The 2018/19 financial year has been a challenging year for the Group on many fronts, the result of which was a 3.5 per cent decline in like-for-like sales and a £3.9 million reduction in adjusted EBITDA. Rob Pitcher was installed as Chief Executive Officer just days before the beginning of the financial year under review and, given the deterioration in sales performance at that time, his priorities were to stabilise performance and determine the direction of the Revolution brand. Many new work-streams have been initiated and, towards the end of the year, there was good evidence of sales performance stabilising and moving into growth. Actions have also been progressed to remove cost from the business and with many more of the work-streams expected to deliver future trading improvements and bank debt now reducing, the Group is much better placed to consolidate its market position and deliver an improved performance in 2019/20.

Performance in the period under review for adjusted EBITDA and adjusted Profit before tax bonus targets was below the threshold level and therefore no bonuses were payable to any Executive Director or member of the senior management team.

No LTIP awards held by Executive Directors were due to vest in respect of the three-year performance period ended 29 June 2019.

The Group’s Remuneration Policy was submitted for approval at the 2018 AGM. The Committee reviewed the policy during the year and concluded that it remains appropriate and fit for purpose, and as such no changes to the policy are to be proposed at the 2019 AGM.

In respect of operating the Remuneration Policy in the 2019/20 financial year:

• no changes will be made to Executive Director base salary levels. Rob Pitcher’s salary will remain on £350,000 and Mike Foster’s salary will remain on £204,000, the latter having been increased by two per cent from 1 April 2019, in line with the inflationary increase applied to head office salaries at that time;
• no changes will be made to benefits or pension provisions. However, in respect of new appointments to the Board, the Committee will ensure that pension provision is aligned to the workforce;
• annual bonus provision for 2019/20 will continue to be capped at 100 per cent of salary for Executive Directors. 70 per cent of the bonus potential will be based on a sliding scale of EBITDA performance targets and 30 per cent of the bonus potential will be based on strategic targets based on like-for-like sales growth, health and safety audit ratings, guest experience measurements and employee Net Promoter Score. Bonus earnings based on the strategic target measurements will only be paid if the minimum EBITDA performance target is achieved;
• Rob Pitcher will receive the second part of his LTIP award (based on 100 per cent of salary) as contractually agreed when he joined the Company. The award will take place shortly after the preliminary announcement of the 2019 results. While the Committee notes the provision in ISS’s latest voting guidelines (i.e. where there has been“a material decline in a company’s share price, Remuneration Committees should consider reducing the size of LTIP awards at the time of grant”) and investor sentiment on this more generally, a reduction to the award level is not considered appropriate in respect of Rob Pitcher’s planned 2019 LTIP award given the Remuneration Committee’s desire to:
  
  (i) fulfill the commitment made to Rob upon his appointment, which was a critical element in attracting him to this opportunity, in respect of granting a 300 per cent of salary LTIP award within the first 18 months of his employment;
  (ii) ensure that Rob is appropriately incentivised to remain in the business noting: (a) the significant progress that he has made since his appointment just over a year ago and the planned workstreams for 2019/2020 onwards; (b) that a number of the Group’s issues in the past were exacerbated by a period of management instability; (c) the reduction in the share price is not a reflection of his efforts since joining the Group but rather a result of the underlying problems in the period leading up to his appointment; and (d) the fact that the initial 200 per cent of salary LTIP award is, in the view of the Committee, considered unlikely to vest to a material extent; and
  (iii) ensure that Rob is appropriately incentivised to continue to turn the business around in challenging trading and uncertain macroeconomic conditions
• The basis of the performance targets for the awards remain unchanged; 70 per cent on earnings per share (“EPS”) (25 per cent of this part of awards will vest for EPS growth of seven per cent per annum increasing pro-rata to 100 per cent vesting for EPS growth of 13 per cent per annum) and 30 per cent based on relative total shareholder return (“TSR”) against a bespoke peer group of listed pub companies. However, rather than using the conventional median to upper quartile vesting schedule, a median to median plus ten per cent p.a. vesting scale will be adopted given the small number of comparator companies.
  
  • Following his 200 per cent of salary LTIP award in November 2017, no further LTIP award will be granted to Mike Foster in 2019/20;
  • shareholding guidelines will continue to operate at 100 per cent of salary; and
  • no changes will be made to Non-Executive Director fees.

The Committee met five times during the year, with all members attending each meeting. It's main activities were to:

• determine the Chairman’s fee and the framework and policy for the remuneration of the Executive
  Directors and other members of the Executive Committee and ensure they remain appropriate;
• advise on the design of, and to determine and agree, the total individual remuneration package of each of the Executive Directors and other members of the Executive Committee, giving due regard to any relevant legal requirements, the provisions and recommendations set out in the prevailing Code and
  the UK Listing Authority’s Listing Rules and associated guidance;
• approve the design of, and targets for, annual and long-term performance related pay schemes operated for the Executive Directors and other members of the Executive Committee, the total annual
  payments made under such schemes and provide oversight and guidance in relation to other Group-wide incentive proposals to ensure that these are aligned to performance, the Group’s core values and the Board’s risk appetite; and
• oversee remuneration and benefit structures and policies throughout the Group’s business and to give
  advice on any major changes.