The information in this section of the Directors' Remuneration Report is not subject to audit.

The objectives of the Remuneration Policy are as follows:

  • To reward employees and Executives appropriately for the work they do (base salary);
  • To provide market competitive remuneration packages to enable retention or recruitment (base salary plus benefits);
  • To incentivise the employees and Executives to perform at their best consistently (bonus/Long-Term Incentive Plan);
  • To align Shareholders' and senior management's interests (bonus in shares, Long-Term Incentive Plan and shareholding guidelines); and
  • To retain key staff (long-term structures with delayed vesting).

The following table provides a summary of the key components of the remuneration package for:

Executive directors

ComponentPurposeOperationOpportunityApplicable performance measuresRecovery

Base salary

To help recruit, retain and motivate high performing Executives.

Reflects the individual experience, role and importance of the Executive Director to the business

Base salaries are set by the Remuneration Committee and reviewed annually and increases are effective from 1 January, although increases may be awarded at other times if the Remuneration Committee considers it appropriate.

A market benchmarking exercise will be undertaken periodically as determined by the Remuneration Committee to ensure that base salary remains around the median of the market level for roles of a similar nature and to reflect the individual's skills, experience and performance

Base salaries are reviewed annually. Increases will not normally exceed the range of increases awarded to other employees within the Group.

The Remuneration Committee may also increase a Director's salary should there be a change in the scope of their role, the scale or complexity of the business or if significant changes to market practice arise, which the Remuneration Committee believes justifies a further increase in base salary.




To help recruit, retain and motivate high performing Executives.

To provide market competitive benefits.

Benefits are set by the Remuneration Committee and reviewed annually.

Benefits currently received by the Directors include:

  • Paid holidays
  • Life insurance
  • Private medical cover
  • Housing allowance
  • Car allowance

The Company provides a range of market-benchmarked benefits. The costs of these benefits may change year-on-year due to external costs.

The Remuneration Committee has flexibility to provide benefits which would typically have been available to an Executive Director in an overseas jurisdiction when recruiting from outside of the UK.



Annual bonuses

Align interests of Executive Directors and Shareholders in the short- and medium-terms.

The annual bonus scheme participation levels (including maximum opportunities) are determined by the Remuneration Committee following the end of the year, based on performance achieved against the performance metrics set. Awards are split equally between (i) cash and (ii) shares vesting over two years, subject to continued employment.

Up to 100% of base salary

Specific targets and weightings may vary according to strategic priorities and may include:

  • Financial performance
  • Attainment of personal objectives

Weighting will focus on Group financial.


Long-Term Incentive Plan (LTIP)

Align the interests of Executive Directors and Shareholders in the long-term.

Incentivises long-term value creation.

The XP Power Long-Term Incentive Plan was approved at the 2017 Annual General Meeting. This replaced the Company's share option scheme for awards to Executive Directors.

LTIP awards may be made in the form of conditional share awards, nil or nominal cost. The LTIP also provides for awards to be structured as stock appreciation or phantom rights, which may be suitable for awards granted in overseas jurisdictions.

Performance is typically measured over three financial years starting with the year or date of grant, or any longer period as the Remuneration Committee may decide.

50% of a vested award will be distributed at that time, with the remaining 50% distributed after a period of one year.

Amounts equivalent to any dividends or Shareholder distributions made in respect of awards at vesting, are at the discretion of the Remuneration Committee.

The maximum award level under the LTIP is 100% of base salary or such higher amount as the Remuneration Committee in its absolute discretion may determine, up to a maximum of 200% of base salary. The 200% cap is restricted to exceptional circumstances only.

It is the Remuneration Committee's intention to set relative TSR targets for 50% of the award and absolute EPS growth targets for the other 50%, although the Remuneration Committee will set appropriate performance conditions and weightings each year prior to awards being made.

The Remuneration Committee has the discretion to claw back some or all of the awards granted under the LTIP by reducing unvested awards or requiring the return of the net value of vested awards to the Company in circumstances of material financial misstatement, a major environmental event, a breach of the Company's code of ethics or a serious health and safety issue.

Share option plan

Align the interests of Executive Directors and Shareholders in the long-term.

Incentivises long-term value creation.

Prior to the adoption of the XP Power Long-Term Incentive Plan, market value share options were granted with 50% options vesting after three years from date of grant and 50% options vesting after four years.

No further options are intended to be granted to Executive Directors.

Vesting of outstanding options is based on total Shareholders' return relative to the FTSE 350 Electronic and Electrical Equipment Sector. Top 20th percentile: 100% vest. Between median and top 20th percentile: vest on a straight-line basis between 25% and 100%. Below median: zero vest.

The Remuneration Committee has the discretion to claw back unvested options or require the return of the net value of vested options in circumstances of material financial misstatement, a major environmental event or a breach of the Company's code of ethics or a serious health and safety issue


Provide a basic pension benefit that would be expected for the position.

Percentage of base salary paid into a defined contribution scheme.

2-8% depending on geography.


There are no provisions for recovery of pension payments contributions.

Shareholding (minimum)

Align the interests of Executive Directors and Shareholders in the long-term.

To build a minimum shareholding equivalent to two years' salary. Directors have a period of five years from 1 April 2016 (the date of approval) to achieve this.




The performance targets above were chosen as they are considered suitable for aligning the interests of the Executives with those of Shareholders.

