ITE Group to seek shareholder approval to amend remuneration policy

At FTSE SmallCap ITE Group’s upcoming AGM the board is seeking shareholder approval to amend its remuneration policy and Performance Share Plan (PSP) to allow for enhanced awards to be granted to CEO Mark Shashoua and CFO Andrew Beach in the 2019 financial year.

The amendments will enable awards to be granted above the ‘normal’ annual award limit included in the PSP (150% of salary) such that awards may be granted at 500% of salary to the CEO and at 250% of salary to the CFO. Awards to other participants in 2019 are not expected to exceed the 200% of salary ‘exceptional circumstances’ limit included in the PSP. Awards after fiscal 2019 will revert back to prior levels, namely 100% of salary for the CEO and 80% of salary for the CFO.

In light of the higher quantum, the remuneration committee have revised the performance conditions applicable to awards. Previously awards were subject 70% on EPS growth and 30% on TSR performance against the FTSE 250 and SmallCap Indices (excluding investment trusts) over a three-year period. The 2019 awards will have ROCE as an additional performance condition with the three metrics to be equally weighted. The stretch of the TSR and EPS targets have also been increased so that 50% will vest for performance equivalent to the current stretch target and full vesting will only occur in the event of outperformance beyond these levels. For example, the ranking required for full vesting for the TSR condition has been increased from upper quartile to upper decile performance. In addition, a share price underpin will apply so that any vesting above the ‘normal’ award levels (i.e. 100% and 80% of salary) will only occur if the average share price over the three months to 30 September 2021 is at least 93.6p.

The remuneration committee state that the next three-year period is critical for the delivery of the board’s Transformation and Growth strategy (TAG) and the enhanced awards are intended to provide a material incentive to management to focus on driving performance over this period. As the proposed grant levels are significantly higher than the awards made in previous years, shareholders will need to be satisfied with the award size, the rationale provided and with the stretch of the performance targets.

Governance Issues at AGMs