01 02 Governance 03 04 Remuneration Committee Report Tim Elsigood Chairman of the Remuneration Committee Chairman’s Overview At its core, our review of the Company’s remuneration policy for Executive Directors has sought to ensure that Executive Director Dear Shareholders, remuneration is aligned to the Company’s purpose and values, is clearly linked to strategy and promotes long-term sustainable I am pleased to present the Directors’ Remuneration Report performance by treating our CEO and Executive Directors (and the for the year ended 31 December 2018 on behalf of the Board. Executive Management team whose pay structure is modelled on This Remuneration Report is divided into two sections: that of the Executive Directors) as your partners in our Company. • our new Directors’ Remuneration Policy (the “Policy”) which (For the purposes of this Remuneration Report, including the Policy, will be presented to our shareholders for approval at the 2019 the Company means GHG PLC.) AGM on 22 May 2019; and • the Annual Remuneration Report providing detail of amounts The business has grown significantly since it divested from BGEO Group paid during the reporting year. PLC in 2015 as demonstrated by the growth in the number of facilities we own or operate from 42 to 323 in the last three to four years, The Remuneration Committee carried out a wholesale review of the doubling our employee count and revenues increasing threefold to existing Policy in 2018/2019 supported by the UK General Counsel and $335 million. With this change, the responsibilities of the CEO have Willis Towers Watson – an independent advisor appointed following grown. In addition, the Board, more than ever, views the CEO as critical a competitive tender process who have no other relationship with to the execution of our strategy due to his unique expertise in the the Group. The review focused on the following areas: Georgian healthcare economy – the sole sector in which the Company • the alignment of remuneration with the Company’s strategy operates. At the same time, whilst the value of the CEO’s share salary and its growing portfolio; compensation has fluctuated (up and down) with the changes in • the relationship between pay and performance; the share price of the Company over the last three years, his base • developments in governance and investor views; and compensation and his discretionary deferred share compensation • market competitiveness. have not increased since the IPO. As part of this process, we sought the views of many of our Taking all these factors into account, the Committee is proposing shareholders in early 2019 through letters introducing the proposed an increase to: Policy, calls and also face-to-face meetings with myself and other (i)the CEO’s total salary: the cash salary element to increase to members of the Committee and we listened carefully to their US$375,000 (currently US$225,000), while the deferred share feedback before making final decisions. Shareholders have been element of the CEO’s base salary will remain unchanged at widely supportive and I would like to thank our shareholders for 175,000 shares per annum; and their engagement in our consultation process. (ii) the maximum discretionary deferred share compensation that can be awarded to the CEO is to be increased to 150% of salary Overview of changes to policy (currently 100%). Our new Policy retains our innovative and shareholder-aligned framework which has received strong support from our shareholders However, under the new Policy, each tranche of discretionary deferred previously (96.8% in favour). However, cognisant of the evolved shares will be subject to a new holding period in addition to the corporate governance landscape and investor expectations for vesting periods, so that the total vesting and holding period for the a UK premium listed company, the Remuneration Committee discretionary deferred shares will be up to five years. is proposing to introduce the following changes: • discretionary deferred share compensation will be subject Pension benefits will be fully aligned with that of the Georgian to a two-year post’ vesting holding period; workforce, and in line with new Georgian legislation: Executive • Executive Directors will be required to build and then maintain a Directors will be offered at the same percentage as that of the wider shareholding equal to 200% of salary during employment which shall workforce, with employer contributions equal to 2% of remuneration continue to apply for a further two years post-employment; and 1 from JSC GHG. • enhanced malus and clawback provisions in relation to discretionary deferred shares that are consistent with UK best practice. 1 While under the prior policy this occurred naturally and the current CEO today holds, in vested and unvested shares, more than 200% of his salary, we have decided to make this a formal requirement for Executive Directors. 89