130 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 131 G ANNUAL REPORT ON REMUNERATION O VE R NAN The performance measures and weightings for 2023 bonuses were the same as in previous years. For 2023, 10% of the bonus was assessed The sections of the Annual Report on Remuneration that have been audited C against a scorecard of ESG measures linked to our carbon footprint, the sustainability of our UK productions and commissions and progress E by PwC are indicated with headings throughout the report. towards our diversity goals. The balance of the bonus was linked to EBITA (60%), cash conversion (10%) and individual personal and strategic targets (20%). The majority of the 2023 bonus (70%) was based on the achievement of corporate and financial targets, with bonus outcomes determined in Remuneration Policy application in 2023 accordance with pre-set target ranges. In line with the principles applied in previous years, the financial outcomes used for the bonus are The following section provides details of how the current Remuneration Policy was implemented in 2023. adjusted (both positively and negatively) for certain items, such as acquisitions and currency movements to ensure a fair like-for-like comparison with the targets set at the start of the year. Executive Directors – Audited The table below sets out in a single figure the total remuneration for both Executive Directors for the financial year. As part of the assessment of performance, the Committee also undertook a holistic review of overall performance, to ensure that outcomes were a fair reflection of the underlying business performance. Carolyn McCall Chris Kennedy The corporate and financial targets applied for 2023, together with performance against those targets and the resulting level of bonus, are set 2023 2022 2023 2022 out in the table below. Notes £000 £000 £000 £000 Salary 1,010 971 723 695 Taxable benefits 18 18 18 18 The adjusted EBITA ranges were set at the start of the year to reflect the market expectations for an anticipated slowdown in advertising Pension 91 146 65 62 spend, as well as the impact of our continued budgeted investment in content and technology. The target ranges set therefore reflect this Total fixed remuneration 1,119 1,135 806 775 external market and investment context. Annual Incentive (Bonus – cash and shares) 1 1,026 1,429 673 937 Performance required ESP / LTIP awards 2, 3 736 1,126 447 684 Performance Pay-out level Save As You Earn (SAYE) 4 – – 5 – Performance measure Weighting 20% 50% 80% 100% achieved (% of maximum) ITV adjusted EBITA1 60% £473m £503m £523m £573m £491m 38.2% Total variable remuneration 1,762 2,555 1,125 1,621 ITV cash conversion2 10% 66% 72% 75.6% 78% 102% 100% Total 2,881 3,690 1,931 2,396 1. The ITV EBITA outcome was adjusted for translational currency movements. Outperformance in Studios profitability was balanced by the impact of contraction in the wider advertising market. This resulted in EBITA performance towards the lower end of the range. 1. Two-thirds of the annual bonus is settled in cash and one-third is deferred into shares awarded under the ITV Deferred Share Award plan which automatically release on the third 2. While overall cash conversion performance was strong and supported the payout level, it was recognised that performance relative to the target range was partly attributable anniversary of the award, subject to continued employment. to a favourable movement in working capital, in part due to the impact of the US writers and actors strike expected to unwind in 2024. See page 14 for more information. 2. The 2021 ESP awards were subject to a performance underpin assessed based on results for the year ended 31 December 2023. The amount shown is the indicative vesting value using the average share price in Q4 of 2023 (63.31 pence). The awards will vest in May 2024 and will include dividend shares reinvested. Following a two year holding period, they will become exercisable from May 2026. These awards were granted based on a share price of 123.37 pence, therefore the values shown do not include an amount attributable to share The annual ESG targets applied for 2023, together with performance against those targets are set out below. price growth. 3. In the 2022 Annual Remuneration Report, the amount shown for share awards for both Executive Directors was the indicative vesting value of the 2020 LTIP award that was subject to performance conditions measured to 31 December 2022 using the average share price in Q4 2022 (70.67 pence). The figure shown in the table above represents the subsequent Social purpose goal Scorecard objectives Achievement value received on the vesting date of 6 April 2023 using the share price on that date (80.82 pence). These awards are subject to a two year holding period. 4. Chris Kennedy was granted share options under the SAYE on 13 September 2023 at a 20% discount of the ITV share price at the time of grant. The amount disclosed is the value of Net zero carbon emissions1 Scope 1 and 2 emissions to be below 7,271 tonnes of CO e, in Combined scope 1 and 2 emissions were 42% lower than the the total discount when investing the maximum (£500 per month) over a three year contracted period. 