The following section provides detail of remuneration earned by the Directors during the year in line with the Directors' Remuneration Policy approved by the shareholders at the Annual General Meeting held on 20 October 2017, along with details of how the Policy will be applied in the 2020 financial year. The sections of the 2019 Annual Report on Remuneration that are audited by PricewaterhouseCoopers LLP (PwC) are indicated below.

Executive Directors' Remuneration (Audited)

Single Total Figure of Remuneration

The table below sets out the total remuneration for each person who has served as an Executive Director in the period ended 30 June 2019. The table shows the remuneration for each such person in respect of the year ended 30 June 2019 and the year ended 30 June 2018:

	Salaries		Benefits		Annual Bonus		Long Term Incentive		Pension		Total
	2019 £000	2018 £000	2019 £000	2018 £000	2019 £000	2018 £000	2019 £000	2018 £000	2019 £000	2018 £000	2019 £000	2018 £000
Ian Page	500	500	60	65	360	380	1,984	2,036	70	77	2,974	3,058
Richard Cotton	275	356	26	29	–	272	–	906	38	40	339	1,603
Tony Griffin	309	303	10	10	223	223	565	508	34	32	1,141	1,076
Total	1,084	1,159	96	104	583	875	2,549	3,450	142	149	4,454	5,737

Please note the following methodologies have been used in respect of the above table:

1. Salaries – this is the cash paid or received in respect of the relevant period.
2. Benefits – this represents the taxable value of all benefits paid or received in respect of the relevant period. The benefits provided include the use of a fully expensed car, medical cover and life assurance. SAYE options granted in the year have also been included in the benefits column in respect of any year in which there was a grant. These have been valued using the fair value as per note 28 to the Group's financial statements.
3. Annual Bonus – this is the amount of cash bonus paid in respect of the financial year.
4. Long Term Incentives – this is the value of any long term incentives vesting where the performance period ended in the relevant period.
5. Pension – this is the cash value of the employer contribution to the Group stakeholder personal pension scheme or, in the case of Tony Griffin, defined contribution pension plan plus the value of any salary supplement paid.
6. The 2018 value assigned to the long term incentives for Ian Page and Tony Griffin was shown in last year's Annual Report as an estimate, with the value determined by reference to a share price of £27.707 (being the average market value of a share over the last quarter of the Company's financial period ended on 30 June 2018). This has been restated to show the actual value determined by reference to a price of £22.44 (being the market value of a share on 22 October 2018, the date of vesting). The 2018 value for Richard Cotton in last year's Annual Report was based on the value of his recruitment awards which vested half on 3 January 2018 and half on 22 October 2018. The value included in last year's Annual Report (£1,404,000) has been updated for the latest available information, including, in the case of the second half of the awards, a price of £22.44 (being the market value of a share on 22 October 2018, the date of vesting).
7. Richard Cotton resigned as an Executive Director on 3 April 2019 and left the business on 28 June 2019. The salary and pension figure disclosed in the table relates to the period to 3 April 2019. Payments made to Richard Cotton after this date are set out in the Directors' Remuneration Report.
8. Tony Griffin's remuneration is paid in Euros but reported in Sterling for the purpose of this table. The exchange rate used for this purpose was 1.1286 for 2018 and 1.1345 for 2019. His salary was €351,100 for 2019 (reflecting two months at a salary of €342,537 and ten months at a salary of €352,813) and €341,144 for 2018 (reflecting two months at a salary of €334,182 and ten months at a salary of €342,537).

Additional Disclosures in Respect of the Single Figure Table

Salaries and Fees

As disclosed in the Directors' Remuneration Report in the 2018 Annual Report, the Executive Directors' base salaries were reviewed in September 2018, in alignment with the Group's performance development review calendar to provide a clearer link between performance and reward. Following that review, Richard Cotton's and Tony Griffin's salaries were increased by 3.0%, to £369,513 and €352,813 respectively, with effect from 1 September 2018, broadly in line with the average range of increases awarded to employees in the wider Group. Ian Page notified the Remuneration Committee (the Committee) that he did not wish to be considered for a salary increase in 2019.

