Science in Sport
plc
("Science in
Sport", the "Group" or the "Company")
Management Incentive
Plan
Overview
The Company is proposing to adopt
the Growth Plan to incentivise management and to closely align
their interests with Shareholders, subject to the approval of
shareholders at the General Meeting. It is proposed that one-off
awards will be made to Daniel Wright (Executive Chairman), Daniel
Lampard (Chief Operating Officer), Christopher Welsh (Chief
Financial Officer) and certain other members of executive
management.
Background
As set out in the Proposed Placing
and Retail Offer announcement released on 4 July 2024, the Company
has been extensively restructured since Daniel Wright was appointed
Executive Chairman in October last year. Whilst there is still much
work to be done ambitious targets have been set to ensure that
Science in Sport delivers sustainable cash generative growth in the
medium term. Initially management's focus has been on cash
management and restructuring the operational focus of the Company
to ensure that there is a strong platform for growth. The
Company proposes to introduce a growth plan which reflects in
Tranche 1 some of the foundation work undertaken to date and in
Tranche 2 the ambitious growth targets that the broader senior
leadership team are tasked with delivering pursuant to the
turnaround.
In designing the Growth Plan, the
Remuneration Committee wanted to ensure that remuneration should be
geared towards long term variable elements rather than short term
cash remuneration and that the value creation targets should be
truly rewarding to shareholders, taking into account the illiquid
nature of the asset class and the risk premium that investors
should expect for supporting growth companies.
As part of this alignment, Dan
Wright has undertaken to cap his salary at £80,000 for the duration
of the Growth Plan and the leadership team receiving awards under
the Growth Plan have reduced their contractual annual discretionary
bonus entitlements to no more than 50% of base salary and forfeited
any accrued or accruing bonus entitlements under existing STIP or
LTIP arrangements.
The Growth Plan covers the value
created over the next three years and will be measured by reference
to the difference in market capitalisation of the Company following
the Placing calculated by reference to the Enlarged Issued Share
Capital at the Issue Price and measured against the 60 day volume
weighted average share price after three years post grant (the
"Growth in Market
Capitalisation"). A summary of the Growth Plan is set
out below and importantly no value will accrue to recipients
beneath a 20% return and in order for full value to be delivered,
the management team must deliver a return of 300% over the next
three years, which would equate to a share price of 68p per
Ordinary Share.
The maximum dilution to existing
Shareholders under the Growth Plan and all other employee share
schemes will not exceed 10% of the Company's issued ordinary share
capital.
Mechanism of the Growth Plan
The Company will procure the issue
and allotment to the Growth Plan Participants of 20,000,000
Ordinary Shares in the capital of SIS (Science in Sport) Limited (a
wholly owned subsidiary of the Company). The Growth Shares will
attract value in accordance with agreed performance conditions as
described in more detail below.
The Growth Shares will be subject to
the operation of a put and call option (the "Put and Call Option") pursuant to
which:
(a)
the Company will grant put options to the Growth Plan
Participants permitting them to sell some or all of Growth Shares
to the Company in certain circumstances; and
(b)
Growth Plan
Participants will grant the Company a corresponding call
option.
Upon reaching the crystallisation
events as set out in the table below (these differ for Tranche 1
and Tranche 2 (as defined below)) the Company and or the Growth
Plan Participants can exercise the Put and Call Option pursuant to
which the Growth Shares will be sold to the Company for
consideration to be satisfied either by the allotment and issue of
Ordinary Shares or by the payment of cash to the equivalent value
at the discretion of the Remuneration Committee of the
Company.
Performance Conditions
The Performance Conditions will be
tested at the earlier of (i) the end of three years from the date
of issue of the Growth Shares or (ii) a takeover of the Company by
way of an offer or scheme of arrangement.
Tranche 1 - if the Growth in Market
Capitalisation is 20% or more, participants will be eligible to
share in 2.5% of the growth created, increasing to a fixed rate of
3% on reaching a hurdle of 45% growth. Thereafter
participants will share in any additional value creation by
reference to the number of shares that they would have become
entitled to upon attaining the 45% growth hurdle.
The Growth Shares can be realised by
the Growth Scheme Participants on the earlier of (1) the end of the
measurement period (being 3 years plus 60 Business Days) or (2) a
takeover of the Company by offer or scheme of
arrangement.
Tranche 2 - if the Growth in Market
Capitalisation is 20% or more, Growth Scheme Participants will be
eligible to share in 4% of the value created, increasing to 6.25%
up to growth of 85% and increasing pro-rata to a maximum of 7.70%
up to growth of 300%. Above 300% growth the Growth Scheme
Participants will be entitled to a fixed 7.7%
The Participants will be restricted
from selling any Ordinary Shares received pursuant to Tranche 2
of the Growth Plan, save in order to meet any tax
liabilities, for a further 2 year holding period. During this
period 50% will be released from the Holding Period on the first
anniversary of the Measurement Date and 50% on the second
anniversary, in other words 4 and 5 years respectively from the
award.
