Our Executive team has led the delivery of record profit before tax and significant strategic milestones as detailed in our Strategic Report. These strong outcomes are reflected in the 2025 incentive awards. Under the leadership of our Group CEO, R Cox, and Group CFO, N Wright, we are accelerating our growth ambitions through our refocused Expanding Beyond the Core strategy, including market vertical transformation and strategic acquisitions.
At this critical juncture in our strategic journey, our refreshed Remuneration Policy is designed to attract, retain and incentivise high-calibre executives. It embodies a "more for more" philosophy, enabling greater reward for more stretching performance that is directly aligned with our long-term Capital Markets Day targets and, crucially, with enhanced shareholder value creation.
Dear Shareholder
As Chair of the Remuneration Committee, I am pleased to present the Remuneration Report for the year ended 31 December 2025.
Our report describes the work of the Committee, how it has applied our Remuneration Policy (“Policy”) that was approved by shareholders at the 2023 AGM and sets out the Committee’s proposals for changes to that Policy that will be subject to a binding shareholder vote at the 2026 AGM. The proposed Policy is set out in the Directors' Remuneration Report and a summary of how this will be implemented for the year ending 31 December 2026 is included in the Directors' Remuneration Report. The remainder of the report sets out the annual report on remuneration detailing how the current Policy was applied over the year ended 31 December 2025.
Strategic and business context
As detailed in our Strategic Report, the Group has delivered full year revenue of £158.5m (2024: £147.8m), representing robust year-on-year growth of 7.2%. Adjusted profit before tax is £21.2m (2024: £15.3m), up 38.6%, marking another Group record and ahead of market expectations.
The Group's balance sheet remains strong, reflecting good operational cash generation and working capital management, which have supported strategic capital investment and the acquisition of Overseas Konstellation Company S.A. (OKC). This is our first significant transaction under our Expanding Beyond the Core strategy, which is performing well and is expected to make a meaningful contribution to the Group. We have also agreed a new £90m multi-currency revolving facility agreement with a £30m accordion option, replacing the current £50m facility. This will provide funding to support our strategic objectives and disciplined approach to capital allocation, including the ongoing strategic investments and selective M&A in line with our focused criteria.
Underpinning this record performance is our refreshed strategy, Expanding Beyond the Core, which has evolved to accelerate our growth ambitions. Our commercial transformation into three core market-focused verticals – Consumer & Lifestyle, Transport & Smart Technologies, and Construction & Other Industrial – continues to progress well. Our pipeline of opportunities is growing across all three verticals, enabling us to better serve our customers' complete needs and unlock additional value through comprehensive solutions, driving sustained organic growth well ahead of underlying markets.
Our long-term ambitions were highlighted at our March 2025 Capital Markets Day, where we outlined our stated targets for FY2029 including Group revenues to exceed £230m–£250m, operating profit of 18%-20% and return on capital employed of over 20%. While we recognise that navigating mixed market conditions means delivery may not be linear, we remain confident that our strategy will unlock significant value and deliver sustained growth.
Incentive outcomes
Annual bonus
The 2025 annual bonus was subject to a balanced mixture of financial and non-financial performance measures, directly aligned with our key strategic priorities. As detailed in last year's Remuneration report, for 2025, the financial portion of the annual bonus was increased from 65% to 70% of the maximum bonus. The weighting was: 60% linked to profit before tax, 10% on net working capital as a percentage of sales, 10% based on performance against ESG-related metrics and 20% based on individual/strategic objectives.
Based on performance against these stretching measures, our Group CEO, R Cox, earned a bonus of 100% of salary, and our new Group CFO, N Wright, earned a bonus of 100% of salary. N Wright joined the Company on 22 September 2025 as Group CFO Designate and was entitled to a pro-rated bonus from his date of joining to 31 December 2025.
Our former Group CFO, G McGrath, resigned from the Board on 31 October 2025 and remained an employee until 28 February 2026. He earned a bonus of 98.9% of salary, pro‑rated for his period of active service.