The Committee's approach to Executive Directors' salaries for the year ending 30 June 2020 is summarised in the Directors' Remuneration Report.

Benefits

The Company provides benefits in line with market practice and each Executive Director has the use of a fully expensed car, medical cover and life assurance.

Annual Bonus

The Company operates an annual cash incentive scheme for the Executive Directors. Annual bonuses were awarded by the Committee in respect of the 2019 financial year having regard to the performance of the Group and personal performance objectives for the year.

The amount achieved for the year ended 30 June 2019 against targets for the 2019 financial year is as follows:

Measure	Threshold (10% of salary)	Target (50% of salary)	Maximum (90% of salary)	Actual (at budgeted rates)	Ian Page	Tony Griffin
Underlying profit before tax	£99,920,050	£105,179,000	£115,696,900	£107,866,933	62%	62%
Personal Objectives (see table below)	Up to 10% of salary. The objectives are based on key aspects of delivering the Group's strategy1				10%	10%

1. The Committee considers that the objectives for the forthcoming financial year (2020) are commercially sensitive as they give our competitors insight into our business plans and therefore are not detailed in this report. They will be disclosed in the 2020 Annual Report.
2. Richard Cotton resigned as an Executive Director on 3 April 2019 and left the business on 28 June 2019 and therefore was not entitled to receive a bonus.

The personal objectives of each Executive Director for the year ended 30 June 2019 are set on an individual basis and are closely linked to the corporate, financial, strategic and other non-financial objectives of the Company. This enables the Committee to reward the Executive Directors' contribution to both the annual financial performance and the achievement of specific objectives. A summary of the objectives is set out below along with a description of the performance against them. The Committee reviewed the performance of each Executive Director against their specific objectives based on a report by the Chief Executive Officer and, with respect to the Chief Executive Officer, a report by the Chairman.

Director	Link to Strategic Enabler	Objective	Performance
Ian Page	Acquisition	Build the pipeline of M&A opportunities; and ensure strategic value is derived from the 2018 financial year acquisitions	Completed the acquisition of Laboratorios Vencofarma do Brasil Ltda (Venco) and derived significant value from the AST Farma and Le Vet acquisition
	Product Pipeline	Expand new product pipeline through acquisition, investment or partnering arrangements	Completion of licensing agreements and the launch of the Le Vet pipeline
	People	Recruit and onboard a new Non-Executive Director	Lisa Bright joined on 1 February 2019
	Manufacturing	Review the Group Manufacturing and Supply organisation and develop future proof structure to deliver strategic goals	Recruited Simon Francis to lead the Manufacturing and Supply organisation. restructured Quality and Supply Chain, adding key personnel
Tony Griffin	Acquisition	Integration of AST Farma and Le Vet	Achieved key milestones
	People	Support the development of the global marketing approach in key therapeutic areas	Key global roles implemented for CAP and Equine
	Customers	Develop Corporatisation Plan	Defined and communicated plan; milestones on track
	Manufacturing	Support Manufacturing and Supply Chain to ensure improved processes and more robust Sales and Operations planning	Restructured Supply and Demand teams preparing to implement Integrated Business Planning

Long Term Incentive Plan

The LTIP awards granted on 19 September 2016 are due to vest on 19 September 2019. Ian Page and Tony Griffin were granted LTIP Awards on 19 September 2016, the performance targets for which are as follows: 50% of the award is subject to a performance condition based on the Company's total shareholder return (TSR) performance relative to the constituent companies of the FTSE 250 index (excluding investment trusts) over the performance period as follows:

TSR performance	Vesting percentage
Below median	0%
Median	25% of the TSR portion will vest
Between median and upper quartile	Pro rata vesting between 25% and 100% based on the Company's ranking in the comparator group
Upper quartile	100% of the TSR portion will vest

50% of each award is subject to a performance condition based on the growth in the Group's underlying diluted earnings per share (EPS) over the performance period as follows:

EPS compound annual growth rate (CAGR)	Vesting Percentage
<8% CAGR	0%
8% CAGR	25% of the EPS portion will vest
CAGR between 8% and 25%	Pro rata vesting between 25% and 100%
>25% CAGR*	100% of the EPS portion will vest

* This reflects the EPS performance requirement for maximum vesting as increased by the Committee from the original level of 20%, to reflect the acquisition of AST Farma B.V. and Le Vet Beheer B.V., as disclosed in the Directors' Remuneration Report for the 2018 financial year.

