Directors’ Remuneration

 

This report was prepared by the Remuneration Committee (The Committee) and approved by the Board for the financial year ending 31 March 2016.

The Remuneration Committee members throughout the year were Anthony Dove (Chairman), Stanley Davis and Kim Taylor-Smith. The Committee meets when necessary to review the remuneration of the Executive Directors. It is also responsible for determining the fees of the Chairman. The Group Finance Director generally attends meetings of the Committee but takes no part in deliberations relating to his own position. The views of the Chief Executive are sought in respect of the other Executive Directors.

The Executive Directors abstain from any discussion or voting at full Board Meetings on Remuneration Committee recommendations where the recommendations have a direct bearing on their own remuneration package.

The Remuneration Committee’s overall approach is focused on ensuring the Group’s remuneration policy is aligned with shareholders’ interests while also enabling the Group to attract, retain and motivate high quality executive management.

In making remuneration decisions, the Committee considers the Group’s overall performance against its long-term objectives. For the year to 31 March 2016, the Group has delivered a positive performance as set out in the Strategic Report.

In setting the remuneration policy for the Executive Directors, the Committee takes into account the following:

  • The need to attract, retain and motivate Executive Directors and senior management;
  • Periodic external comparisons to examine current market trends and practices and equivalent roles in similar companies.

The key elements of the remuneration package for Executive Directors are as follows:

BASE SALARY

Base salary for each Executive Director is reviewed annually by the Committee, taking account of the Director’s performance, experience and responsibilities. The Committee has regard to salary levels paid by UK listed companies of a similar size and nature. This approach ensures that the appropriate benchmark data is used. When determining Executive Directors’ base salaries, the Committee also considers wider economic factors and the performance of the Group as a whole.

ANNUAL BONUS

The Committee’s general policy is that Executive Directors should receive a bonus in relation to the achievement of stretching performance targets which reflect how well the Group has performed against budget. The Committee wishes to retain the flexibility to set bonus targets which reward outperformance against predetermined performance objectives and which reflect the needs of the business

LONG-TERM INCENTIVES

The Group operates a Long Term Incentive Plan (the “Plan”). The purpose of the Plan is to motivate key individuals and to reward them for exceptional performance. Under the Plan each participant is allocated a number of shares. The vesting of shares under the Plan is subject to the achievement of performance targets.

PENSION PROVISION

Pension provision is provided by company contributions into a defined contribution scheme.

BENEFITS

The Group operates a policy whereby Executive Directors are provided with a cash alternative for health insurance and company cars as well as life assurance.

SERVICE CONTRACTS

The Committee’s policy on service contracts for Executive Directors is that they should provide for termination of employment by either side giving either 6 month’s or 12 month’s notice.

CHAIRMAN AND NON-EXECUTIVE DIRECTORS

The Non-Executive Directors are engaged for fixed terms. These appointments are subject to the retirement by rotation provisions in the company’s Articles of Association.

The effective dates of the letters of appointment for the current Non-Executive Directors are as follows:

 

 ANNUAL REPORT ON REMUNERATION

The following sections show how the policy described above was applied in 2015/2016.

 SALARY

Salaries for Executive Directors at 31 March 2016 were as follows:

  • Neil Sinclair     Chief Executive    £240,000
  • Stephen Silvester     Group Finance Director    £130,000
  • Richard Starr     Group Property Director     £90,000

The Chief Executive’s salary was raised by £75,000 with effect from 1 April 2015 and by a further £15,000 with effect from 1 December 2015.

The Group Finance Director’s salary was raised by £10,000 with effect from 1 December 2015. The Group Finance Director has agreed to salary sacrifice 10% of his salary to pay into his pension in addition to a 5% contribution by the company.

The Group Property Director’s salary was raised by £15,000 with effect from 1 April 2015 and by a further £5,000 with effect from 1 December 2015.

On 25 May 2016 Richard Starr signed a variation to his service agreement following his agreement to become a full time executive with effect from 4 July 2016. His salary will be increased to £180,000 on 4 July 2016.

NON-EXECUTIVE DIRECTORS

The remuneration of the Non-Executive Directors is set by the Executive Directors. The policy of the Board is that the remuneration of the Non-Executive Directors should be consistent with the levels of remuneration paid by companies of a similar size. Non-Executive Directors receive an annual fee. They do not receive any performance related remuneration or pension contributions.

Current fee levels are as follows:

The Chairman and Non-Executive Directors do not have contracts of service but their terms are set out in letters of appointment.

PALACE CAPITAL NO. 1 SHARE OPTION SCHEME

Executives have in the past, been able to participate in the Share Option Scheme. This scheme is designed to encourage the matching of interests between management and shareholders. No awards under the scheme were made to Directors during the year. The Chairman and Chief Executive continue to participate by virtue of an award made in 2011, which may be exercised until 2021. Further details are provided in note 20 of the Group financial statements.

LONG TERM INCENTIVE PLANS (LTIP 2014 AND LTIP 2015)

Executives have been able to participate in the Group’s LTIP. These schemes are designed to encourage the matching of interests between management and shareholders. An award of 120,268 shares was made on 8 December 2015. Further details are provided in note 22 of the Group financial statements.

A break down of the Directors’ interests in the awards under the Long Term incentive plans are as follows:

The maximum performance share awards under the LTIP schemes are as follows:

  • Neil Sinclair    100% of salary
  • Stephen Silvester    75% of salary
  • Richard Starr    75% of salary

BONUS

The Group’s remuneration policy caps bonus payments to the Executive Directors as follows:-

In determining the bonuses, the Executive Directors are measured against specific criteria.

In respect of the year ended 31 March 2016 the following bonuses have been awarded but are currently unpaid:

  • Neil Sinclair – Chief Executive: £54,000
  • Stephen Silvester – Group Finance Director: £32,500
  • Richard Starr – Group Property Director: £20,250

 

On 24 February 2016 the Board of the Company approved the introduction of the Palace Capital Deferred Bonus Plan. In accordance with the terms of the Plan up to 35% of any bonuses awarded may be deferred for a year and shares to the value of the deferred bonus amount allocated. The Executives will have a further year from the vesting date to exercise their options. In respect of the year ended 31 March 2016 the Deferred Bonus Plan has not been operated.

SUMMARY OF DIRECTORS’ TOTAL REMUNERATION