A detailed description of performance against the targets is set out here. In line with our policy, 33% of the bonus earned for the year ending 31 December 2025 is deferred into shares for three years under the Deferred Bonus Share Plan (DBSP).
2023 Long-Term Incentive Plan (LTIP) award outcomes
The Group achieved adjusted earnings per share (before exceptional items and excluding MEL) of 33.93p1 in 2025, exceeding a maximum target of 31.01p. We also delivered relative total shareholder return (TSR) performance between median and upper quartile against the FTSE SmallCap Index (excluding investment trusts) over the three-year performance period. The return on average capital employed (ROACE) of 16% (before exceptional items and excluding MEL) also exceeded the maximum target of 15%. However, the level of sustainable product development was below the minimum target of 4% of revenue. Consequently, the Committee determined that 76.17% of the LTIP award granted in 2023 would vest.
In line with good governance practice, these incentive outcomes were reviewed in the broader context of the stakeholder experience. Given the underlying financial performance of the Group and the significant progress made to position Zotefoams for long-term success, the Committee concluded that the formulaic outcomes for both the annual bonus and LTIP were an appropriate reflection of performance delivered and the wider stakeholder experience (including, but not limited to, the shareholder experience). Therefore, the Committee did not exercise any discretion to adjust these outcomes during the year. The Committee also considered whether any malus and clawback triggers should be activated and confirms that no recovery provisions were operated during the year.
2025 LTIP awards
An LTIP award was granted to our Group CEO, R Cox in April 2025 at a level of 150% of salary.
Our Group CFO, N Wright, will also be granted an LTIP award in respect of 2025. As the Company was unable to make the 2025 LTIP grant to N Wright during 2025, his 2025 LTIP award will be granted in 2026. He will receive 27/36th of 150% of salary in respect of 2025, reflecting his start date of 23 September 2025.
Recognising that our former Group CFO, G McGrath, remained in role until 31 October 2025, he was also granted a 2025 LTIP award at 150% of salary. Reflecting his long service and contribution to the business, the Committee exercised its discretion to grant “good leaver” status for the purposes of determining the treatment of his outstanding DBSP and LTIP incentive awards. His outstanding DBSP awards will be retained and will vest on their usual vesting dates with no acceleration. His outstanding LTIP awards will vest on their usual vesting dates, pro-rated for the period to the end of his employment and tested for performance in the usual way. Full details of the remuneration arrangements on termination of employment for G McGrath are detailed here.
2025 LTIP awards are based 45% on adjusted EPS growth, 15% on ROACE, 5% on sustainable product development, and 35% on relative TSR against the FTSE SmallCap Index (excluding investment trusts). Further details, including the performance targets, are set out here.
Investor engagement and the new Directors’ Remuneration Policy
In 2025, the Committee has focused on the review and evolution of our Policy, which we will ask shareholders to approve at our AGM on 27 May 2026, in line with the normal three-year renewal cycle.
We are committed to aligning shareholder and executive interests, maintaining an open and transparent dialogue with our shareholders on executive pay and listening to your views. The Committee consulted with the Company’s 13 largest shareholders in Q4 2025 and Q1 2026, representing approximately 58.4% of the register, as well as the main proxy voting advisory agencies, on our Policy proposals. We met with those shareholders who wished to discuss the proposals in more detail and responded in writing to those requesting more information. We are pleased to report that shareholders who provided feedback were broadly supportive of the proposals in relation to the approach described below.
This approach is specifically designed to ensure our Executive Directors and other senior management are incentivised to deliver our ambitious strategic aims and drive shareholder value.
Key changes proposed and implementation of new Remuneration Policy in 2026
Our overarching aim is to ensure our executive remuneration remains competitive and appropriately incentivises the delivery of our ambitious strategy and long-term shareholder value.
