47153 AG Barr Annual Report 2025 AW4 SQ WEB - Flipbook - Page 119
Strategic Report
Corporate Governance
Accounts
Explanation of performance metrics chosen and the target setting process
Performance measures are selected that are aligned to the Company’s strategy. Stretching performance targets are set each year for the annual bonus
and LTIP awards. When setting these performance targets, the Remuneration Committee will take into account a number of different reference points, which
may include the Company’s business plans and strategy and the market environment. Full payment or vesting will only occur for what the Remuneration
Committee considers to be stretching performance. Additionally, the Remuneration Committee has discretion to change formulaic outcomes to ensure
that payments made through variable incentive plans are proportionate to the Company’s overall performance.
The annual bonus performance targets have been selected to provide an appropriate balance between incentivising directors to meet financial targets
for the year and achieving strategic and/or personal objectives. The Remuneration Committee also aims to make sure that targets are set in line with the
Company’s risk appetite so as to ensure that executive directors are not incentivised to take inappropriate risks.
The LTIP performance targets reflect the Company’s strategic objectives and therefore the financial and strategic decisions which ultimately determine the
success of the Company. The LTIP performance measures may be based on key financial and/or strategic and/or total shareholder return related measures.
LTIP performance will normally be based on Earnings Per Share, which is a key measure of the Company’s profitability, relative Total Shareholder Return
to further strengthen the link between the interests of the executive directors and the shareholders and a performance measure aligned with
Environmental Sustainability.
The Remuneration Committee retains the ability to adjust or set different performance measures if events occur (such as a change in strategy, a material
acquisition and/or a divestment of a Group business or a change in prevailing market conditions) which cause the Remuneration Committee to determine
that the alternative measures are more suitable either for a defined period or for the foreseeable future so that they achieve their original purpose.
Awards and options may be adjusted in the event of a variation of share capital in accordance with the Scheme rules.
Policy for the remuneration of employees generally
Remuneration arrangements are determined throughout the Group based on the same principle that reward should be achieved for delivery of the business
strategy and should be sufficient to attract and retain high calibre talent.
All employees are eligible to receive base salary, retirement benefits and other benefits based on role, seniority and location. The majority of employees
are currently eligible to receive awards under an annual bonus plan, with only the most senior employees currently eligible to participate in the LTIP as
set out below.
The annual bonus arrangements for the senior management team are similar to those for the executive directors in that targets are set annually dependent
on financial and/or non-financial performance metrics. The key principles of the remuneration philosophy are applied consistently across the Group below
this level, taking account of the seniority of employees.
Approach to recruitment remuneration
The Policy aims to facilitate the appointment of individuals of sufficient calibre to lead the business and execute the strategy effectively for the benefit of
shareholders. When appointing a new director, the Remuneration Committee seeks to ensure that arrangements are in the best interests of the Company
and in line with market practice.
When agreeing the level of remuneration appropriate for the individual, the Remuneration Committee will take into consideration a number of relevant
factors, which may include the calibre of the individual, the candidate’s existing remuneration package, and the specific circumstances of the individual
including the jurisdiction from which the candidate was recruited.
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