Directors’ Remuneration
Matchtech has a Remuneration Committee which is responsible, on behalf of the Board, for
developing remuneration policy.
As Matchtech Group plc is an AIM listed company rather than a fully listed company it is
not required to disclose the information in the Remuneration Committee Report, but the
Board has chosen to do so as a voluntary disclosure. As such the Auditor is not required to
and has not, except where indicated, audited the information included in the Remuneration
Committee Report.
The Company’s statement on remuneration policy is set out together with details of the
remuneration of each Director.
Scope and membership of Remuneration Committee
The Remuneration Committee, comprising of independent Non-Executive Directors, meets
not less than twice a year. The Chairman attends the meetings as required, except when
his own remuneration is under consideration.
The purpose of the Remuneration Committee is to review, on behalf of the Board, the
remuneration policy for the Chairman, Executive Directors and other senior management
and to determine the level of remuneration, incentives and other benefits, compensation
payments and the terms of employment of the Executive Directors and other senior
executives. It seeks to provide a remuneration package that aligns the interests of
Executive Directors with that of the shareholders.
The Committee has continued to review the remuneration of the Executive Directors with
regard to the need to maintain a balance between the constituent elements of salary,
incentives and other benefits.
It receives advice from independent remuneration consultants, PriceWaterhouseCoopers
LLP Consulting and makes comparisons with similar organisations.
No Directors, other than the members of the Remuneration Committee, provided material
advice to the Committee on Directors’ remuneration.
Remuneration policy
The objectives of the Group’s remuneration policy are to attract, retain and incentivise
management with the appropriate professional, managerial and technological expertise to
realise the Group’s business objectives and to align their interests with those of
shareholders. The Group strives to link payment to performance and thereby create a
performance culture.
It is the Group’s policy that all Executive Directors’ service contracts contain a 6-month
notice period.
The Non-Executive Directors have letters of appointment stating their annual fee and that
their appointment is subject to satisfactory performance and their re-election at forthcoming
AGM’s. Their appointment may be terminated within a maximum of six months written
notice at any time.
The remuneration of the Non-Executive Directors is determined by the Board. The Non-Executive Directors do not receive any pension or other
benefits, other than out-of-pocket expenses, from the Group, nor do they participate in any of the bonus or share option schemes.
The remuneration agreed by the Committee for the Executive Directors contains the following elements:
- base salary and benefits;
- profit bonus;
- annual profit growth bonus;
- share options conditional upon performance;
- share incentive plan;
- pension benefits
The following sections provide an outline of the Group’s remuneration policy during the year.
Base salary and benefits
The Committee establishes salaries and benefits by reference to those prevailing in the employment market generally for Executive Directors of
companies of comparable status and market value, taking into account the range of incentives described elsewhere in this report, including a
performance based commission and performance bonus. Reviews of such base salary and benefits are conducted annually by the Committee.
Profit bonus
The performance based commission for the Executive Directors is based upon a fixed percentage of pre-tax profits generated by the Group in the
year.
Annual profit growth bonus
The annual growth based bonus is based upon the Group’s pre-tax profit performance in the year compared with the baseline pre-tax profit from
the previous year. This bonus is paid at the end of the year.
The following bonus rates are paid on the increase in profits for the year. The Remuneration Committee may vary the rates during the year to take
account of any acquisitions or disposals during the year.
The baseline profit for 2007/08 was £12.8 million.
Share options conditional upon performance
During the year the Group operated a Long Term Incentive Plan (LTIP) for Executive Directors and key staff. The Executive Directors receive an
annual grant of zero-priced share options. The grant for the year, made on 19th November 2008, was £100,000 for the Chief Executive Officer,
£80,000 for the Chief Financial Officer and £64,000 for the Resources Director. The number of shares granted is based upon the closing market
price of the Group’s shares on the day before the grant of the share options.
This Award will be capable of release subject to the Director remaining employed until the Expiry of the Holding Period date set out and the
satisfaction of the following Performance Targets:
Total Shareholder Return (‘TSR’)
The return on a Group’s share over the period from the Date of Grant to the third anniversary of the Date of Grant exceeding the median return of
the comparator group of listed recruitment companies. The composition of the comparator group is decided independently by the external
remuneration advisors PricewaterhouseCoopers, formerly Halliwell Consulting. The comparator group of companies for the LTIP grants are as
follows.
The comparator group of 28 companies for the 2006 LTIP are Adecco, Capita Group, Carlisle Group, Corporate Services Group, CPL Resources,
Glotel, Harvey Nash Group, Hat Pin, Hays, Healthcare Locums, Hydrogen Group, Imprint, Interquest Group, Lorien, Michael Page International,
Morson Group, MSB International, Northern Recruitment, OPD Group, Quantica, Robert Walters, Spring Group, Staffline Group, Sthree, Synarbor,
Vedior, Whitehead Mann and Work Group.