 

Both the TSR element and the EPS element are subject to an additional return on capital employed (ROCE) performance measure. Unless the Group's ROCE is 10% or more in the final year of the performance period, the awards will lapse in full regardless of TSR and EPS performance. The percentage vesting will be reduced by 10% for every 1% that ROCE falls below 15%.

The Company's TSR performance was over 148.2% compared with a 55.8% TSR for the upper quartile company in the comparator group (FTSE 250 Index (excluding investment trusts)). Therefore, 100% of the TSR element will vest. In addition, the compound annual growth in the Group's underlying diluted EPS for the performance period was 28.3%. Accordingly, 100% of the EPS element will vest. Overall, taking into account that ROCE performance for 2019 was 15.5%, the LTIP awards will vest as to 100% of the maximum opportunity. In the single figure table in the Directors' Remuneration Report, the value attributable to this award is calculated by multiplying the number of shares in respect of which the award is expected to vest by £27.085 (being the average market value of a share over the last quarter of the Company's financial period ended on 30 June 2019).

SAYE

There were no exercises under the SAYE Scheme by Executive Directors during the year.

The aggregate gain made by the Executive Directors on share options and LTIP awards exercised during 2019 was £2,897,470 (2018: £3,497,837).

Pension

Ian Page and Richard Cotton were both members of the Dechra Pharmaceuticals PLC Group Stakeholder personal pension scheme throughout the year. Richard Cotton elected to receive a salary supplement in lieu of the employer contribution over and above £10,000 and Ian Page elected to receive his entire pension contributions as a salary supplement.

Tony Griffin was a member of the Basispensioen, a defined benefit pension plan established in the Netherlands up to 31 December 2018. The table below sets out the arrangements for Tony Griffin for the period under review.

Accrued benefit at 1 July 2018	€274,000
Increase in accrued benefit excluding inflation allowance	€6,000
Increase in accrued benefit including inflation allowance	€9,000
Transfer value of benefit accrued during the period less member contributions	€282,000
Transfer value at 1 July 2018	€274,000
Transfer value at 31 December 2018	€283,000
Increase in transfer value over the period after member contribution	€8,000

The defined benefit pension plan was capped at €50,000. Pensionable salary over this cap was paid into a defined contribution plan. From 1 January 2015 there has been a cap on maximum amount of pensionable income set by the Dutch government, which for the period to 31 December 2018 was €105,075 and for the period to 30 June 2019 was €107,583. Tony Griffin elected to receive a salary supplement in lieu of the pension premium entitlement for earnings above this cap. The earliest date that a non-reduced pension is payable is 10 February 2040. From 1 January 2019, Tony Griffin has received contributions to a defined contribution pension scheme in the Netherlands in respect of earnings up to the cap and a salary supplement in respect of earnings above the cap.

Contributions made by Dechra Pharmaceuticals PLC on behalf of the Executive Directors during the year equated to no more than 14% of pensionable salary for each Executive Director.

Non-Executive Directors' Remuneration (Audited)

Single Total Figure of Remuneration

The table below sets out the total remuneration for each person who has served as a Non-Executive Director in the period ended 30 June 2019. The Chairman and the other Non-Executive Directors are paid a fee for their role. The table shows the remuneration for each such person in respect of the year ended 30 June 2019 and the year ended 30 June 2018:

	Additional responsibilities	Base fee £000		Additional fee £000		Total £000
		2019	2018	2019	2018	2019	2018
Tony Rice	Chairman and Nomination Committee Chair	126	126	5	–	131	126
Ishbel Macpherson	Senior Independent Director and Remuneration Committee Chair	50	50	13	8	63	58
Julian Heslop	Audit Committee Chair	50	50	10	5	60	55
Lawson Macartney		50	50	–	–	50	50
Lisa Bright*	Employee Engagement Designated Non-Executive Director	21	–	2	–	23	–
Total		297	276	30	13	327	289

* Lisa Bright was appointed on 1 February 2019.