The following tables illustrate
target value thresholds and both the value that would be delivered
to Shareholders and the value attributing to the Growth Scheme
Participants, assuming the Placing and the Retail Offer is
subscribed in full:
Tranche1
|
Increase
in Measurement Value
|
Growth in
Market Capitalisation
|
Indicative
share price (pence)
|
% to
Growth Plan
|
Value of
Growth Plan
|
No of
shares in the Company*
|
% of
Enlarged Issued Share Capital*
|
Base vesting value
|
20%
|
£7,897,269
|
20.4
|
2.50%
|
£197,432
|
967,803
|
0.41%
|
Full vesting value
|
45%
|
£17,768,854
|
24.65
|
3.00%
|
£533,066
|
2,162,538
|
0.92%
|
Full vesting above hurdle
|
300%
|
£118,459,030
|
68.0
|
1.24%
|
£1,470,526
|
2,162,538
|
0.92%
|
Tranche 2
|
|
|
|
|
|
|
|
Base vesting
|
20%
|
£7,897,269
|
20.4
|
4.00%
|
£315,891
|
1,548,484
|
0.66%
|
Mid vesting
|
85%
|
£33,563,392
|
31.45
|
6.25%
|
£2,097,712
|
6,669,990
|
2.79%
|
Full vesting
|
300%
|
£118,459,030
|
68.0
|
7.70%
|
£9,121,345
|
13,413,743
|
5.46%
|
Tranche 1 & 2 Combined
|
|
|
|
|
|
|
|
Base vesting
|
20%
|
£7,897,269
|
20.4
|
6.50%
|
£513,322
|
2,516,287
|
1.07%
|
Full vesting
|
300%
|
£118,459,030
|
68.0
|
8.94%
|
£10,591,871
|
15,576,281
|
6.28%
|
*figures assume that the issued share capital remains the
same. These numbers will be adjusted for any new issues of
ordinary shares, share buybacks or similar event during the period
of the Growth Plan).
|
|
|
Base Vesting @ 20%
|
|
Full Vesting @ 300%
|
Name
|
% of
Tranche 1
|
% of
Tranche 2
|
Indicative
aggregate value
|
Indicative
PLC Share Entitlement
|
|
Indicative
aggregate value
|
Indicative
PLC Share Entitlement
|
Daniel Wright
|
59%
|
35%
|
£226,760
|
1,111,566
|
|
£4,059,261
|
5,969,501
|
Daniel Lampard
|
27%
|
23%
|
£127,350
|
624,266
|
|
£2,528,735
|
3,718,728
|
Christopher Welsh
|
0%
|
22%
|
£68,832
|
337,413
|
|
£1,987,530
|
2,922,839
|
Others
|
14%
|
20%
|
£90,380
|
443,042
|
|
£2,016,345
|
2,965,214
|
|
|
|
|
|
|
|
|
Total
|
100%
|
100%
|
£513,322
|
2,516,287
|
|
£10,591,871
|
15,576,281
|
If there is a variation of share
capital of the Company, or in the event of a demerger, special
dividend or other event determined by the Board, the Board may make
such adjustments as it may determine to the Growth Plan, its
allocation and measurements in order to achieve the same intention
and an equitable effect for the Company the Growth Plan
Participants.
Change of control of the Company
On a change of control of the
Company by way of takeover or scheme of arrangement, the Growth
Shares will vest immediately with their value to be determined by
the relevant offer price per Ordinary Share that forms part of the
offer or scheme.
Leaving employment
Growth Plan Participants who cease
to be employees of the Company during the performance assessment
period of 3 years will forfeit their entitlement unless they are
deemed to be 'Good Leavers', being those who cease to be an
employee of a Group Company as a result of death, ill health,
injury or disability, a relevant transfer within the meaning of the
TUPE Regulations or the company in which the Growth Plan
Participant is employed ceasing to be under the control of the
Company.
Growth Shares held by Growth Plan
Participants who are Good Leavers prior to a vesting date will vest
at the discretion of the Remuneration Committee of the Company on
the normal vesting date and will be pro-rated for time to reflect
the proportion of time between acquisition of the Growth Shares and
the date on which the relevant performance condition is/was
satisfied during which the Good Leaver was an employee.
Malus and clawback
The Growth Plan provides for
customary clawback and malus provisions, which allow the
Remuneration Committee of the Company discretion to require
repayment in defined circumstances.
Taxation
It is a condition of being granted
awards that Growth Plan Participants agree to indemnify the Group
in respect of tax (including income tax and employee national
insurance contributions) which falls due or payable in connection
with the Growth Plan.
Corporate governance
The Directors place considerable
value on corporate governance.
The Company continues to operate in
line with the QCA Code. In line with the QCA Code and the QCA
Remuneration Guide, the Directors consider that it is good practice
to seek the consent of Shareholders in creating any new share
scheme that may be dilutive and are therefore seeking such consent
at the General Meeting to be held on 24 July 2024. A circular
will be posted to shareholders shortly.
The principles at the heart of the
Growth Plan reflect the overarching objectives of the Remuneration
Committee of the Company to:
· develop remuneration packages which motivate directors and
support the delivery of business objectives in the short, medium
and long-term;
· align
the interests of the executive team with the interests of long-term
Shareholders;
· encourage executive and senior team members to operate within
the risk parameters set by the Board; and
· ensure
that the Company can recruit and retain high-quality executives
through packages which are fair and attractive, but not
excessive.
