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Directors' Remuneration Statement

BOARD REMUNERATION

Introductory Statement

As a Company listed on the Alternative Investment Market of the London Stock Exchange, the Company is exempt from the s420 obligation of the Companies Act 2006 to prepare a director’s remuneration report, and the s439 obligation to put a written remuneration policy to a shareholders vote once every three years. However the Board continues to believe that it should operate to the highest corporate governance standards appropriate to companies of its size and resource availability. It is therefore pleased to provide the following voluntary information, and to refer to the details of the director’s remuneration received during the year which can be found in Note 9 to the Accounts which is provided in accordance with AIM Rule 19. Details of director’s current shareholdings are provided in the shareholding section of the Directors report.

Board Remuneration Policy

All matters relating to remuneration of the Directors of the Company are determined by the Remuneration Committee whose decisions are made with a view to achieving the broad objective of rewarding individuals for the nature of their work and the contribution they make towards the Group achieving its strategic aims. Proper regard is given to the need to attract and retain high quality and motivated staff at all levels and to ensure the effective management of the business. The Committee will be cognisant of comparative pay levels after taking into account geographic location and the operations of the business.

The remuneration policy for Directors is set so as to achieve the above objectives and is broadly split into Executive and Non-Executive categories, and consists of the following components in each sub category:

Element Purpose Operation & Review
Basic Salary To attract and retain effective management to implement Group strategy. Reviewed by the Committee on an annual basis with effect from the beginning of November, consistent with annual reviews conducted for all other employees. The current values of individual approved salaries
effective from November 2016, together with the amounts actually being received are shown in the table overleaf. Paid monthly in arrears.
Annual Performance Bonuses To reward delivery of pre-agreed annual financial objectives. Individually constructed performance related schemes measured against specific criteria agreed annually. Paid in the March following the financial year to which the bonus relates, after completion of the annual audit.
Profit Related Pay To encourage achievement of profit budgets within main trading subsidiaries. Subsidiary company wide employee scheme to reward all staff with a pro-rata profit share, based on a pre-set formula explained overleaf. Paid in the February following the announcement of the financial results for the previous year, after completion of the annual audit.
Pension and Death in Service Life Assurance To facilitate retention and motivate effective management. Fixed Company contributions expressed as a percentage of current basic salary for each individual paid into a personal pension scheme held in that individual’s name. The death in service cover provides for four times current annual salary paid into trust, where death occurs during the term of the director’s employment contract.
Benefits in Kind To assist Directors in the completion of their duties. Benefits restricted to the provision of a company car and private medical insurance.
Long Term Incentive Plans To align executive  rewards with returns for shareholders and to encourage executive retention and strategic consistency. Single fixed term schemes, generally running for a minimum period of three years, with performance related conditions, where the maximum payout is set at approximately one year’s basic salary paid in shares, at the end of the scheme, based on the market value of those shares as at commencement.
Other Share Schemes To align executive rewards with benefits available for other managers in a tax efficient manner. HMRC Approved tax efficient share schemes as offered to other employees which are also made available to executive directors on the same periodic basis. These include discretionary Company Share Option Plans (CSOP) and eligible Save As You Earn plans (SAYE).

 

The executive director’s remuneration terms are detailed in individual contracts of employment and associated amendment documentation, which amongst other points contain standard details as follows:

  • Notice period to be given by the Company is twelve months.
  • Notice period to be given by the Director is six months.
  • Paid holiday entitlement of 23 days plus bank holidays.
  • Post employment restrictive covenants lasting twelve months.
  • Standard non-compete restrictions during employment. 

Non-Executive Directors

 

Element Purpose Operation & Review
Basic Annual Fee To attract and retain a balanced skill set of individuals to ensure strong stewardship and governance of the Group. Fees are set so as to reflect the factors pertinent to respective positions, taking into account the anticipated amount of time commitment, and comparative rates paid by other companies of a similar size. The Non-Executive Directors do not participate in share option awards, performance bonuses or pension arrangements. Fees are reviewed by the Remuneration Committee on an annual basis.
Travelling Expenses To reimburse legitimately incurred costs of attending necessary Board and associated meetings. Pre-set rates used to reimburse mileage, travel, accommodation and other incurred expenses in line with those used for other employees.
Medical Insurance Benefit in Kind To assist Directors in the completion of their duties. Benefits restricted to the provision of private medical insurance for those directors who do not have alternative arrangements in place.

The non-executive director’s remuneration terms are detailed in individual letters of appointment, which amongst other points contain standard details as follows:

  • Initial appointment for a period of twelve months. 
  • Renewal of appointment for a fixed period of three years after initial twelve months. 
  • Post employment restrictive covenants lasting twelve months.

REMUNERATION REPORT

Executive Director Remuneration In line with the above policy, the Remuneration Committee have approved the following details of executive director remuneration:

- Basic Salaries. A current maximum approved salary limit for the roles of Chief Executive and Finance Director was approved by the Remuneration Committee in April 2012, which are shown in the table below in column A. Within these limits, the basic salaries paid during the last financial year are shown in column B, while the current annualised salaries, which were increased by the standard Company increment of 1% in November 2016, are shown in column C.