The comparator group of 27 companies for the 2007 LTIP are Adecco, Capita Group, Carlisle Group, Carter & Carter Group, Corporate Services
Group, CPL Resources, Harvey Nash Group, Hat Pin, Hays, Healthcare Locums, Hexagon Human Capital, Hydrogen Group, Imprint, Interquest
Group, Michael Page International, Morson Group, Northern Recruitment, OPD Group, Prime People, Robert Walters, Spring Group, Staffline
Group, Sthree, Synarbor, Vedior and Work Group.
The comparator group of 23 companies for the 2008 LTIP are Adecco, Capita Group, CPL Resources, Empresaria Group, Harvey Nash Group,
Hays, Healthcare Locums, Hexagon Human Capital, Hydrogen Group, Impellam Group, Interquest Group, Kellan Group, Michael Page
International, Morson Group, OPD Group, Penna Consulting, Prime People, Rethink Group, Robert Walters, Spring Group, Staffline Group, Sthree
and Work Group.
Earnings per Share Growth
If this TSR Underpin has been satisfied then the number of shares which shall be capable of release at the end of the Holding Period shall be in
accordance with the following table:-
The current status of performance against these targets is detailed below:
Total Shareholder Return (‘TSR’) performance
For the purposes of this report the Group’s TSR has been calculated using the three months to 7 September 2009
Earnings per Share Growth performance
(note: Earnings Per Share for the purpose of a performance measure for the LTIPs is calculated excluding the non-recurring items of the sales and
profits of the US business sold on 31 August 2006 as well as the IPO costs of £0.6m, and 2006 Earnings per Share has been restated under
IAS12)
Share Incentive Plan
During the year the Group operated a Share Incentive Plan (SIP) for Executive Directors and all staff called “Match”.
Under the scheme, staff are entitled to buy shares in Matchtech Group plc out of pre-tax salary.
They can invest up to a maximum of £125 per month or an annual lump sum of £1,500, which will be used to purchase Matchtech Group shares
(“Invest shares”).
Matchtech will award one free share for every share that is purchased (“Match shares”). Staff will receive “Match” shares at the end of a 3 year
holding Period, subject to remaining employed with Matchtech and the “Invest” shares remaining in the plan throughout the holding period.
On 31July 2009, the following shares were held in the scheme by the Executive Directors:
Pension
The Group contributes 10% of Executive Directors Adrian Gunn and Tony Dyer’s basic salary into a Group Personal Pension Plan. During the
year the group contributed 10% of Executive Director Paul Raine’s salary into an Executive Pension Plan. In addition, the Executive Directors
contribute into their pension schemes by way of Salary Sacrifice.
TSR performance for the year against market comparator
The graph below illustrates the Total Shareholder Return of the Group for year 27 October 2006 to 31 July 2009 for both the Group and the FTSE
AIM Industrial Goods and Services index, which is considered the most appropriate comparator index, as it is the index in which the Group
appears and is also used for comparing pay and benefit levels.
Audited Information
Directors’ remuneration
The table below summarises all Directors’ emoluments and pension contributions for the current and the prior year for comparison.
*Benefits in kind include car allowances, medical and life insurance.
Compensation for loss of office
The Remuneration Committee has exercised its discretion over Paul Raine’s compensation for loss of office, taking into account his length of
service and his overall contribution to the performance of the Group. On termination of his contract, he received a compensation package totalling
£77,160.
On 26 February 2009 he was paid a lump sum representing salary and contractual benefits for the six months of his notice period to 5 August
2009 of £63,518. In addition he received his bonus entitlement under his annual bonus scheme of £29,258, a discretionary payment of £30,000
and a payment equivalent to the current value of the estimated vesting of shares granted under the 2006 Long Term Incentive Plan of £17,902. All
other remaining unvested LTIPs lapsed on 6 February 2009. During the notice period he remained unable to solicit clients and employees of the
Group without the prior consent of the Board.
No other awards were made to any Director.
Directors’ interests in shares and share options
The Directors’ interests in the share capital of the Group at 31 July 2009 are shown below. There are no changes to this information as at the date
of this report.
Shares
Share Options
The IFRS 2 credits in the year for all LTIP’s relating to the Directors were £42,000 (2008: charge £46,000) in respect of Adrian Gunn and £41,000
(2008: charge of £41,000) in respect of Tony Dyer.
No Director had any other interest in the share capital of the Group or its subsidiaries, or exercised any share options during the year, other than
as already disclosed.
On 31 July 2009, the closing market price of Matchtech Group plc Ordinary shares was 127.50 pence. The highest and lowest prices of these
shares during the year were 270.0 pence on 6 August 2008 and 115.0 pence on 8 April 2009 respectively, based on the London Stock Exchange
Daily Official List.
Approval
This report was approved by the Committee, on behalf of the Board, on the date shown below and signed on its behalf by:
Stephen Burke
Chairman of the Remuneration Committee