Changes to Director/PDMR Remuneration

Capita plc – Changes to Director/PDMR Remuneration

21 April 2020

Today Capita plc (Capita or the Company) is updating the market on senior management remuneration, ahead of the Company’s AGM on 25 June 2020. This includes changes in awards to Directors and PDMRs, and comes in the context of the ongoing Covid-19 crisis.

In an RNS released on 27 March 2020, Capita outlined a number of robust and wide-ranging actions being taken to protect its financial position, including significant temporary reductions in salary/fees for senior management and the Board. The Executive and Non-Executive Directors have taken 25% temporary cuts in salary/fees, effective from 1 April 2020, while temporary salary reductions are also applying to all members of the Executive Committee and higher earning colleagues across the Group. We have, however, continued with our commitment to pay the Real Living Wage to all those directly employed by Capita in the UK.

Capita remains focused on taking appropriate steps that will look to protect the interests of all its key stakeholders and best ensure the strength of Capita’s business in the long term.

In addition to the actions described in the previous market update, Capita has made further decisions in relation to senior management remuneration:

• We have withdrawn the 2020 annual incentive plan (STIP) for Jon Lewis, CEO, and Patrick Butcher, CFO, the Executive Committee, and other senior managers who participate in the 2020 LTIP.
   

• In light of Capita’s recent share price performance, the 2020 LTIP award levels for Jon Lewis and Patrick Butcher are being reduced significantly. Based on the closing share price on the day before grant, the awards to Jon Lewis and Patrick Butcher represented a reduction of 70% in the number of shares that would otherwise be awarded as part of their annual grant. This award will vest in three years’ time, subject to the performance conditions set out below. Any shares that vest are subject to both a post-vest holding period of two further years and a shareholding guideline which prevents any net-of-tax shares from being sold until the guideline is reached (300% of salary for the CEO and 200% for the CFO). LTIP awards for senior management have also been reduced significantly.

Performance Conditions

The LTIP awards for Jon Lewis and Patrick Butcher will vest three years from grant based on:

1. 75% Relative Total Shareholder Return (TSR) - 25% of this part of an award will vest for median TSR increasing pro-rata to 100% of this part of an award vesting for upper quartile performance as measured against the constituents of the FTSE 250 (excluding investment trusts) over the three years from grant.In addition to the median to upper quartile target range, no part of this award may vest unless the Remuneration Committee is satisfied that the level of vesting is consistent with the Company’s underlying financial performance; and

2. 25% Responsible Business Scorecard measures centred around delivering a better-quality business, based on Client (10%), Employee Engagement (10%) and Supplier (5%) targets and measured over three financial years ending 31 December 2022.

The Remuneration Committee had intended to set EPS growth targets for 25% of the 2020 LTIP awards.  It concluded that given the continued uncertainty surrounding the full impact of COVID-19 – the EPS performance metric should be removed for the 2020 LTIP awards, and TSR should be upweighted to 75% of awards and measured over the three years from the date of grant. Inclusion of an element of the award based on EPS will be re-considered for the 2021 awards. No changes have been made to the Responsible Business Scorecard measures from those disclosed in the 2019 Directors’ Remuneration Report.

In reviewing if Performance Conditions have been met, the Remuneration Committee will review the vesting outcome taking into account, in its absolute discretion, the underlying performance of the Company and the contribution of the award participant.

The information set out below is provided in accordance with the requirements of Article 19(3) of the EU Market Abuse Regulation No 596/2014.

Notification and public disclosure of transactions by persons discharging managerial responsibilities and persons closely associated with them

1	Details  of  the  person  discharging  managerial  responsibilities  /  person  closely associated
a)	Name	Jonathan Lewis, Patrick Butcher, Rupert Green, Claire Chapman, Ismail Amla, Will Serle, Garry Dryburgh, Katja Hall, Aimie Chapple, Andy Start, Christopher Baker, Mark Cook and Chantal Free
2	Reason for the notification
a)	Position/status	Jonathan Lewis – Chief Executive Officer Patrick Butcher – Chief Financial Officer Rupert Green – Chief Corporate Development Officer Claire Chapman – Chief General Counsel Ismail Amla – Chief Growth Officer Will Serle – Chief People Officer Garry Dryburgh – Chief Transformation Officer Katja Hall – Director of Corporate Affairs Aimie Chapple – Executive Officer Andy Start – Executive Officer Christopher Baker – Executive Officer Mark Cook – Executive Officer Chantal Free – Executive Officer
b)	Initial notification/Amendment	Initial notification
3	Details of the issuer,  emission allowance market participant, auction platform, auctioneer or auction monitor
a)	Name	Capita plc
b)	LEI	CMIGEWPLHL4M7ZV0IZ88
4	Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a)	Description of  the financial instrument, type of instrument Identification code	Ordinary shares of 2 1/15p each GB00B23K0M20
b)	Nature of the transaction	Grant of Nil Cost Unapproved Options under the Long Term Incentive Plan 2017.
c)	Price(s) and volume(s)	Jonathan Lewis – Grant of share options Price(s) Volume(s) £nil 1,770,000 Patrick Butcher – Grant of share options Price(s) Volume(s) £nil 700,000 Rupert Green – Grant of share options Price(s) Volume(s) £nil 581,570 Claire Chapman – Grant of share options Price(s) Volume(s) £nil 581,570 Ismail Amla – Grant of share options Price(s) Volume(s) £nil 715,779 Will Serle – Grant of share options Price(s) Volume(s) £nil 626,306 Garry Dryburgh – Grant of share options Price(s) Volume(s) £nil 679,990 Katja Hall – Grant of share options Price(s) Volume(s) £nil 369,073 Aimie Chapple – Grant of share options Price(s) Volume(s) £nil 477,559 Andy Start – Grant of share options Price(s) Volume(s) £nil 469,730
		Christopher Baker – Grant of share options Price(s) Volume(s) £nil 501,045 Mark Cook – Grant of share options Price(s) Volume(s) £nil 501,045 Chantal Free – Grant of share options Price(s) Volume(s) £nil 326,574
d)	Aggregated information	8,300,241 share options  nil
e)	Date of the transaction	2020-04-16
f)	Place of the transaction	Outside of a trading venue