Georgia Healthcare Group PLC Annual Report 2018 Governance Remuneration Committee Report continued ANNUAL REPORT ON REMUNERATION The Remuneration Committee and its advisors The Remuneration Committee is principally responsible to the Board for establishing a Remuneration Policy for the Executive Directors, Chairman, Non-Executive Directors and designated members of the Executive Management Team that rewards fairly and responsibly, and is designed to promote the long-term success of the Group. The Remuneration Committee’s full Terms of Reference were last updated in December 2018 to reflect the principles and provisions of the 2018 UK Corporate Governance Code 2018. The Committee’s terms of reference are available on our website at: http://ghg.com.ge/uploads/files/ghg-remuneration-committee-tors-87.pdf. The Committee is comprised of three independent Non-Executive Directors: Tim Elsigood, David Morrison and Ingeborg Oie. Mr Gilauri stepped down from the Committee with effect from 20 September 2018. The composition of the Remuneration Committee and the members’ attendance is shown in the Board and Committee meetings attendance table on page 68. In addition to the formal meetings held during the year, the Committee participated in various discussions by telephone outside of these meetings. Other attendees at Committee meetings who provided advice or assistance to the Committee on remuneration matters from time to time included the CEO, the other Board members, the UK General Counsel and the Group’s Legal Director. Attendees at Committee meetings do not participate in discussions or decisions related to their own remuneration. The Committee received advice on compliance from Baker & McKenzie LLP, its legal advisors. The Committee continues to remain of the view that the advice received from Baker & McKenzie LLP is objective and independent and that the fees and the basis upon which they are charged remain commensurate. To aid in formulating the new Policy, the Company engaged a specialised remuneration consultant, Willis Towers Watson (“WTW”), to conduct an independent review of the Company’s current Remuneration Policy. The findings of this review were subsequently presented to the Committee and have been used as a basis for the ongoing shareholder engagement in respect of the new Policy. WTW are independent advisors appointed following a competitive tender process who have no other relationship with the Company. WTW’s fees are typically charged on an hourly basis with estimates for work agreed in advance. During the year, WTW charged £29,000. Shareholder context and Remuneration Policy and report Our existing Directors’ Remuneration Policy was most recently approved by shareholders at our AGM on 26 May 2016. The Directors’ Remuneration Report received the following votes from shareholders at the 2018 AGM: Total votes cast/ Resolution Votes for % for Votes against % against Votes withheld Approval of the Directors’ Remuneration Report 119,961,911 97.13 3,540,638 2.87 123,872,934/0 Directors’ remuneration Single total figure of remuneration for the Executive Director (audited) The table below sets out the remuneration earned by the Company’s sole Executive Director, Nikoloz Gamkrelidze, in respect of his employment with the Group for the years ended 31 December 2018 and 31 December 2017. For 2018, 77.2% of Mr Gamkrelidze’s compensation as set out in the table below is in the form of deferred shares that vest in tranches with a vesting period of up to four years. Deferred share Cash salary Deferred share Total salary compensation Taxable benefits Pension benefits Total Year ending (US$)1 salary (US$)2 (US$) (US$)3 (US$)4 (US$)5 (US$) 2018 225,000 452,022 677,022 338,511 7,360 1,495 1,024,388 2017 225,000 452,022 677,022 575,369 43,089 1,575 1,297,055 Notes: 1 Cash salary is expressed in US dollars but paid in GBP and Lari as applicable, converted into the respective currency as described in Note 2 of the table in section 6.2 of the 2016 Remuneration Policy. Accordingly, there may be variations in the numbers above and those provided in the accounts. 2 Deferred share salary. The figures show the value of GHG shares underlying nil-cost options granted under the Executive Director’s service contract with JSC GHG in respect of service in the relevant year. For 2018 and 2017, Mr Gamkrelidze was awarded 175,000 deferred share salary shares. The value attached to each GHG share is calculated by reference to the share price as of 12 November 2015, the date of admission to listing, which was US$2.58298 (based on the official share price of GBP 1.7 per share converted into US dollars using an exchange rate of US$ 1.5194, being the official exchange rate published by the Bank of England on the same date). 3 Discretionary deferred share compensation. The figure shows the value of GHG shares underlying nil-cost options granted in respect of service in the relevant year. The discretionary deferred share compensation award is capped at 100% of total salary. For 2018, options were awarded over 111,301 GHG shares. The value of the discretionary deferred share compensation is calculated by reference to the share price on 8 February 2019 which was US$3.0414 (based on the official share price of GBP 2.35 per share converted into US Dollars using an exchange rate of 1.2942, being the official exchange rate published by the Bank of England on the same day). For 2017, options were awarded over 122,900 GHG shares. The value of the discretionary deferred share compensation is calculated by reference to the share price on 10 December 2017, which was US$ 4.6816 (based on the official share price of GBP 3.50 per share converted into US Dollars using an exchange rate of US$ 1.3376, being the official exchange rate published by the Bank of England on previous business date i.e. 8 December 2017). Discretionary deferred shares awarded in 2018 are subject to three-year straight line vesting beginning in January 2020, subject to the leaver provisions described in section 4.5(b) of the 2016 Policy. The means of determining the number of shares underlying this compensation and the terms and conditions are described in section 4.2(b) of the 2016 Policy. The basis for determining Mr Gamkrelidze’s 2018 discretionary award is described in section 3.2 below. 4 Benefits. The figure shows the gross taxable value of health and disability insurance and tax equalisation payments. 5 Pension. The figure shows the aggregate employer contributions for the relevant years into the Group’s defined contribution pension scheme. Under the Group’s defined pension scheme the normal retirement age is 65. 6 Mr Gamkrelidze was reimbursed for reasonable business expenses, on provision of valid receipts. 7 No money or other assets are received or receivable by Mr Gamkrelidze in respect of a period of more than one financial year, where final vesting is determined by reference to achievement of the performance measures or targets relating to a period ending in 2018. 100