Paragon Group of Companies PLC – Annual report – 30 September 2016
Industry: financial services
B5 DIRECTORS’ REMUNERATION REPORT (extract)
Share-based awards
Paragon Performance Share Plan
Vesting:
Awards granted in December 2013 under the Group’s PSP which will vest in December 2016 are subject to performance conditions measured over three financial years ended 30 September 2016, with 50% based on comparing the Group’s relative TSR performance against a comparator group of companies comprising the constituents of the FTSE-250 and 50% based on assessment against EPS growth targets. The vesting percentage will be reviewed by the Committee against a financial underpin. The Company was ranked below median for the TSR element, which will therefore not vest. EPS targets required growth to exceed RPI plus 7% over each of the three financial years for the full amount to vest and this has been achieved. Consequently, 50% of the awards will vest, subject to the Committee determining, prior to vesting, that such level of vesting is consistent with the Company’s financial performance.
Grants:
The awards granted in December 2015 were calculated so as to have a face value of 200% of salary, using the average closing mid-market price of the Company’s shares on each of the five dealing days up to and including the day before the grant date (£3.5634). Therefore, the face value of the awards granted during the year were £926,000 for Mr Terrington, £583,000 for Mr Woodman and £494,000 for Mr Heron.
Entitlements:
Details of individual entitlements of the directors under the PSP at 30 September 2015, and 30 September 2016 are:
Sharesave Plan
Awards made under the Sharesave Plan are granted to directors on the same terms which are available to employees in general. Details of individual options held by the directors at 30 September 2015 and 30 September 2016 are:
Deferred Bonus Shares
Details of individual entitlements of the directors under the Paragon Deferred Share Bonus Plan (‘DSBP’) at 30 September 2015 and 30 September 2016 are:
The face value of the awards granted during the year (being the number of shares in each case multiplied by £3.5634, that being the average of the closing prices of the Company’s shares at the end of each of the five dealing days ending on the day before the grant date) were £214,000 for Mr Terrington, £130,000 for Mr Woodman and £78,000 for Mr Heron.
Rights to further shares under the DSBP are due to be granted in respect of the compulsory deferral of performance bonuses for the year ended 30 September 2016, shown in the single total figure of remuneration table above. The number of shares to be awarded will be determined based on the average market price of the Company’s shares on the five dealing days before the awards are granted. The shares, less any clawback, which can be applied by the Remuneration Committee in certain circumstances, will be exercisable by the recipients from the third anniversary of the grant date, subject, in normal circumstances, to the recipient being employed by the Company at that time.
Directors’ share ownership
Directors’ interests in shares
The interests of the executive directors in the shares of the Company at 30 September 2016 were:
The interests of the Chairman and the non-executive directors at 30 September 2016, which consist entirely of ordinary shares, beneficially held, were as follows:
Share ownership guidelines
All executive directors are encouraged to hold a minimum number of shares in the Company with a value of 200% of their salary, calculated at 31 December each year on the basis of the average price of the Company’s shares over a rolling three-year period. For new appointments the guideline was 100% of salary by the fifth anniversary of their appointment, increasing to 200% by the seventh anniversary. The number, net of income tax and national insurance, of vested but unexercised shares granted under the DSBP and under the PSP count towards the aggregate shares held by each director in respect of the policy.
Guideline holdings and the actual shares held at 30 September 2016 are set out below:
At 30 September 2016, all of the executive directors’ holdings were in accordance with guideline levels.
From 1 October 2016 onwards the Committee has amended its guidelines so that all directors, whenever appointed, are required to hold shares to a value of 200% of their salary and will be required to retain 50% (net) of a vested PSP or DSBP award until that level is reached. The guidelines applying from 1 October 2016 are set out in the Directors’ Remuneration Policy in section B5.3.
The Committee has decided, for the present, not to mandate that executive directors hold awards granted under the PSP for an additional period after the vesting date given the level of personal shareholdings of the current executive directors and their commitment to the Company over many years. For new external appointments the Committee has introduced a holding period to encourage share participation applied to the PSP awards.
Accounts examples 