The initial requirement for any pay-out under the PSP is that the fully diluted net asset value per share of the Company be at least 250 pence (the “asset value hurdle”). The next requirement is that the mid-market share price must average at least 230 pence in the three months prior to any payment (the “share price criterion”). When the asset value hurdle is passed, the Remuneration Committee can accrue a profit sharing pool, however this will not be allocated or paid out until the share price criterion is met and the Remuneration Committee is satisfied that the fully diluted net asset value per share is based on realised profits.
The PSP is based upon the increase in the audited fully diluted net asset value per share of the Company. The initial profit sharing pool is 20% of any increase in the fully diluted net asset value per share at 30 September over the last high watermark which was 196.3 pence per share (being the fully diluted net asset value per share at 30 September 2014 when payment was made under the Company's previous profit sharing plan), multiplied by the number of ordinary shares in issue. Subsequent potential pay-outs under the PSP will be based on the same criteria as referred to above except that the asset value hurdle will be determined by reference to the last high watermark. This ensures that the Participants cannot accrue any profit share twice in respect of the same net asset value growth. The Remuneration Committee shall have regard to any revaluations of assets and will make adjustments to ensure that only realised profits are allocated to the profit sharing pool.
There is no obligation that all of the profit sharing pool be paid or distributed to the Participants and the Remuneration Committee may reduce the profit sharing pool where in its opinion such amount should not be distributed. Any amount not distributed is permanently lost. Participation in the PSP shall be at the absolute discretion of the Remuneration Committee. The Remuneration Committee has the ability to vary the conditions attached to any pay-out in exceptional circumstances and determine the calculation of an award. The split of the profit sharing pool between the Participants will be at the discretion of the Remuneration Committee.
If the employment of a Participant ceases yet he/she remains a good leaver, the Company will compensate the Participant by paying to him/her a sum (after deduction of taxes and national insurance contributions required by law) equal to the average of the annual financial year bonus payments under the PSP received by the Participant in respect of the three financial years immediately preceding the date of the termination of the employment or if the employment is for a period less than three financial years then the average of the bonus payments received during the employment. Standard provisions are also included in the PSP to make adjustments in respect of a change of control of the Company.
The independent directors of the Company, having consulted with the Company's nominated adviser, Liberum Capital Limited, consider that the terms of the PSP are fair and reasonable insofar as the Company's shareholders are concerned.