 

The Senior Independent Director and the chairmen of the Audit Committee and Remuneration Committee receive an additional fee for those roles. From 1 July 2018, the Nomination Committee Chairman also received an additional fee for this role and on the appointment of the Employee Engagement Designated Non-Executive Director it was agreed that an additional fee should be paid for this role due to the additional time commitment required. As disclosed in the Directors' Remuneration Report in the 2018 Annual Report, it had been agreed that there would be no changes to the base fees (£126,000 for the Chairman and £50,000 for the Non-Executive Directors); however, there would be an increase to the additional fees as disclosed in the table below.

Office	2019 Fee £000	2018 Fee £000
Audit Committee Chairmanship additional fee	10	5
Nomination Committee Chairmanship additional fee	5	–
Remuneration Committee Chairmanship additional fee	8	5
Senior Independent Director additional fee	5	3
Employee Engagement Designated Non-Executive additional fee	5	–

The Committee's approach to the Chairman's and Non-Executive Directors' fees for the year ending 30 June 2020 is summarised in the Directors' Remuneration Report.

Further Information on Directors' Remuneration

Long Term Incentive Arrangement and Share Scheme awards during the financial year

Long Term Incentive Awards (Audited)

Awards were made under the Dechra 2017 Long Term Incentive Plan on 26 October 2018, as set out in the table below.

	Type of award	Maximum opportunity	Number of shares	Face value at grant	% of award vesting at threshold	Performance Period
Ian Page	Nil cost option under the LTIP	200% of salary	46,168	£999,999	25%	1 July 2018 – 30 June 2021
Richard Cotton1	Nil cost option under the LTIP	150% of salary	25,589	£554,258	25%	1 July 2018 – 30 June 2021
Tony Griffin	Conditional award under the LTIP	100% of salary	14,444	£312,857	25%	1 July 2018 – 30 June 2021

1. Richard Cotton's award lapsed on 28 June 2019 when he left the Company

One third of each award is subject to a performance condition based on the Company's TSR performance over the performance period relative to the constituent companies of the FTSE 250 index (excluding investment trusts) as follows:

TSR performance	Vesting percentage
Below median	0%
Median	25% of the TSR portion will vest
Between median and upper quartile	Pro rata vesting between 25% and 100% based on the Company's ranking in the comparator group
Upper quartile	100% of the TSR portion will vest

Two thirds of each award is subject to a performance condition based on the growth in the Group's underlying diluted EPS over the performance period. As disclosed in the Directors' Remuneration Report in the 2018 Annual Report, the Committee concluded that the EPS growth target required for maximum vesting should be the same as for the March 2018 grant. Accordingly, the EPS target is as follows:

EPS compound annual growth rate (CAGR)	Vesting Percentage
<8% CAGR	0%
8% CAGR	25% of the EPS portion will vest
CAGR between 8% and 18%	Pro rata vesting between 25% and 100%
>18% CAGR	100% of the EPS portion will vest

Both the TSR element and the EPS element are subject to an additional ROCE performance measure. Unless the Group's ROCE is 10% or more in the final year of the performance period, the awards will lapse in full regardless of TSR and EPS performance.

Each award is subject to a two year holding period. Other than shares sold to satisfy tax liabilities arising in connection with the acquisition of shares, no shares acquired may be sold before the second anniversary of vesting.

SAYE (Audited)

There were no SAYE options granted to Executive Directors during the year ended 30 June 2019.

Payments to Past Directors (Audited)

Richard Cotton resigned as an Executive Director on 3 April 2019; he remained employed by the Company until 28 June 2019. The following payments were made during the period 3 April to 28 June 2019:

• £103,000 in relation to his salary; and
• £13,000 in relation to his pension.

Richard Cotton continued to receive private medical cover for him and his family and a fully insured car up to the last day of his employment with the Company. The value of these benefits for the full year is included in the Single Total Figure of Remuneration table in the Directors' Remuneration Report.

He was not entitled to receive a bonus for the year ended 30 June 2019 and his outstanding LTIP and SAYE awards lapsed on 28 June 2019.

