Corporate governance report Remuneration Dear Shareholder INTRODUCTION Remuneration The financial year under review has been significantly impacted by Covid-19, with government restrictions requiring Committee report the closure of the Group’s stores to customers for a third of the financial year, and imposing social distancing measures for the remainder. Despite this, our Executive Board has continued to perform strongly, delivering record PBT of £157.8m, against £109.1m last year and £125.9m in 2019, due to the strength of our recently enhanced online proposition and our new contactless Click & Collect service, driven by continued strategic investments. Good strategic progress has continued, with particular focus on building our customer proposition, digital capability and our approach to climate change and sustainability. We have also continued to focus on supporting the financial and emotional wellbeing of our colleagues, and of our communities. These efforts resulted in improved customer and colleague satisfaction metrics. William Reeve FY21 EXECUTIVE PAY OUTCOME Chair of Remuneration All of our senior management team performed very strongly Committee in a difficult year in which we achieved record profits for the Company, even after repayment of £14.5m claimed under the Job Retention Scheme in FY20 and Covid-related grants of Remuneration Committee membership £4.0m, and operating a Company-funded furlough scheme The table below sets out the membership and attendance of for colleagues during periods of government-imposed Directors on the Remuneration Committee during the year: store closures in FY21. A high proportion of our executive remuneration is in performance-related variable pay so as Meetings to incentivise and reward strong performance, and so this Member From To attended has resulted in a high bonus outcome for FY21. Our strong William Reeve (Chair) 1 July 2015 To date 5/5 performance over the last three years has delivered both a Ian Bull 10 July 2019 To date 5/5 full LTIP vesting and a significant growth in our share price. Andy Harrison 1 September To date 5/5 These are reflected in the reported single figure remuneration 2014 earned by our Chief Executive, Nick Wilkinson, of £4.04m Peter Ruis 10 September To date 5/5 (2020: £0.96m), and by our Chief Financial Officer, Laura 2015 Carr, of £2.47m (2020: £0.50m). The significant year-on- Arja Taaveniku1 15 February To date 2/3 year increase isas a result of the strong performance of the 2021 business, both in FY21 and over the last three years; the resulting growth in share price which has enhanced the value Paula Vennells2 4 September 25 April 3/3 earned under the LTIP; and the voluntary pay reduction taken 2019 2021 by Nick (90%) and Laura (20%) during April to June 2020. Note 1. Arja Taaveniku was appointed to the Board during the financial year, and alsothat this is the first year in which an award under the Long- joined the Committee on appointment. She was unable to attend one Incentive Plan has vested to Laura. Over 80% of FY21 meeting during the year due to a prior commitment. Term 2. Paula Vennells stepped down from the Board on 25 April 2021. paywill vest in shares, and at least two thirds of these (after The Company Secretary acts as secretary to the Committee. No Director ever payment of tax and National Insurance contributions) must be participates when his or her own remuneration is discussed. retained. The Committee considers that this pay outcome is fairand reasonable, and reflects the overall shareholder and stakeholder experience of the Group, as well as the strong performance of the Executives. VESTING OF INCENTIVES IN FY21 FY21 Bonus In November 2020, our shareholders approved our revised Remuneration Policy, with over 99% of votes in favour. Our new Policy includes specific temporary incentive arrangements for the FY21 annual bonus to recognise the challenge of setting lasting, robust and meaningful quantified targets in the midst of the Covid crisis. In addition, the normal cash bonus was temporarily replaced with a deferred share bonus scheme to increase alignment and extend the bonus horizon. The Committee set bonus targets related to financial performance and delivery of a Recovery Plan (weighting ateic roress including environmental, social and governance performance (weighting 25%) and personal 138 DUNELM GROUP PLC ANNUAL REPORT & ACCOUNTS 2021