At the last Policy review three years ago, our focus was on repositioning base salaries, which were below the lower quartile of relevant peers, and implementing only a modest increase to the incentive opportunity (bonus and LTIP combined) from 225% of salary to 250%.
Executing our ambitious strategy requires a step change in the size and scale of the business. Based on the CEO and CFO’s current market positioning, a key principle for this new Remuneration Policy review is to adopt a "more for more" framework. This framework enables greater reward for more stretching performance, directly aligned with our long‑term Capital Markets Day targets and the creation of significant shareholder value.
This will be delivered through a one-off transformation long-term incentive award for 2026, designed to operate alongside the existing LTIP and only activated to the extent that the core LTIP targets are achieved. This transformation mechanism is specifically linked to the delivery of our Capital Markets Day ambitions and ensures management is focused on delivering the building blocks of real change under our strategy, in turn driving a material increase in the share price. The annual bonus opportunity will also be increased for our Group CEO, R Cox, by 50% of salary for 2026.
1 Based on excluding MEL losses and adjusting for a constant tax rate of 19%.
Proposed approach
Modest base salary increases for 2026 – in line with wider workforce
Rationale
The base salaries for the Group CEO and Group CFO will be increased in line with the base salary increases for the wider workforce on 1 April 2026 (3.5%).
Under the new Policy, executives will have a more geared package, emphasising our pay-for-performance culture.
We will keep salary levels under review in future years to ensure they remain appropriate for the evolving size and scale of the business and do not fall behind the market. We may consider making more substantial increases in future years where this is warranted by sustained high performance, but this would be subject to review and communication with shareholders.
Proposed approach
Increase maximum annual bonus for 2026 our Group CEO, R Cox, from 100% of salary to 150%
Given our Group CFO, N Wright, has recently been recruited, his annual bonus will remain at 100% of salary for 2026 (with scope to increase his annual bonus future years up to 150% of salary).
Rationale
This increase reflects R Cox’s exceptional performance and his significant contribution to the Group since he joined as Group CEO Designate on 2 April 2024. This change positions his total maximum compensation around the median (excluding the 2026 transformation award), ensuring we remain competitive for a leader of his calibre.
Given his recent appointment, no changes are proposed to the annual bonus for N Wright at this stage, but the Policy has been drafted flexibly to allow increases in future years once he is established in the role. Any increases would be communicated to shareholders in advance, where practical.
Proposed approach
No change to the maximum core LTIP award, which remains at 150% of salary
The measures for the core LTIP for 2026 will continue to be EPS growth (45%), relative TSR (vs constituents of the FTSE SmallCap Index excluding investment trusts). (35%), ROACE (15%) and ESG (5%). We already set stretching targets for these metrics.
Rationale
We did consider increasing the core LTIP opportunity level and the stretch in these targets. However, we concluded that this would not align directly with the purpose of the transformation mechanism, which is specifically designed to drive the Group's transformation and unlock a step change in value creation.
For EPS and ROACE, while crucial, the delivery of increased earnings and ROACE does not always directly translate to a significant increase in the Zotefoams share price or immediate shareholder returns.
For relative TSR, setting targets that require performance above upper quartile level would not be appropriate as this would likely be more dependent on the performance of other companies rather than the progress of Zotefoams' transformation, thereby reducing the direct link between management actions and remuneration outcomes.
As set out below, we believe the introduction of a transformation mechanism alongside the core LTIP for 2026 is strongly aligned with shareholder interests, as it requires Zotefoams to deliver on both the core LTIP targets and to unlock significant shareholder value.
Proposed approach
One-off transformation mechanism introduced for 2026 LTIP awards
As illustrated below, this will operate as a multiplier to the 2026 LTIP award based on achieving stretching levels of absolute TSR.
For the CEO this would be a 2.0x multiplier (i.e. an additional 150% of salary) and for the CFO 1.8x (i.e. an additional 120% of salary).
