Strategic ReportStrategic ReportStrategic Report Financial Additional Overview Strategy Performance Governance Statements Information Directors’ Remuneration Report Aligning incentivisation with the long-term success of the Group Alasdair Breach Chairman of the Remuneration Committee I am pleased to present the Directors’ Remuneration Report Executive Directors that we consider to be exceptional in for the year ended 31 December 2018 on behalf of the its focus in this regard. BOGG Board. This Remuneration Report is divided into two sections: The principles of our Policy are: (i) weighting salary to long- •Our new Directors’ Remuneration Policy (the “Policy”) term deferred share remuneration rather than cash; and which will be presented to our shareholders for approval (ii) paying performance-based remuneration in the form at the AGM on 17 May 2019; and of discretionary deferred shares only and no cash bonus. •The Annual Remuneration Report providing details of amounts paid during the reporting year. Our strategically aligned remuneration structure means that Executive Directors are completely focused on This is our first such Remuneration Report and Policy as delivering shareholder value. By focusing on the Group’s an independently listed company. As we outlined in our sustainable, long-term performance, our policy mitigates prospectus, the Policy follows the model operated by reputational and behavioural risks. The structure aligns BGEO Group PLC, the Group from which we demerged, both salary and performance-based remuneration with and is closely aligned with our long-term development shareholder interest and operates within a framework strategy and value creation for our shareholders. that promotes the Group’s long-term success. The Policy for Executive Directors aims to: Given that both historical salary and bonus shares •focus on alignment between Executive Directors can lapse upon leaving, the Executive Director is also and our shareholders; motivated to think long term and to remain with the •incentivise the Executive Directors to promote the Company. Pension and benefits are only a very small part long-term sustainable success of the Company and of an Executive Director’s remuneration package. its strategy; •support our corporate culture, including teamwork over The Policy is UK Corporate Governance Code 2018 individualism, and avoiding inappropriate risk taking; compliant, noting that the deferred share salary is neither •follow the principles and provisions of the new UK a typical remuneration scheme nor a typical salary, and Corporate Governance Code 2018; and the discretionary deferred shares are released later than •attract and retain high calibre executives. a typical cash bonus would be. The Remuneration Committee’s principal consideration The new Policy continues with the basics of the approved when determining the Remuneration Policy is to promote remuneration policy at our predecessor BGEO Group the long-term sustainable success of the Company and PLC, but with the changes in vesting periods, pension its strategy by focusing on alignment between Executive contribution, shareholding guidelines and malus and Directors and our shareholders over the long term. The clawback provisions set out in Key Features of the Company has adopted, subject to shareholder approval Policy below. at the forthcoming AGM, a remuneration structure for Annual Report 2018Bank of Georgia Group PLC 129