Payments for Loss of Office (Audited)

There were no payments for loss of office made to Directors during the period.

Shareholding Guidelines and Statement of Directors' Shareholdings and Interests:

Executive Directors Interest under Share Schemes (Audited)

Awards held under the Long Term Incentive Plan by each person who was a Director during the year ended 30 June 2019 are as follows:

	Award date	Number of shares at 30 June 2018	Granted during the year	Lapsed during the year	Exercised during the year	Number of shares at 30 June 2019	Status	Performance Period
Ian Page	15 September 2015	90,721	–	–	90,721	–	Vested and exercised in the year	2015–2018
	19 September 2016	73,260	–	–	–	73,260	Unvested1	2016–2019
	2 March 20182	39,904	–	–	–	39,904	Unvested	2017–2020
	26 October 2018	–	46,168	–	–	46,168	Unvested	2018–2021
Richard Cotton	7 March 20173	21,033	–	–	21,033	–	Vested and exercised in the year	2015–2018
	2 March 20182	21,473	–	21,473	–	–	Lapsed	2017–2020
	26 October 2018	–	25,589	25,589	–	–	Lapsed	2018–2021
Tony Griffin	15 September 2015	22,641	–	–	22,641	–	Vested and exercised in the year	2015–2018
	19 September 2016	20,858	–	–	–	20,858	Unvested1	2016–2019
	2 March 2018	12,099	–	–	–	12,099	Unvested	2017–2020
	26 October 2018	–	14,444	–	–	14,444	Unvested	2018–2021

1. Will vest on 19 September 2019 as to 100%.
2. Each of Ian Page and Richard Cotton was granted a tax qualifying option over 1,197 shares at an exercise price of £25.06 as part of their LTIP award. These tax qualifying options are linked to the nil cost option such that, at the time of exercise, to the extent that there is a gain in the tax qualifying option, the nil cost option will be forfeited to the value of that gain.
3. This award was a Recruitment Award granted to Richard Cotton as referred to in the Directors' Remuneration Report of 2018 Annual Report. This was granted outside the rules of the LTIP.

Executive Directors may participate in the SAYE Scheme on the same basis as other employees. Awards held under the SAYE Scheme by each person who was a Director during the year ended 30 June 2019 are as follows:

	Date of grant	Number of options	Option price	Exercise date
Ian Page	12 October 2017	1,093	£16.46	December 2020
Richard Cotton	12 October 2017	1,093*	£16.46	December 2020

* These options lapsed on 28 June 2019.

Dilution Limits

Awards granted under Company LTIP, Executive Share Option Schemes and SAYE Schemes are met by the issue of new shares when the awards/options are exercised. The Committee monitors the number of shares issued under each of these schemes and their impact on dilution limits. The Company's usage of shares compared to the Investment Association dilution limits as at 30 June 2019 is as follows:

Executive Share Plans	All Share Plans
Limit: 5%	Limit: 10%
Usage: 2.3%	Usage: 3.1%

Shareholdings (Audited)

Executive Directors

In respect of the financial year ended 30 June 2019, the Company's shareholding guidelines required Executive Directors to have acquired and retained half of any shares acquired under the LTIP and, if relevant, any recruitment award (after sales to cover tax) until such time as their holding has a value equal to 200% of salary. Unvested share based incentives will not be allowed to count towards the holding requirements. Shares which are vested, but which remain subject to a holding period and/or clawback, may count towards the holding requirement on a net of assumed tax basis.

The holdings of each person who served as an Executive Director during the period ended 30 June 2019 and their families as at 30 June 2019 are as follows:

Name	Appointment date	Ordinary shares Number	Ordinary shares £000*	% of salary
Ian Page	13 June 1997	786,650	21,601	4320
Tony Griffin	1 November 2012	70,606	1,939	626
Richard Cotton	3 January 2017	63,384	1,741	471

* Calculated using the share price as at 28 June 2019.

