The Committee considered whether the median pay ratio for the year is consistent with the pay, reward and progression policies for the Company’s UK employees taken as a whole, and concluded that it is, for the following reasons: • Our CEO, whose fixed pay is lower as a proportion of total pay than the peer group, hasperformed above the average in the industry and his pay will reflect that. • This year the ratio will be at the high end. This is due entirely, either directly or indirectly, to the high levels of performance, and the payout in line with our policy and existing arrangements, due as a result of that performance. • The increase in variable pay reflects the strong business performance shown under Nick’s leadership both in FY21 for the annual bonus, but also over the past three years, which is rewarded through the LTIP. • Last year’s ratio was abnormally low, due to Nick’s voluntary 90% salary reduction, and the low bonus and LTIP vesting. • The colleagues at the 25th, 50th and 75th percentile are hourly-paid colleagues, reflective of the fact that c.80% of our colleague base are employed in hourly-paid roles who do not have any element of variable pay. • The median pay ratio is considered appropriate and consistent with the pay and reward policies for all of the Group’s employees. Our remuneration strategy is based on paying median or below for salary, but median to upper quartile for variable pay, to reward strong performance and focus on long-term value creation, with at least two thirds (after deduction of tax and National Insurance liabilities) paid or invested in Dunelm shares which are retained for at least the duration of employment. The CEO remuneration is reflective of this, as Nick’s pay has a larger quantum in variable pay. In comparison we pay our hourly-paid colleagues upper median or above versus the market. Table 13 – Relative spend on pay The table below shows the all employee pay cost and returns to shareholders by way of dividends (including special dividends) and share buyback for FY21 and FY20: FY21 FY20 £’m £’m % change Total spend on pay 166.7 155.2 7.4% Ordinary dividend to shareholders 24.3 41.4 (41.3%) Special distributions to shareholders – 64.6 (100.0%) Total distributions to shareholders 24.3 106.0 (77.1%) This information is based on the following: • Total spend on pay – total employee costs excluding car allowances and bonuses from note 4 on page 198. This excludes £14.5m received from the UK Government’s Job Retention Scheme in respect of colleagues who were on furlough during the period. • Dividends taken from note 7 on page 200. DUNELM GROUP PLC ANNUAL REPORT & ACCOUNTS 2021 167 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTSOTHER INFORMATION