Georgia Healthcare Group PLC Annual Report 2018 Governance Remuneration Committee Report continued Other Executive Director Policies – Shareholding guidelines Purpose and link to strategy Operation • To further align Executive Directors’ • Executive Directors are required to build and then maintain a shareholding interests with those of shareholders. equivalent to 200% of total salary (i.e. cash and deferred share salary) such amount • To ensure Executive Directors build and to be built up within a five-year period from appointment as an Executive Director then maintain a significant shareholding in (the “required shareholding”). the Company over the long term. • For these purposes all beneficially owned shares as well as unvested (net of tax) and • To ensure departing Executive Directors vested, deferred share salary and discretionary deferred shares are counted towards the make long-term decisions and maintain an required shareholding (as such awards are not subject to any performance conditions after interest in the ongoing success of the grant). Meeting and maintaining the required shareholding is thus likely to happen naturally Group post-employment. over the course of the Executive Director’s employment. • Executive Directors are to maintain the lower of the required shareholding or the Executive Director’s actual shareholding at the time employment ceases for a period of two years from the date on which employment ceases unless the Remuneration Committee determines otherwise. • In very exceptional circumstances, for example in the event of a serious conflict of interest, the Remuneration Committee has the discretion to vary or waive the required Shareholding but must explain any exercise of it’s discretion in the Group’s next Remuneration Report. It should be emphasised that there is no present intention to use this discretion. Notes to the Policy table Cash salary The Remuneration Committee has the discretion under the policy to change the currency in which cash salary is paid and also has the discretion to determine the appropriate exchange rates for determining the cash salary to be paid. Deferred share salary The deferred share salary comprises the most important element of the Executive Director’s fixed annual remuneration and is commensurate with his role within the Group. Heavily weighting salary in favour of deferred share compensation rather than cash means that the Executive Director’s day-to-day actions are geared towards sustained Group performance over the long term. The deferred share salary component is neither a bonus nor LTIP, it is salary fixed at the outset of each Executive Director’s service contract and is therefore not subject to performance targets or measures. The Executive Director’s salary increases or declines in value depending on Group performance in the subsequent work years, thereby aligning the Executive Director’s interests directly and naturally with those of the Group’s shareholders. For FY 2019 deferred share salary will be awarded after the Policy becomes affective but vesting will be adjusted as if it had been awarded in January 2019 and so 25% will vest in each of January 2021, January 2022, January 2023 and January 2024. Performance-based (Discretionary Deferred Share) Remuneration Performance is recognised entirely through the discretionary deferred share compensation plan, which measures and rewards performance over the financial year. The majority of remuneration is inherently linked to performance and shareholder value as the majority of remuneration is in the form of deferred share salary and discretionary deferred shares. The Group does not operate an LTIP because it believes that there is sufficient long-term incentive built into its deferred share salary and discretionary deferred share remuneration. Measures are chosen to reflect strategic priorities for the group and will be chosen by the Remuneration Committee annually towards the beginning of the performance year. The aggregate pool of shares available each year for awards of discretionary deferred share compensation for the Executive Director and the Executive Management team as a whole is determined annually by the Remuneration Committee in its absolute discretion, based on a number of factors including: • operating and quality objectives; • financial results; • strategic objectives; and • people and culture development impact. 94