The maximum award for 2026 (150% of salary core award x 2 multiplier = 300% of salary for the CEO and 150% salary core award x 1.8 multiplier = 270% of salary for the CFO) only vests if we deliver BOTH the stretching EPS, ROACE, relative TSR and ESG targets under the core 2026 LTIP (including upper quartile relative TSR performance) AND 25% p.a. TSR growth (which equates to a doubling of the share price).
Rationale
Executives will only receive value from this additional element if significant, tangible shareholder value is delivered.
The one-off transformation mechanism is also only activated to the extent that the core LTIP targets are achieved.
Given the strong performance delivered and the potential for this momentum to continue, we believe now is the right time to incentivise a step change in value creation.
Notwithstanding our continued strong performance in 2024 and 2025, our share price has not risen at a commensurate level in recent years, for reasons largely beyond management’s immediate control. The transformation mechanism is designed to address this directly by focusing on material share price growth.
Measuring the transformation mechanism on growth in absolute TSR ensures that management is focused on delivering the building blocks of real change under our strategy, in turn driving a material increase in the share price. This is a simple, transparent measure that is easily understood internally and externally.
Proposed approach
Targets for the transformation mechanism are stretching
- Threshold (i.e. 1.0x multiplier, or no increase to core LTIP outcome) – 10% p.a. TSR growth. Based on an assumed share price of c. £4.00 at the end of 2025, this would require a share price of c. £5.30 by the end of 2028.
- Maximum (i.e. 2.0x multiplier for CEO and 1.8x multiplier for CFO) – 25% p.a. TSR growth. Based on an assumed share price of c. £4.00 at the end of 2025, this would require a share price of c. £7.80 by the end of 2028 – i.e. around a doubling of the share price.
- The multiplier will apply on a straight-line basis between these two points.
Rationale
We chose absolute TSR because it directly focuses management on delivering a material increase in the share price, aligning executive reward with direct shareholder returns. It is also a simple and easily understood measure.
We considered relative TSR but deemed it unsuitable for this specific mechanism due to challenges in constructing a robust peer group and the risk of rewarding low performance if the low standard of performance is merely better than peers. Achieving the proposed levels of absolute TSR demands a step change in our business's value. Additionally, we already use relative TSR (vs constituents of the FTSE SmallCap Index excluding investment trusts) in our core LTIP.
Recognising that the transformation mechanism is designed to reward outperformance, the Committee has set absolute TSR targets at more stretching levels as is typical market practice:
- The threshold target of 10% p.a. TSR growth was set at the upper quartile of typical threshold absolute TSR targets in the FTSE All-Share Index. Typical target for threshold vesting: 8% p.a. TSR growth at median (interquartile range of 7%–10%).
- The maximum target of 25% p.a. TSR growth was set above the upper quartile of typical maximum absolute TSR targets in the FTSE All-Share Index. Typical target for maximum vesting: 15% p.a. TSR growth at median (interquartile range of 12%–25%).
Illustration of the one-off transformation mechanism
2026 core LTIP award
Measure | Weighting |
|---|---|
EPS growth | 45% |
Relative TSR1 | 35% |
ROACE | 15% |
ESG | 5% |
1 Measured on a ranked basis against constituents of the FTSE SmallCap Index excluding investment trusts.
We already set stretching targets for these metrics.
One-off transformation mechanism for 2026
This would be subject to a multiplier of up to 2.0x (1.8x for the CFO), if exceptional TSR is delivered over the three years of the performance period. The one-off transformation mechanism is also only activated to the extent that the core LTIP targets are achieved.
Safeguards
We are committed to ensuring performance under the transformation mechanism is delivered in a responsible and disciplined way and that executives are not over-rewarded, especially if market conditions are favourable.
Underpin condition: The Committee may reduce the outcome of any vesting if it considers that the objective of responsible and disciplined delivery has not been achieved.
Committee discretion: We also retain discretion to adjust the performance outcome if it is not considered representative of the experience of shareholders and other stakeholders.
Post-vesting holding period: The core LTIP and transformation mechanism are subject to a two-year post-vesting holding period, aligning with current LTIP and UK market practice.
