Directors Remuneration Policy The principles of our Remuneration - PDF document

Remuneration 104 Remuneration Committee Report continued Directors’ Remuneration Policy The principles of our Remuneration Policy Competitive Total remuneration should be competitive when compared with industry peers and companies of similar size and scale. Performance linked A significant part of the Executive Directors’ reward is determined by the Company’s success. Failure to achieve threshold levels of performance may result in both no bonus under the PIP or no vesting under the LTIP and in addition partial forfeiture of earned deferred elements from previous years PIP contributions. The fixed element of the Policy remains conservative against industry and cross-sector peers. Shareholder alignment A considerable part of the reward is paid in shares that have to be retained until minimum shareholding requirements have been met and in the case of the LTIP for 5 years from grant. Simple and transparent The PIP structure is clear to participants and openly communicable; the LTIP is aligned to standard market practice and will be simple for participants and shareholders alike to understand. New Remuneration Policy In accordance with the regulations, the New Policy (the "Policy") as set out below will operate from 1 January 2020 and be put to a binding shareholders' vote and become formally effective if approved at the 2020 Annual General Meeting on 23 April 2020. The current Policy, which was approved on 26 April 2017, remains operative until this time and can be found on our website at www.clsholdings.com and on pages 51 to 60 of our 2016 Annual Report. The Committee uses the following comparators for executive remuneration: ■ FTSE 350 Real Estate Supersector ■ ■ U + I plc, Helical Bar plc, Workspace Group plc, St Modwens plc, Londonmetric plc, Grainger plc, Shaftsbury plc, Great Portland Estates plc, ■ Derwent London plc. These companies are of a similar size and/or complexity to the Group, but the comparator group is kept under review as different companies enter the market or change their size or the main characteristics of their business; and ■ FTSE 250 ■ – changing practice in the international market where the Company competes for talent; – pay conditions elsewhere in the Group; – changing views of institutional shareholders and their representative bodies; and – the recruitment market. CLS Holdings plc Annual Report and Accounts 2019

105 Strategic report Policy table Element/Purpose and Link to Strategy Operation Opportunity Performance Measures Executive Directors Base salary Reviewed annually and usually fixed for Competitive in the range for the None, although individual’s Provides a base level of 12 months commencing 1st January. Company’s comparator groups. performance and remuneration to support contribution are taken Factors taken into account include: The Committee intends to review the list recruitment and retention of into account. of companies each year and may add or ■ remuneration practices within the Group; ■ Directors with the necessary remove companies from the groups as ■ the general performance of the Group; ■ experience and expertise to deliver it considers appropriate. Any changes ■ experience and individual performance; ■ the Group’s strategy. to the comparator groups will be ■ changes in the scale, scope ■ Key element of core disclosed in the part of the report setting or responsibilities; fixed remuneration. out the operation of the policy for the ■ salaries within the ranges paid by the ■ future year. Corporate governance companies in the comparator groups used for remuneration benchmarking In general salary rises to Executive (when the Committee determines a Directors will be in line with the rise to benchmarking exercise is appropriate); UK based employees. and Maximum increase of 5% of salary per ■ the economic environment. ■ annum unless there is a significant change to the role and responsibilities. Benefits The key benefits provided to the Executive Market level in the range for the None. To provide a competitive level Directors include private medical insurance, Company’s comparator groups. of benefits and encourage the life insurance, income protection, gym The maximum will be set at the cost well-being and engagement contribution and staff lunch provision. of providing the benefits described. of employees. The Committee recognises the need to maintain suitable flexibility in the determination of benefits that ensure it is Financial statements able to support the objective of attracting and retaining personnel. Accordingly, the Committee would expect to be able to adopt benefits such as relocation expenses, tax equalisation and support in meeting specific costs incurred by Executive Directors to ensure the Company and the individuals comply with their obligations in the reporting of remuneration. Where the Company offers a flexible benefits approach (where the value of one benefit may be exchanged for another) to employees generally an Executive Director would have the option to participate. Other benefits (in line with those received Additional information by the general workforce) may be offered at the discretion of the Committee, such as long service awards or recognition of life events. Pension Employer retirement funding is determined The maximum Company contribution is None. Provide retirement planning and as a percentage of gross basic salary, up 10% for current directors. protection to employees and their to a maximum limit of 10%. Where this For new joiners, the pension benefit will family during their working life. exceeds the maximum annual pension be aligned to the staged percentages contribution that can benefit from tax Provides a standard UK market applicable to the wider UK workforce, relief, any excess may be provided in the level of retirement funding to currently 5% of salary upon joining, form of a salary supplement, which would enable the Company to recruit rising to 7.5% of salary after three years not itself be pensionable or form part of and retain Directors with the and 10% of salary after 5 years. salary for the purposes of determining the experience and expertise to deliver The maximum employee contribution extent of participation in the Company’s the Group’s strategy. is 5%. incentive arrangements. CLS Holdings plc Annual Report and Accounts 2019