Shaftesbury AR 2017 LR

GOVERNANCE Shaftesbury Annual Report 2017
Remuneration
report
THE LEVEL AND
COMPONENTS OF
REMUNERATION
PROCEDURE
KEY RESPONSIBILITIES
• Determine the terms of
employment and remuneration
for executive directors and
the Company Secretary.
• Ensure that the executive
directors are remunerated
fairly and responsibly with the
long-term interests of the
Company in mind.
• Consider the appropriateness
of the directors’ remuneration
framework against
arrangements for other
employees.
• Review the remuneration
policy every three years.
• Approve the design, targets
and outcomes for the annual
bonus schemes and share
incentive schemes.
• Ensure that the remuneration
report and disclosure of director
remuneration is simple to read
and understand, accurate and
complete.
Dear shareholder
We have reported another strong set of results which
has delivered growth in income and the value of the
business. We have continued intensive asset
management of our portfolio and completed important
refinancing initiatives, as summarised in the Strategic
Report on page 56. Against the backdrop of this
performance, the Committee’s main decisions during
the year related to the following elements:
Annual bonus outcomes
At the beginning of each year, we set financial and
operational targets for the annual bonus scheme
which align with the Group’s long-term strategy. Where
projects extend for periods beyond the financial year,
annual targets are set to assess progress towards
achievement of the ultimate objectives. In setting
targets, we use the Group’s KPIs which drive value
through the delivery of long-term rental growth.
The outcome of performance against our targets
was 55% of the maximum potential award. The 2017
bonus targets are disclosed in full on page 94.
Each executive director has elected to receive his
award solely in the form of deferred shares, and will
therefore receive an award under the Deferred
Annual Share Bonus Scheme of 82.5% of salary in
December 2017, which will vest in December 2020.
REMUNERATION
I am pleased to present our 2017 remuneration report.
The remuneration policy sets out our approach
to the reward of executive and non-executive
directors. Our aim is to provide a remuneration
structure which is fair, with incentives aligned
with the Group’s strategy and long-term objectives,
and which encourages executive continuity.
2018 salary review
Salaries of executive directors were reviewed and
increases of 2% were approved, effective from
1 December 2017. This is below the average salary
increases awarded to employees.
2018 annual bonus
The Committee reviewed the annual bonus
framework for 2018 to ensure it remained aligned to
the Group’s strategy and operational goals. We
decided that the performance measures remained
appropriate but would introduce two minor
amendments to the calibration for the year ahead.
First, we are increasing the weighting of the “growth
in ERV” metric from 20% to 35% of the overall
bonus to reflect the strategic importance of rental
growth to the business. Second, for that ERV metric,
we will introduce a target range with a payout scaled
from threshold to maximum, depending on the
performance achieved. This reflects feedback from
our investors and is intended to make the target
more stretching whilst also providing greater
incentive to maximise performance within a range of
potential outcomes. Targets will be fully disclosed
retrospectively in next year’s report.
KEY ACTIVITIES
• Set annual bonus targets
• Annual bonus outcomes
• Annual review of
remuneration policy
• Ratify LTIP vesting
• LTIP grant approval
• Committee report
86
NOVEMBER 2016
(2 MEETINGS)