HOW OUR REMUNERATION POLICY IS LINKED TO OUR STRATEGY GROUP STRATEGY Deliver value for our shareholders and other stakeholders through long-term, sustainable, profitable growth Remuneration strategy Remuneration structure • Pay fairly for an individual’s role and responsibilities • Base pay and benefits at median or below • Reward strong performance • Annual bonus at median • Focus on long-term value creation • Long-Term Incentive Plan at upper quartile • Align executives with shareholders through share • Two thirds of variable pay retained in shares for duration ownership of employment and a significant amount for a further two years Our binding Remuneration Policy was last updated in 2020, The financial performance criteria for annual and long-term and approved by shareholders at the AGM on 17 November plans are linked to reported figures, usually PBT for the annual 2020 with over 99% of votes in favour of it. incentive, and earnings per share for the long-term incentive. Hence they are transparent and predictable. A percentage The principles behind, and the reasons for, the overall of the performance criteria for the annual bonus, and from remuneration structure that we have adopted for our 2021 the long-term incentive plan, is linked to delivery Executive Directors are directly related to our long-term of strategic objectives, which include measurement via strategic goal of delivering value for our shareholders numerical KPIs such as colleague and customer satisfaction. and other stakeholders through the profitable growth The Remuneration Committee has the ability to apply of a purpose-led, quality business. discretion to adjust formulaic outcomes where appropriate, and malus and clawback mechanisms apply to the annual Since the flotation of the Company our executive bonus and long-term incentive plan. This is coupled with our remuneration has been structured specifically: ‘Life-time Lock-in’ which requires our Executive Directors to • To pay fairly and approriately for an individua build a meaningful personal shareholding, and to retain the p l’s role majority of performance-related pay in shares for the duration and responsibilities of employment, with a two-year post-employment retention • To reward strong performance period for a significant portion of these (see the Policy for • To be focused on long-term value creation details). • To align Executives strongly with shareholders through share ownership. This policy is consistent with the creation of long-term, sustainable growth in shareholder value through delivery It is our intention to maintain a simple and transparent of the objectives set out in our corporate purpose and remuneration structure for the benefit of all parties. This ambitions, which are all long term in nature. It is also comprises fixed pay, an annual performance-related consistent with our shared values, which include ‘long- incentive, the majority of which must be retained in shares, term thinking’ and to ‘act like owners’. Our approach is also and a performance-related long-term incentive share in keeping with the family origin of the business, and is plan. The majority of the Executive Directors’ potential important to the Adderley family who remain our majority remuneration is variable and performance-related in order shareholders. to encourage and reward superior business performance and shareholder return. The majority of performance-related The Remuneration Committee considers that the policy pay must be retained in shares, which encourages long- and practices have operated as intended. The Company term thinking, wise risk management and alignment with has attracted and retained high quality Executives; overall shareholders and other stakeholders. Overall levels of pay are levels of pay over recent years have been in line with the analysed carefully each year. value delivered to shareholders and other stakeholders; positive feedback has been received from shareholders via AGM voting and other engagement mechanisms such as the engagement process conducted in connection with the 2020 Policy renewal; and from colleagues through our consultation with the National Colleague Voice. DUNELM GROUP PLC ANNUAL REPORT & ACCOUNTS 2021 141 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTSOTHER INFORMATION