Use of discretion

The Company's incentive plans including the annual bonus scheme, share option scheme and LTIP will be operated within the rules of the relevant scheme, together with all applicable laws and regulations. The Remuneration Committee may operate the discretion contained in the relevant plan in order to facilitate its administration and operation. Discretion includes (but is not limited to) who is invited to participate or receive awards, the size and timing of awards or payments, the setting of appropriate performance measures and targets for annual bonuses and incentive schemes from year to year and any adjustment of these to take account of market conditions, the annual review of performance against targets for the determination of bonuses and awards, the determination of vesting and performance periods and the treatment of leavers, and discretion when dealing with adjustments in respect of corporate events (such as changes in control, rights issues, de-mergers, acquisitions etc).

Non-Executive Directors

ComponentPurposeOperationOpportunityApplicable performance measuresRecovery


Fees are set at a level which is sufficient to attract, motivate and retain quality Non-Executive Directors.

Fees are reviewed periodically. The Board (excluding the Non-Executive Directors) is responsible for setting Non-Executive Directors' fees.

Non-Executive Directors are not entitled to participate in the Group's incentive plans.

The total amount of Non-Executive Directors' fees shall not exceed £300,000.



Approach to executive recruitment

Where a new director is to be appointed, a candidate profile is developed based on a review of future business requirements against the experience and skills of existing Board members. This is used to brief external recruitment consultants appointed by the Remuneration Committee to undertake the selection process. Initial meetings with prospective candidates are held by the Chief Executive Officer. A shortlist is selected to meet other Board members and a number of executive managers. The Remuneration Committee then meets and decides which candidate, if any, will be recommended to join the Board.

Any appointment to the Board receive an induction in respect of their directorship. This will typically include meetings with senior management and our corporate advisers, presentations from key business areas, and visits to our overseas businesses.

In the event of the recruitment of a new Executive Director, the Remuneration Committee would take into consideration the structure and levels of the remuneration for existing Directors and prevailing market together with the skills and value it believed the new Director would bring to the Company. It is therefore expected that a new Director's package would include the same elements as existing Directors and the maximum level of variable remuneration for annual bonus and LTIP would also be capped as it is for existing Executive Directors.

In addition, the Remuneration Committee will have discretion to make payments or awards to buy out incentive arrangements forfeited on leaving a previous employer, i.e. over and above the approach outlined in the table above, and may exercise the discretion available under Listing Rule 9.4.2R if necessary to do so. In doing so, the Remuneration Committee will seek, to the best possible extent, to do no more than match the fair value of the awards forfeited, taking account of the applicable performance conditions, the likelihood of those conditions being met and the proportion of the applicable vesting period remaining.

Where an Executive Director appointment is an internal candidate, the Remuneration Committee will honour any pre-existing remuneration obligations or outstanding variable pay arrangements that relate to the individual's previous role.

The Remuneration Committee retains the discretion to offer appropriate remuneration outside the standard policy where an interim appointment is made to fill an Executive role on a short-term basis or where exceptional circumstances require that the Chairman or a Non-Executive Director takes on an Executive function.

Executive directors' contracts

The Executive Directors' contracts run for an indefinite period, with the Company being able to terminate the contracts without cause giving 12 months' notice. When a Director is terminated without cause, the Director is entitled to a termination payment of 12 months of basic pay. Directors' service contracts are available for inspection at the Annual General Meeting of the Company. Directors are able to terminate the contracts giving 12 months' notice.

Non-executive directors' contracts

The Non-Executive Directors' contracts run for an indefinite period, with the Company being able to terminate the contracts without cause giving 12 months' notice. If the Shareholders do not re-elect a Non-Executive Director, or they are retired from office under the Articles, their appointment terminates automatically, with immediate effect and without compensation. Non-Executive Directors are not entitled to share option awards, long-term incentive plans or pensions.

Shareholder consultation

The Remuneration Committee's policy is to consult with major Shareholders in respect of significant decisions on Executive remuneration.

Statement of consideration of employment conditions elsewhere in the company

Pay and conditions throughout the Group are taken into consideration when setting remuneration policy. The Remuneration Committee does not consult other employees when setting Executive Director remuneration.

Illustration of the application of the remuneration policy

The charts below give an indication of the level of remuneration that would be received by each Executive Director in accordance with the Directors' remuneration policy (excluding share price movement).

Chief Executive Officer

Duncan Penny

Duncan Penny graph

Chief Financial Officer

Gavin Griggs

Gavin Griggs graph

Executive Vice President, Asia

Andy Sng

Andy Sng graph
  • Fixed (£)
  • Annual variable (£)
  • LTIP

The charts provide estimates of the potential future reward opportunities for each Executive Director, and the potential split between the different elements of remuneration under three different performance scenarios: "Minimum"; "On target"; and "Maximum".

The "On target" scenario has been calculated based on the 2019 approved budget and threshold vesting of normal LTIP awards.

The "Maximum" scenario has been calculated assuming that the Directors achieve the maximum allowed variable bonus which is capped at 100% of their respective base salaries and maximum vesting of normal LTIP awards under the plan. In order for Directors to achieve the maximum bonus, adjusted profit before tax would have to reach £44.7 million in 2019.

The fixed element of remuneration includes base salary, benefits-in-kind and pension contributions. The benefits-in-kind are measured according to their taxable value as follows:

PositionNameBase salaryBenefitsPensionTotal fixed pay
Chief Executive OfficerDuncan Penny£401,700£4,189£16,068£421,957
Chief Financial OfficerGavin Griggs£288,400£23,180£11,536£323,116
Executive Vice President, AsiaAndy SngS$257,500S$96,059S$15,450S$369,009