Malus and clawback: These provisions will continue to apply.
Other changes
Proposed approach
Removal of the requirement to defer one-third of the bonus earned into shares for three years once the 200% of salary shareholding guideline achieved
Rationale
We recognise that the CEO and CFO are both relatively new in their roles at Zotefoams and are actively working towards meeting their shareholding requirement of 200% of salary.
The removal of the requirement to defer one-third of the bonus into shares once the 200% of salary shareholding requirement has been met is a principle-based approach. It supports the attraction and retention of high-calibre talent by providing greater flexibility once significant share ownership is established, while ensuring that Executive Directors’ interests remain strongly aligned with those of shareholders.
We did consider reducing the level of bonus deferred and maintaining an element of bonus deferral (e.g. 15% of salary) once the shareholding guidelines have been met. However, we concluded that removing the deferral requirement once the shareholding guideline has been achieved is appropriate on the basis that this is a simple approach, and we are comfortable that we will retain sufficient powers to exercise recovery provisions through cash bonuses and unreleased LTIP awards, providing robust safeguards.
Proposed approach
No change to 200% of salary in employment shareholding guideline
No change to post-employment shareholding guideline: our Executive Directors will continue to be required to retain such of their “relevant shares” as are worth 200% of salary for the full two-year period.
Rationale
The 200% of salary shareholding guideline is aligned with market, reflecting the size of the ongoing core LTIP (which is 150% of salary) and that the transformation award is a one-off award for 2026 (up to an additional 150% of salary for the CEO). This equates to an additional 50% of salary per year over the three years of the new Policy.
The CEO and CFO are also both relatively new in their roles at Zotefoams and are actively working towards meeting their shareholding requirement of 200% of salary.
Proposed approach
Simplifying the interaction of the two-year post‑employment shareholding guideline with the LTIP two-year holding period and the three-year deferral period for the deferred bonus plan in certain "good leaver" circumstances as determined by the Remuneration Committee (e.g. for a genuine retirement)
For the avoidance of doubt, LTIP awards will not be released before the end of the three-year performance period. LTIP awards retained by a good leaver would be subject to time pro-rating to reflect the proportion of the three-year performance period in employment and would be subject to the satisfaction of the performance conditions as assessed at the end of the three-year performance period.
Rationale
For a good leaver (e.g. for a genuine retirement), the deferral period for deferred bonus shares and holding period for vested LTIP awards would end two years post-cessation of employment. This will reduce complexity and administration. In practice this means that:
- outstanding deferred bonus awards (from annual bonuses already earned) would be released on the earlier of the end of the three-year deferral period or two years post cessation.
- the two-year holding period for vested LTIP awards would end two years post cessation of employment. Under the current Policy, the default position is that the most recently granted LTIP awards would not be released until four years post cessation of employment.
This aligns the timeframe for the release of deferred bonus awards and LTIP awards with the two-year post‑employment shareholding guideline.
Executive compensation positioning
While market benchmarking was not the sole driver for the proposed changes, it provided important context. The key principle for the Policy review is to have a "more for more" framework, enabling greater reward for stretching performance, aligned with our long-term Capital Markets Day targets. In finalising the proposals, we considered a number of market reference points to ensure that our remuneration remains competitive and enables us to continue to attract and retain top talent. We considered two peer groups:
- FTSE SmallCap companies with market capitalisations up to £300m (excluding financial services companies): This group was chosen as it represents companies of a comparable size to Zotefoams’ current market valuation, where we are positioned around the median. This provides a realistic assessment against our immediate peers.
- Companies with market capitalisations up to £500m (excluding financial services companies): This group was included specifically to reflect our significant growth ambitions and the future scale we are striving to achieve. Benchmarking against this slightly larger group allows us to assess our competitiveness as we execute our strategy to expand the business.