Non-Executive Directors

By the third anniversary of their appointment to the Board, Non-Executive Directors are required to have acquired and retained a holding of Dechra shares equivalent to the value of at least 50% of their annual base fee. The holdings of the Non-Executive Directors and their families as at 30 June 2019 are as follows:

Name	Appointment date	Ordinary shares Number	Ordinary shares £000*	% base fee
Tony Rice	5 May 2016	40,000	1,098	872
Ishbel Macpherson	1 February 2013	5,848	161	321
Julian Heslop	1 January 2013	10,000	275	549
Lawson Macartney	1 December 2016	5,880	161	323
Lisa Bright	1 February 2019	–	–	–

* Calculated using the share price as at 28 June 2019.

 

There have been no changes in the holdings of the Company's continuing Directors between 30 June and 2 September 2019.

Performance and Chief Executive Remuneration

TSR

The graph below shows the TSR performance of the Company over the past ten financial years compared with the TSR over the same period for the FTSE 250 Total Return Index. Throughout the financial year ended 30 June 2019 the Company has been a constituent member of the FTSE 250; for this reason it is considered that the TSR performance of the FTSE 250 Index is the appropriate comparator for this report.

Chief Executive Officer Remuneration for Ten Previous Years

Year ended	Total single figure remuneration £000	Annual bonus payout (% of maximum opportunity)	LTIP vesting (% of maximum number of shares)
30 June 2019	2,974	72	100.0
30 June 2018	3,058	76	100.0
30 June 2017	3,420	92	100.0
30 June 2016	2,480	72	96.25
30 June 2015	1,934	80	93.1
30 June 2014	1,589	80	100.0
30 June 2013	1,201	36	100.0
30 June 2012	682	60	0
30 June 2011	984	60	71.1
30 June 2010	768	44	100.0

Percentage Change in Chief Executive Officer Remuneration

The table below sets out in relation to salary, taxable benefits and annual bonus the percentage change in pay for Ian Page and the average percentage change for all UK based employees, comparing pay in respect of the year ended 30 June 2018 and the year ended 30 June 2019. For these purposes, UK employees were chosen as a comparator group reflecting that Ian Page is UK based and the number of UK employees was sufficiently large to provide a robust comparison. Employees outside the UK were not included in the comparator group since country specific differences could distort the comparison.

	% change (2018–2019)
	Salary	Taxable benefits1	Annual Bonus
Chief Executive Officer	–	(7.7%)	(5.3%)
Average per all UK based employees	8.3%	16.7%	(8.5%)

1. Excludes SAYE options granted during the year.

Chief Executive Officer's Pay Ratio

The table below shows the ratio of the Chief Executive Officer's remuneration for 2019 and 2018 using the Single Total Figure as disclosed in the Directors' Remuneration Report to the full time equivalent remuneration of the UK employee whose remuneration was ranked at the 25th percentile, median and 75th percentile. Employees' pay was calculated on the same basis as the Single Total Figure Remuneration except that anyone who joined or left the business part way through the year has been excluded from the calculations along with anybody on reduced pay for illness, maternity, paternity, adoption and shared parental leave. Although we are not required to include this disclosure as the applicable regulations apply only for financial years starting on or after 1 January 2019, we have chosen to do so on a voluntary basis.

Year	Method	25th percentile pay ratio	Median pay ratio	75th percentile pay ratio
2018	Option A1	137:1	109:1	58:1
2019	Option A1	136:1	105:1	55:1

1. The applicable regulations provide for three methods of calculating the pay ratio. We have chosen Option A and have calculated the pay and benefits of all of the Group's UK employees in order to identify the employees at the 25th, median and 75th percentile. We have chosen this approach reflecting that guidance recognises this as the most statistically accurate method.

	20191 Total pay and benefits £000	20182 Total pay and benefits £000
Chief Executive Officer	2,974	3,058
25th percentile employee	22	22
Median employee	28	28
75th percentile employee	54	53

1. The 2019 figure includes share options and awards, which have been valued by reference to £27.085 (being the average market value of a share over the last quarter of the Company's financial period ended 30 June 2019). SAYE options granted in 2018 and 2019 financial years have also been included in the benefits column in respect of any year in which there was a grant. These have been valued using the fair value as per note 28 to the Group's financial statements.
2. The 2018 figure includes share options and awards, which have been valued by reference to the actual value for the LTIP of £22.44 and the value at the exercise date for the Approved and Unapproved Share Options (£25.00).