The Remuneration Committee of the
Company considered various alternative including:
(a)
structures
across share options, restricted shares and value creation plans;
and
(b)
performance
measures based on revenue, profits/ earnings and non-financial
measures.
It was agreed that the Growth Plan
is the most suitable option for the Company at this stage in its
growth journey. It is further noted that the Growth Plan will only
produce rewards for the executive team if the Company's share price
increases.
Directors' Related Party
Transactions
Daniel Wright (Executive Chairman),
Daniel Lampard (Chief Operating Officer) and Christopher Welsh
(Chief Financial Officer) are considered to be
related parties of the Company for the purposes of Rule 13 of the
AIM Rules for Companies by virtue of their status as
Directors.
The Independent Directors (who
exclude Daniel Wright, Daniel Lampard and Christopher Welsh),
having consulted with the Company's Nominated Adviser, Panmure
Liberum, consider that the terms of the Growth Plan are fair and
reasonable insofar as the shareholders of the Company are
concerned.
Capitalised terms used but not
defined in this announcement are set out on the Definitions section
below.
For
further information:
Science in Sport plc
|
T: 020 7400 3700
|
Daniel Wright, Executive
Chairman
Daniel Lampard, Chief Operating
Officer
Christopher Welsh, Chief Financial
Officer
|
|
|
|
Panmure Liberum Limited (Nominated Adviser, Broker and Sole
Bookrunner)
|
T: 020 3100 2000
|
Richard Lindley
John More
Anake Singh
|
|
About Science in Sport plc
Headquartered in London,
Science in Sport plc is a leading sports nutrition business that
develops, manufactures, and markets innovative nutrition products
for professional athletes, sports and fitness enthusiasts and the
active lifestyle community. The Company has two highly regarded
brands, PhD Nutrition, a premium active-nutrition brand targeting
the active lifestyle community, and SiS, a leading endurance
nutrition brand among elite athletes and professional sports
teams.
The two brands sell through the
Company's phd.com and scienceinsport.com digital platforms,
third-party online sites, including Amazon and eBay, and extensive
retail distribution in the UK and internationally, including major
supermarkets, high street chains and specialist sports retailers.
This omnichannel footprint enables the Company to address the full
breadth of the sports nutrition market.
PhD is one of
the UK's leading active nutrition brands with a
reputation for high quality and product innovation. The brand has
grown rapidly since its launch in 2005. The range now comprises
powders, bars, and supplements, including the high protein, low
sugar range, PhD Smart.
SiS, a leading endurance nutrition
business founded in 1992, has a core range comprising gels, powders
and bars focused on energy, hydration, and recovery. SiS is an
official endurance nutrition supplier to over 320 professional
teams, organisations, and national teams worldwide. SiS supplies
more than 150 professional football clubs in
the UK, Europe, and the USA.
SiS is Performance Solutions partner
to Ineos Grenadiers cycling team, and Tottenham Hotspur and CGC
Nice football clubs.
For further information, please
visit phd.com and scienceinsport.com
DEFINITIONS
The following definitions apply
throughout this announcement, unless the context requires
otherwise:
"Board" or "Directors"
the board of directors of the Company
"Broker" or "Panmure
Liberum"
Panmure Liberum Limited, a company registered in England and Wales
with company number 04915201 and whose registered office is at
Ropemaker Place, Level 12, 25 Ropemaker Street, London, EC2Y
9LY
"Business Day"
a day on which banks in the City of London are
open for business (excluding Saturdays, Sundays and public holidays
in England)
"Enlarged Issued Share
Capital"
the entire issued share capital of the Company
following completion of the Placing and the Retail Offer on
Admission, assuming no other Ordinary Shares are issued between the
date of this announcement and Admission
"Growth Plan"
the proposed Growth Plan of the Group in relation
to ordinary shares in the capital of SIS (Science in Sport)
Limited
"Growth Plan
Participants"
the participants in the Growth Plan will initially
be Daniel Wright, Daniel Lampard, Christopher Welsh and other
senior management with flexibility for further Growth Shares to be
issued to other management and key personnel of the Group in the
future
"Growth
Shares"
the shares in SIS (Science in Sport) Limited to be
allotted and issued to the Growth Plan Participants
"Issue Price"
17 pence per Ordinary Share
"Ordinary Shares"
ordinary shares of 10 pence each in the capital of
the Company
"QCA Guide"
the third edition of the QCA Corporate Governance
Code published by the Quoted Companies Alliance
"QCA Remuneration
Guide"
the remuneration committee guide published by the Quoted Companies
Alliance in 2020
"Shareholders"
the holders of Ordinary Shares for the time being,
each individually a "Shareholder"
"TUPE Regulations"
Transfer of Undertakings (Protection of Employment) Regulations
2006 (as amended)
"UK" or "United Kingdom"
the United Kingdom of Great Britain and Northern Ireland
"VWAP"
the volume weighted average share price