As shown in the charts below, the current Group CEO and Group CFO total compensation is positioned around the lower quartile compared with FTSE SmallCap companies with market capitalisations up to £300m. The proposed changes increase the total maximum compensation opportunity to upper quartile or above for 2026, but only if upper quartile or above performance is delivered, particularly through the stretching absolute TSR targets. From 2027, the packages revert to a positioning between the lower quartile and median of the market data, reflecting the one-off nature of the transformation mechanism.
Group CEO market reference points
Group CFO market reference points
Note: the above charts assume a 3.5% base salary increase for 2026.
Conclusion
The decisions made as a committee regarding remuneration earned in respect of 2025 demonstrate our commitment to ensuring that Executive Directors’ reward is directly aligned with performance and strong outcomes for all our stakeholders.
We firmly believe that the changes embedded in the new Remuneration Policy, adopting a robust 'more for more' incentive framework for delivering high levels of shareholder returns over the three years to the end of 2028, will further strengthen the alignment between executive reward and the delivery of enhanced shareholder value creation. This underscores our commitment to incentivising and rewarding the delivery of exceptional results that benefit all shareholders.
We look forward to receiving your support at our 2026 AGM, where I will be available to respond to any questions that shareholders may have on this report, or our intended approach to reward for 2026.
M Swift
Chair of the Remuneration Committee
10 April 2026
Directors’ Remuneration
Policy report – Introduction
Our proposed new Directors’ Remuneration Policy, for which approval will be sought at the 2026 Annual General Meeting, is set out below under the heading “Directors’ Remuneration Policy”.
As outlined in the Committee Chair’s letter, given the critical point in our strategic journey, the new Remuneration Policy has been developed to attract, retain and incentivise high-calibre Executive Directors and an Executive team to deliver our ambitious strategic goals. A key principle for the new Remuneration Policy is to have a "more for more" framework, enabling greater reward for delivery of more stretching performance aligned with our long-term Capital Markets Day targets.
The differences between the Remuneration Policy approved at the 2023 Annual General Meeting and the new Remuneration Policy set out below are summarised in the Committee Chair’s statement.
In finalising the new Remuneration Policy, the Committee followed a robust process which included discussions on the content of the Policy at three Remuneration Committee meetings plus individual meetings between the Remuneration Committee Chair and all Committee members. The Committee considered input from management (although Committee meetings where decisions were made were not attended by management to avoid conflicts of interest) and from our independent advisers, as well as best practice and shareholder guidance from major shareholders and proxy advisory bodies. The Committee consulted with shareholders in relation to the Policy as described in the investor engagement section.
Directors’ Remuneration Policy
The following part sets out the Remuneration Policy for our Executive and Non-Executive Directors.
This Policy will be put to shareholders for approval at the Annual General Meeting to be held on 27 May 2026.
Remuneration Policy for Executive Directors
Base salary
Purpose and link to strategy
To provide a core reward for undertaking the role, positioned at a level needed to recruit and retain Executive Directors of the calibre required to develop and deliver the business strategy.
Maximum opportunity
Base salaries for Executive Directors are set at an appropriate level to be market‑competitive, reflecting the size and complexity of the business, and to attract and retain the calibre of individuals required for each role.
While there is no maximum opportunity for base salary, any increases for Executive Directors will be considered in the context of the increases awarded to other employees in the Group.
In appropriate circumstances, the Committee may award increases above the range of increases awarded to other employees, including but not limited to:
- where the Committee has set the base salary for a newly appointed Executive Director at lower than the market level for such a role to allow the individual to progress into the role
- on promotion, or where, in the Committee’s opinion, there has been a significant increase in the size or scope of an Executive Directors' role or responsibilities
- change in the size and/or complexity of the Group
- significant market movement.
Increases may be implemented over such time period as the Committee deems appropriate.
Operation
The Committee sets base salary while taking into consideration a range of factors, including:
- the individual’s experience, performance and skills
- the scope of the role
- pay and conditions elsewhere in the Group
- remuneration levels at companies of a comparable size and complexity.
