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Mon 24th Apr 2017 - The Restaurant Group executive directors receive no pay increase in 2017, annual report reveals
The Restaurant Group executive directors receive no pay increase in 2017, notice period changes to six months: The Restaurant Group executive directors have not received a pay rise this year, the company’s annual report has revealed. Chief executive Andy McCue was appointed in September on a salary of £505,000 – £5,000 a year more than his predecessor Danny Breithaupt, who received a year’s salary following his departure in August. The report also said the notice period for directors had been changed to six months instead of a year. McCue received total remuneration last year of £242,000 consisting of £146,000 salary and fees, £29,000 in taxable benefits, £29,000 in pension and £38,000 annual bonus. Meanwhile, Stephen Critoph, who left his position as chief financial officer in April last year, will also be paid £484,478 – his salary and benefits in lieu of notice for his 12-month notice period. His replacement Barry Nightingale, who was appointed in June last year and left on Friday (21 April), received total remuneration in 2016 of £251,000, made up of £179,000 salary and fees, £5,000 in taxable benefits, £27,000 in pension and £40,000 annual bonus. The annual bonus was 30% of the maximum for McCue and 24% for Nightingale, which were pro-rated down to reflect full months of service with the company. For the first time the bonus arrangement included a stretching like-for-like covers target. Remuneration committee chairman Mike Tye said: “For the year under review, the most notable remuneration-related decisions concerned the changes to the executive team. In agreeing the exit and joining terms the remuneration committee was conscious of the approved policy and further decided that where appropriate the terms would be revised in line with market best practice, which is a more demanding position than the current published policy. As a result, the new executive directors will be required to defer 50% of any bonus earned as opposed to any bonus in excess of 100% of salary. The committee reconsidered the appropriate length of notice periods and in the current context concluded that six months provides both the company and the individual with sufficient notice for a newly appointed director. However, over time the committee may increase notice periods to one year in line with the current approved policy. The committee also decided to reduce the quantum of shares vesting at threshold in the long-term incentive plan (LTIP) issued to the new executive directors from 25% to 10%, thus ensuring the executive directors were fully aligned in sharing restoration of value to shareholders as the turnaround of the business progresses. For both departing executive directors (Breithaupt and Critoph), they will receive their 12-month contractual payment in lieu of notice by way of monthly installments, subject to mitigation. No payment will be made in lieu of annual bonus during the notice period. There is no entitlement to a bonus in respect of the financial year ending 2016. All LTIP awards held lapsed on cessation of employment. 2016 was a challenging year for the group and the committee spent a significant amount of time considering the annual bonus arrangements of the new executive directors. Balancing the performance of the company in the first half of the year with the need to incentivise and reward the new executive directors, the committee determined that it would limit maximum bonus entitlement for this year to 50% of the maximum bonus, and that any payment would be pro-rated to reflect full months of service. The committee set challenging underlying profit before tax targets with, for the first time, a stretching like-for-like covers target. As a result annual bonuses of 30% of maximum for the chief executive and 24% for the chief financial officer were awarded, which will be pro-rata to reflect full months of service with the company. For 2017, the maximum annual bonus for the chief executive and chief financial officer will be 150% and 120% of salary respectively. 50% of any bonus will be deferred for three years. The committee intends to grant LTIP awards of 175% and 130% of salary respectively, based on stretching total shareholder return and earnings per share targets. No salary increases were awarded to the executive directors for 2017. This is consistent with the rest of the workforce with the exception of those on the National Living Wage who will in April 2017 receive the increase prescribed by the government depending on their age. For those employees over 25 this equates to a 4% increase to £7.50 per hour. In light of last year’s voting outcome and the major board changes in the year, the committee consulted major shareholders and those we have spoken with have responded positively to the changes to the implementation of the policy. Given the context of these changes, we hope you will be supportive of the resolution to approve the annual statement and the annual report on remuneration at this year’s annual meeting.”

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