Page 166 - Sigmaroc Annual-Report 2023

SIGMAROC ANNUAL REPORT 2023 GOVERNANCE REPORT
Remuneration Committee Report
with the future growth and development ambition of the Group. A key outcome of the review, and which was specifically directed by input from Shareholders, was to measure executive director bonuses based on EPS, rather than EBITDA, as it currently provides a more complete assessment of the Group’s financial performance.
As a result, annual bonuses have since been primarily based on underlying EPS with additional performance conditions pertaining to corporate objectives – this year focussing on delivery of the Group’s acquisition pipeline following the £30 million fundraise in February 2023.
The 2023 underlying EPS targets were set in early 2023, following confirmation of market consensus estimates, and the maximum target set required an out performance relative to market expectations of 10% or more. At the outset of 2023 the market consensus estimates for the Group’s full year EPS was 7.3p, therefore the maximum target was 8.0p. As noted in the 2023 business performance review, the Group performed very strongly despite numerous challenges, achieving underlying EPS of 8.12p, being 1.5% ahead of the maximum target set and this measure, applying to 75% of the overall bonus, was therefore achieved in full.
The remaining 25% of the overall bonus pertained to corporate objectives, and this year was focused on execution and delivery of the Group’s investment pipeline communicated as part of the Group’s £30 million fundraise in February 2023. This measure was defined based on a level of profit after tax added to the Group, with a lower limit of £2 million and an upper limit of £3 million, with the newly acquired businesses contributing over £3 million in FY23.
The 25% of the overall bonus pertaining to corporate objectives was therefore achieved in full in 2023.
The Committee carefully considered whether the annual bonus outcome reflects the underlying performance of the business, as well as the experience of Shareholders and other stakeholders during the year and whether any discretion should be exercised. In doing so, the Committee specifically considered health & safety performance of the Group, factored in broader financial performance (revenue, EBITDA, EBITDA margins, free cash flow, CapEx and ROIC) and overall delivery of strategy. The Committee was satisfied that the bonus outcome was fair, and no discretion was exercised.
2023 POLICY APPLICATION
For 2023, the Committee implemented the policy established in 2021 as follows:
• Review of executive director salaries to ensure they remain commensurate, taking into consideration the inflationary macroeconomic environment in 2022 and its evolution in 2023, and the fact that the executive directors did not receive any adjustments to their salaries in 2022.
• No change to benefits or pension arrangements.
• The annual bonus opportunity will continue to be 125% of salary for executive directors and be based at 75% of underlying EPS and 25% for corporate objectives, with suitable safety standards being maintained as an override.
• Assessment of the performance measures to determine vesting of the initial PSP awards granted in October 2021.
SHAREHOLDERS’ AND EMPLOYEE’S VIEWS
We are very grateful for the views received from major Shareholders and seek to engage with Shareholders on a continuous basis on remuneration matters. I can be contacted via the Company Secretary should you have any questions on this report or more generally in relation to the Group’s approach to remuneration.
While SigmaRoc applies the QCA Code, the Board considers the principles and provisions in the UK Corporate Governance Code. Under the main code, companies are required to establish a mechanism for gathering the views of the workforce on all matters, including pay. The Board has considered carefully the most effective way of achieving this and has appointed its General Counsel, Anthony Brockbank, as the Group’s workforce representative, reporting to the Board on all workforce engagement matters.