in office.
The table below sets out in relation to salary, taxable benefits and annual bonus the percentage change in remuneration for the Chief Executive Officer for the financial year ended 28 February 2015 compared with the previous financial year.
Information on employee remuneration is given in note 3 to the financial statements. The ratio of the average remuneration of executive Directors to the average remuneration of the employees of the Group (excluding Directors) was 17:1 (FY2014: 19:1).