In 2019, there were a total of 380 UK employees (2018: 357 UK employees), 87 of which have been excluded for the above stated reasons (2018: 77), leaving 293 employees in the data set (2018: 280). Of these 178 worked in our Manufacturing business which is predominately shop floor workers (2018: 178). We believe that the final figures detailed above are representative of the majority of the data set.

Relative Importance of Spend on Pay

The following table sets out the percentage change in distributions to shareholders (by way of dividend and share buyback) and total remuneration paid to or receivable by all Group employees comparing the year ended 30 June 2018 and the year ended 30 June 2019. The significant increase in the distributions to shareholders is directly attributable to the 8.8 million new shares issued at the time of the AST Farma and Le Vet acquisition.

	Year ended 30 June 2019 £000	Year ended 30 June 2018 £000	% change
Distributions to shareholders by way of dividend and share buyback	28,400	21,810	30.3%
Overall expenditure on pay	92,700	88,200	5.1%

Implementation of the Directors' Remuneration Policy in the Year Ending 30 June 2020

The Directors' Remuneration Policy will be implemented in the year ending 30 June 2020.

Salary and Fees

The next review of Executive Directors' salaries will be undertaken in September 2019. It is planned that the Executive Directors' salaries for 2020 will increase in line with the range of increases proposed for the wider workforce.

Following a review of the Non-Executive Directors' base and additional fees, it was agreed that no changes will be made to the additional fees for the year ending 30 June 2020, with the exception of the Remuneration Committee Chair additional fee which will increase from £8,000 to £10,000. With regards to the base fees, subject to shareholder approval of the resolution at the 2019 Annual General Meeting to amend Article 99 of the Articles of Association which will increase the cap on Non-Executive fees to £0.75 million, the fees will increase as follows:

Office	2019 Fee £000	2020 Fee £000
Chairman	126	130
Non-Executive Director	50	52

It is proposed that the base fee increases and the increase in the additional fee for Remuneration Committee Chair will apply with effect from 1 July 2019.

Annual Bonus

No changes have been made to the bonus structure. Consequently, Executive Directors will have a bonus opportunity of 100% of salary for the year ending 30 June 2020, on the same basis as for the year ended 30 June 2019. Details of the bonus structure can be found in the Directors' Remuneration Report. In the opinion of the Board, the performance targets applying to the annual bonus are commercially sensitive, and prospective disclosure could provide competitors with insight into the Group's business plans and expectations. However, the Company will disclose how any bonus earned relates to performance against targets on a retrospective basis when the targets are no longer considered commercially sensitive, as shown in the Directors' Remuneration Report in respect of bonuses for the Group's 2019 financial year.

LTIP

The Committee proposes that LTIP awards for the year ending 30 June 2020 (the 2020 Grant) will be made at the level of 200% of salary for Ian Page and 100% of salary for Tony Griffin. The performance measures remain as per the grant of LTIP awards made on 26 October 2018, details of which can be found in the here. In setting the EPS growth targets for the 2020 Grant, the Committee recognised that the base year for those awards will include a full year of AST Farma and Le Vet and also took into account the impact of the Akston licensing agreement on the R&D spend, and have reduced the maximum target from 18% to 16% but have maintained the minimum target recognising that significant growth is still forecast. The Committee will be considering the impact of this licensing agreement on the awards granted on 2 March 2018 (the 2018 Grant) and the awards granted on 26 October 2018 (the 2019 Grant) during the forthcoming year and will disclose any adjustments to the targets for those awards and the Committee rationale in the 2020 Directors' Remuneration Report.

Having regard to the provisions of the 2018 Code, the performance conditions for the 2020 Grant and future awards will include an ability on the part of the Committee to adjust the vesting outcome where the formulaic outcome is inappropriate in the context of underlying performance or other factors considered by the Committee to be relevant.

The awards will ordinarily be subject to a two year post vesting holding period.

