Peachtree 2015 Annual Report Download - page 78

Our remuneration
principles Proposed changes to pay arrangements for 2016
Alignment with
the wider Group
The remuneration policy for executives reflects the overriding remuneration philosophy and principles of the wider Group, including
but not limited to the principles on which salaries are reviewed andthe structure of performance-related incentive plans. Details of pay
arrangements for executive directors are set out in the annual remuneration report on pages 83 to 91.
Alignment with
shareholders
Our existing pay structure for executive directors and other senior management is heavily weighted towards share-based performance-
related pay which is designed to align executive and shareholder interests. In order to enhance this alignment further, the Remuneration
Commiee will be introducing the following changes in 2016:
Malus / clawback
From 2016, all incentives awarded to executive directors and Executive Commiee memberswill be subject to malus and clawback
provisions. Details of the proposed implementation of those provisions in the forthcoming year are set out in the Directors’ annual
remuneration report and policy.
Compulsory bonus deferral
Under our current remuneration policy, if an executive director already holds Sage shares with a value of at least 150% of salary then
their annual bonus is paid wholly in cash. If the executive is non-compliant with this shareholding requirement then 20% of their annual
bonus is normally deferred into shares under the Sage Group Deferred Bonus Plan for three years.
The Remuneration Commiee has determined that from 2016an element of the annual bonus should be compulsorily deferred into
shares irrespective of an individual’s existing shareholding. Accordingly, with effect from the 2016 annual bonus, all executive directors
will be compulsorily required to defer one-third of their bonus into Sage shares. During a transitional period (bonuses for 2016 and 2017),
the deferral period will be temporarily reduced to two years before returning to three years with effect from 2018.
Enhanced shareholding requirement
Our current shareholding requirement requires executive directors to build up a holding of Sage shares worth at least 150% of their base
salary. Effective from the 2016 AGM, the shareholding requirement will be increased to 200% of base salary and directors will be expected
to achieve the guideline within a maximum period of five years from when they first become subject to the guideline.
Holding period for PSP awards
Our new PSP, approved by shareholders at the 2015 AGM, contains the flexibility for the Remuneration Commiee to apply a holding period
of two years to PSP awards (or such other period as may be determined) following the three year vesting period. This flexibility will be added
into our new remuneration policy although there is no current intention to apply a holding period to the 2016 grant of PSP awards.
Some of these proposed changes cannot be implemented for the
executive directors under our current shareholder approved
remuneration policy. Accordingly, we will be seeking shareholder
approval for a revised remuneration policy at the 2016 AGM that will
permit the full implementation of these changes. We have consulted with
our major shareholders and shareholder representative bodies on the
proposed changeswho have been generally supportive of our proposals.
Key remuneration outcomes for FY15
– Following the changes in the application of the revenue
recognition policy to certain products, referred to on page 163,
the Commiee determined that the calculation of actuals on a like
for like basis with the targets (that is, with both targets and actuals
calculated prior to the change in the application of the revenue
recognition policy to certain products) was an appropriate and fair
basis of assessment for the FY15 bonus. On this basis, for the year
ended 30 September 2015, Group organic revenue growth was
6.7%, reflecting good acceleration in growth on the prior year,
and underlying pre-tax profit was £361.7m. Combined with the
achievement of strategic objectives, this led to 67% of the maximum
bonus paying out for the Chief Executive Officer and Chief Financial
Officer. More details on the bonus outcome are set out on page 84.
– Performance Share Plan (PSP) awards granted in 2013 were based
on organic revenue growth, Earnings per share growth and relative
TSR performance measured over the three-year period to 30
September 2015. As with the treatment of the FY15 bonus, the
Commiee determined that organic revenue and EPS growth
should be calculated on a consistent basis with the original targets
(that is, with both targets and actuals calculated prior to the
changes in the application of revenue recognition policy).
Overall, the Commiee determined that 64% of the maximum
number of shares under award will vest in March 2016.
– Guy Berruyer stepped down from the role of Chief Executive
Officer and as a director of the Company on 5 November 2014,
although he remained an employee until 31 March 2015. Details
of his remuneration during FY15 are set out on page 85 and 86.
Remuneration disclosure
This report complies with the requirements of the Large and Medium-
sized Companies and Groups (Accounts and Reports) Regulations 2008
as amended in 2013, the provisions of the UK Corporate Governance
Code (September 2012) and the Listing Rules.
The report is in two sections: The Directors’ remuneration policy
(pages77 to 82).This section contains details of the new remuneration
policy to be put to a binding shareholder vote at the AGM in March 2016.
The Directors’ annual remuneration report (pages83 to 92).This
section sets out details of how our existing remuneration policy was
implemented for the year ended 30 September 2015 and how we
intend the new policy to apply for the year ended 30 September
2016 and will bethe subject of an advisory shareholder vote at the
AGM in March 2016.
Drummond Hall
Chairman of the Remuneration Commiee
Directors’ remuneration policy report
Directors’ remuneration report continued
The Sage Group plc | Annual Report & Accounts 2015
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