Directors Remuneration

Annual Performance Bonuses and Profit Related Pay. The contractual bonus schemes for K R Greetham and B P Roberts are based on a fixed percentage of the Group pre-tax Profit, which includes the Group’s share of pre-tax profits from joint ventures and associate investments. The scheme for D A T Evans is based on a fixed percentage of the Agriculture & Specialist Retail segment operating contributions adjusted for administrative costs. The respective bonus percentages, and the payments made for the financial year ending October 2015 are shown in the table opposite in columns A & B respectively. The Executive Directors also participate in the Company Profit Related Pay Scheme, (“PRP”) which is a scheme for employees of Wynnstay Group Plc and Grainlink Limited and which pays an annual bonus based on a formula which produces a percentile result which is then applied to the relevant individual’s prior year earnings. The formula calculation is the aggregate of the pre-tax profit of Wynnstay (Agricultural Supplies) Limited and Grainlink Limited divided by the aggregate of the combined revenues, adjusted for a commodity inflationary index, and subject to a limiting factor preventing the total paid under the scheme from exceeding 10% of the profits of the participating companies. The relevant rate for 2015, paid in February 2016, was 3.6%, with the actual PRP paid shown in Column C opposite. The anticipated rate for 2016 relating to the last financial year is 2.9% of relevant earnings.

Director Remuneration

Pension and death in service life cover. Individual Company contributions to personal pension plans are based on the value of the Executive Directors basic salary only. The annual defined Company contributions to a personal pension scheme held in the individual’s name, expressed as a percentage of salary, and the amounts paid on behalf of each individual during the last financial year, are shown in the table below under column A and column B respectively. The death in service life assurance cover is provided in a Group policy covering all members, with individual costs attributed to separate members being unavailable. However the scheme to which all three of the executive directors belong had a total renewal cost at November 2015 of £72,523 (2014: £62,996), and there were 550 (2014: 410) members covered, equating to an average cost of £132 per person (2014: £154). 

Benefits in kind. Each executive director is supplied with a company car, primarily for the furtherance of their duties. However these vehicles are available for the executive’s private use and as such have a taxable benefit in kind value calculated in accordance with HMRC rules. These values for the tax year ending April 2016 are shown in the table below in column A. Executives refund the cost of fuel they use for private motoring on a monthly basis. Additionally the Company pays the cost of providing private medical insurance for the executives to ensure that should they require treatment this is provided as quickly as possible, and minimises any period of potential absence from their duties. The cost to the Company of this cover for each individual in 2016 is shown below in column B.

Long Term Incentives. The Remuneration policy allows for a single long term incentive plan to be in place at any one time, with a targeted overall maximum financial gain, over the life of the scheme, approximating to one years basic salary as at the beginning of the scheme, for a 100% achievement of the performance criteria. The last vesting scheme completed in March 2014, and the existing long term incentive plan was implemented for executive directors in October 2014 in line with the policy criteria outlined above. The scheme is structured as a Long Term Performance Related Unapproved Share Option Scheme with options being exercisable within a six month period commencing on the third anniversary of the grant date, providing the performance conditions have been satisfied. The maximum award available for a 100% achievement of the performance criteria for each executive, in terms of eligible options, is shown in the Share Option table overleaf. The performance conditions relate to the earnings per share (“EPS”) and market capitalisation (“MC”) of the Group as at October 2017, with the size of the award, as a percentage of the maximum available, based on the matrix overleaf. The executive will pay an option price of 25p per share. 

 

The reported financial value of gains made under the scheme will be defined as the difference between the market price of the shares on the date of option exercise and the option price, which will be £0.25, multiplied by the number of options actually exercised. 

Other Share Schemes. The executive directors participate in the discretionary Approved Company Share Option Plan (CSOP), which is a tax efficient scheme providing the opportunity to hold up to £30,000 of option value, which, if the scheme rules and legislation are complied with, can be exercised free of income tax liability for the holder. The current outstanding options are shown in the table above, and are exercisable up to March 2022 without any performance criteria attached to them. Additionally the current executive directors are eligible to participate in Saye As You Earn (SAYE) option invitations, subject to the scheme and legislative limitations. Such options held by the executive directors, as at October 2016 are shown in the table above, and again do not have any performance criteria attached to them. Depending on the particular scheme, they are exercisable between September 2017 and January 2022, with further details provided in the Director’s Report on page 30 and in note 9 to the accounts. 

Non-Executive Director Remuneration

The remuneration of the Non-Executive Directors, is and has been paid in accordance with the policy outlined above and has been set so as to reflect the factors pertinent to their respective positions. Details of the amounts received during the last financial year and the current levels of Basic Annual Fees being paid are given in the table below:

P M Kirkham
Vice-Chairman and Chairman of Remuneration Committee
24 January 2017