Consideration by the Directors of Matters relating to Directors' Remuneration

Governance

The Board has overall responsibility for the Group's Remuneration Policy and the setting of the Non-Executive Directors' fees, although the task of determining and monitoring the remuneration packages of the Executive Directors and agreeing the Chairman's fee level has been delegated to the Committee. The task of determining and monitoring the remuneration packages for the SET has been delegated to the Committee in relation to the 2020 financial year onwards.

Membership

Details of each member's attendance at the Committee's meetings is detailed in the Letter from the Remuneration Committee Chairman. The Chief Executive Officer and Group HR Director both attended all meetings held during the financial year in order to assist on matters concerning remuneration of other senior executives within the Group. However, neither was present during the part of the meetings where their own remuneration was discussed.

Responsibilities

The Committee has its own terms of reference, which are approved by the Board. These are reviewed on an annual basis so that they continue to adhere to best practice. During the 2019 financial year this review took place at the June 2019 meeting and they were amended to reflect the 2018 UK Corporate Governance Code requirements. Copies can be obtained via the Company website at www.dechra.com. The Committee Chairman and the Company Secretary are available to shareholders to discuss the Remuneration Policy. An overview of the Committee's terms of reference is provided in the Corporate Governance.

Service Contracts and Letters of Appointment

Details of Executive Directors' service contracts and Non-Executive Directors' letters of appointment are set out below:

	Notice Period

Name	Commencement date
		Director	Company
Tony Rice	5 May 2016	3 months	3 months
Ian Page	1 September 2008	6 months	12 months
Tony Griffin	1 November 2012	6 months	12 months
Lisa Bright	1 February 2019	3 months	3 months
Julian Heslop	1 January 2013	3 months	3 months
Lawson Macartney	1 December 2016	3 months	3 months
Ishbel Macpherson	1 February 2013	3 months	3 months

There are no expiry dates applicable to either Executive or Non-Executive Directors' service contracts/letters of appointment. The Non-Executive Directors are entitled to compensation on termination of their appointment confined to three months' remuneration.

Policy on External Appointments

The Company recognises that Executive Directors may be invited to become Non-Executive Directors of other companies and that this can help broaden the skills and experience of a Director. Executive Directors are only permitted to accept external appointments with the approval of the Board. No Executive Directors currently hold external appointments.

Advisers

The following have provided advice to the Committee during the year in relation to its consideration of matters relating to Directors' remuneration:

• Chief Executive Officer, Chief Financial Officer, Group HR Director and Company Secretary; and
• Deloitte LLP (Deloitte).

Deloitte is retained to provide independent advice to the Committee as required. Deloitte is a member of the Remuneration Consultants Group and, as such, voluntarily operates under the Code of Conduct in relation to executive remuneration consulting in the UK. Deloitte's fees for providing remuneration advice to the Committee were £9,000 for the year ended 30 June 2019. The Committee assesses from time to time whether this appointment remains appropriate or should be put out to tender and takes into account the Remuneration Consultants Group Code of Conduct when considering this. Deloitte was appointed by the Committee and has provided share scheme advice and general remuneration advice to the Company. During the year Deloitte also performed tax advisory work for Dechra.

Alignment of Wider Workforce Pay

The Committee takes into account the general base salary increases for the wider employee population when determining the Executive Directors pay increases. The Committee also reviews, and from the 2020 financial year will determine, the pay increases awarded to the Senior Executive Team and approves the Long Term Incentive awards to this group as well as the share options granted to the senior employees below the SET.

Statement of Voting at Previous Annual General Meeting

The Company remains committed to ongoing shareholder dialogue and takes an active interest in voting outcomes. The following table sets out actual voting in respect of the advisory vote on the Directors' Remuneration Report at the Annual General Meeting on 19 October 2018, the binding vote on the Company's new SAYE scheme at that meeting, and the binding vote on the Remuneration Policy at the Company's Annual General Meeting on 20 October 2017:

Resolution	Votes for	% of vote	Votes against	% of vote	Votes withheld
To approve Remuneration Report	76,045,670	98.58	1,092,914	1.42	25,330
To approve Remuneration Policy	72,932,631	98.88	823,955	1.12	8,619
To approve the SAYE Scheme	76,738,556	99.45	423,701	0.55	1,658