2 line with our SBTi trajectory. target set for 2023. The aggregate emoluments for all Directors as required under Schedule 5 (SI 2008/410), is the total remuneration shown in the table above Business travel emissions to be below 39,257 tonnes of Scope 3 business travel emissions were 39% lower than the CO2e, in line with our SBTi trajectory. target set for 2023. less share awards but including gains on exercise of options and amounts receivable under LTIPs, plus the total emolument figures for Non-executive Directors shown on page 134. Actual emissions performance is reflective of reduced studios output due to the industry strikes during 2023. Further information in relation to each of the elements of remuneration for 2023 set out in the table above is detailed below. An explanation 100% albert certified2 100% albert certification for new programmes produced In 2023 94% of the programmes produced by ITV Studios for 2022 is set out in detail in our 2022 Annual Report and Accounts which can be found on our website www.itvplc.com/investors and commissioned in the UK (excluding acquisitions of had albert certification. 64% of the shows commissioned by finished programmes and repeats). Certification includes ITV had albert certification, up from 42% in 2022. There was The Single Figure outcome has decreased for the Chief Executive from £3,690k in 2022 to £2,881k in 2023, while for the Group CFO & COO programme makers taking part in albert’s Creative Offsets good progress made in this area and the business continues it has decreased from £2,396k in 2022 to £ 1,931k in 2023. Largely this is a result of the 2021 ESP that was awarded at 50% of previous LTIP initiative or approved equivalent to make their production to work with the albert team and wider production awards vesting in 2023 as well as the restatement of the 2019 LTIP that vested in 2022. carbon neutral. community to achieve our 100% aspiration, while recognising the challenges we are still facing in engaging producers. See page 65 for more information on delivery of Salary climate related targets. As disclosed in last year’s report, both Carolyn McCall and Chris Kennedy received a 4% salary increase for 2023. This was in line with other Increase diversity on and To hit the following targets for: In 2023, progress continued to be made towards our senior executives but lower than the 5-6% increase awarded to the majority of employees. Carolyn McCall’s salary was £1,010,416 and off-screen by the end of 20233 Representation on-screen colleague and on-screen diversity targets, exceeding or Chris Kennedy’s salary was £722,900. • 50% Women close to hitting targets for most characteristics. On-screen targets were exceeded for LGBTQ+ and People of Colour, • 20% People of Colour but representation of Deaf, Disabled and Neurodivergent Taxable benefits and pension – Audited • 12% Deaf, Disabled or Neurodiverse people was below the target level. Targets were exceeded The benefits provided to the Executive Directors are the cost of private medical insurance and car-related benefits. • 7% LGBTQ+ for Deaf, Disabled or Neurodivergent colleagues at ITV (increasing to 12.3% from 11.4% in 2022) as well as women All colleague representation and LGBTQ+ colleagues. More needs to be done to increase The Executive Directors were not part of an ITV pension scheme but receive a cash allowance in lieu of pension. ITV was a first mover in • 50% Women the representation of People of Colour and colleagues from reducing executive pension levels. In 2017, the level for the Chief Executive was reduced from 25% of salary to 15% of salary (prior to the 2018 a working class background at ITV and the Committee Corporate Governance Code (the Code) coming into force). In accordance with the Code the Committee determined that directors joining from • 31.8% from working class backgrounds • 16.9% People of Colour noted the continuing work to achieve all of ITV’s diversity 1 January 2019 would receive pension contributions in line with the wider employee group, therefore Chris Kennedy received a cash allowance targets. in lieu of pension of 9% of salary. This is aligned with the maximum matching percentage amount payable to employees in the ITV Defined • 12% Deaf, Disabled or Neurodiverse Contribution Pension plan, which is the pension scheme offered to the majority of Group employees. To bring Carolyn McCall in line with the • 7% LGBTQ+ policy and the wider employee group, her cash allowance was reduced to 9% from 1 January 2023. Training • 80% of managers to have completed ‘Creating Disability Annual Incentive – Bonus (cash and shares) – Audited Inclusion’ training and/or ‘License to Hire’ training. Annual incentives are provided to Executive Directors through the bonus, with one-third of any award deferred into shares under the Deferred Share Award Plan (DSA). The maximum bonus opportunity for the year for the Chief Executive was 180% and for the Group CFO 1. ITV emissions reduction targets and performance are validated and published as part of the Science Based Targets initiative (SBTi) (https://sciencebasedtargets.org/). Further information on ITV’s Climate Action targets and scope can be found at itvplc.com/socialpurpose and in the Social Purpose section of the Annual Report. & COO was 165%. 2. albert certification is an externally audited process that recognises programmes that have embedded sustainability not only within the production process but also through considering sustainability messaging included in programmes. 3. On-screen diversity is measured via Diamond, a single online system delivered through the Creative Diversity Network (CDN) and used by UK broadcasters to obtain consistent diversity data on UK-originated productions they commission (https://creativediversitynetwork.com/diamond/).