Base salary is normally reviewed annually, with increases effective from 1 April. However, the Committee may review base salary at other times where it considers this appropriate.
Base salaries are paid in cash.
Performance measures
NA
Benefits
Purpose and link to strategy
To provide market-competitive benefits for the Executive Directors to assist in carrying out their duties effectively.
Maximum opportunity
There is no maximum or minimum level of benefits as they are dependent on the individual’s circumstances and the cost to the Company.
The opportunity to participate in “all-employee” share plans that the Company establishes from time to time will be on the same basis as for other qualifying employees.
Relocation/international assignment benefits: the level of such benefits will be set at an appropriate level taking into account the circumstances of the individual and typical market practice.
Operation
The Committee’s policy is to provide Executive Directors with a market-competitive level of benefits, taking into consideration benefits offered to other senior managers within the Group, the individual’s circumstances and prevailing market practice.
- Core benefits currently provided to Executive Directors include, but are not limited to, a car allowance, private medical insurance (for the Executive Directors, their spouse/partner and dependent children) and death in service cover.
- Participation in ”all-employee” share plans that the Company establishes from time to time is on the same terms as all other UK employees.
- Relocation/international assignment benefits, where an Executive Director is required to relocate to take up their position, may be provided including, but not limited to, assistance for housing, school fees, travel assistance, relocation costs, insurance cover and assistance with tax advice.
- Reimbursed expenses may include a gross-up to reflect any tax or social security due in respect of the reimbursement.
Performance measures
NA
Pension
Purpose and link to strategy
To provide Executive Directors with competitive post-retirement benefits and reward sustained contribution.
Maximum opportunity
The maximum level of contribution (either as a contribution to the Company’s Defined Contribution Pension Scheme (“the DC Scheme”) or as a cash allowance in lieu of such a contribution or as a combination of a DC Scheme contribution and a cash allowance) will be set in line with the rate received by the majority of the workforce (currently 7% in the UK).
The Committee retains the discretion to determine the approach to and calculation of the workforce pension level, including if relevant the methodology for international directors.
Operation
Executive Directors are eligible to participate in the DC Scheme or receive a cash allowance in lieu of a contribution to the DC Scheme (or receive a combination of a DC Scheme contribution and a cash allowance).
Performance measures
NA
Annual bonus
Purpose and link to strategy
To incentivise Executive Directors to achieve specific financial and strategic goals aligned with the Group’s annual business plan.
Deferring a proportion of annual variable pay until the Executive Directors have achieved the shareholding guideline provides alignment with shareholders’ interests.
Maximum opportunity
The maximum opportunity in respect of any financial year is 150% of base salary.
For 2026, the annual bonus will be an opportunity of 150% of salary for the CEO and 100% of salary for the CFO.
Operation
Awards are ordinarily based on a balanced scorecard combining Group financial and non-financial performance targets.
Performance is normally assessed over one financial year.
Performance targets are set by the Remuneration Committee to ensure they are appropriately stretching and include clear measures for evaluation.
Bonus out-turns are determined by the Committee, taking into consideration actual performance against targets and the underlying performance of the business.
The Committee has the discretion to adjust bonus out-turns should the formulaic output not produce a result that, in the view of the Committee, fairly reflects overall performance.
Until an Executive Director has met the shareholding guideline (as determined by the Committee), 33% of the earned bonus is normally deferred under the Deferred Bonus Share Plan (DBSP). Awards under the DBSP will vest after a period set by the Committee, which will normally be three years from the date of award.
Deferred awards are normally granted in the form of conditional awards of shares, although awards may take other forms if it is considered appropriate.
Deferred awards will accrue dividend equivalents during the deferral period. These will normally be paid in shares on a reinvested basis.
Cash and deferred awards are subject to malus and clawback provisions.
Performance measures
Performance is ordinarily measured based on an appropriate mix of financial, strategic and personal performance measures.
At least 50% of the bonus opportunity will be based on financial performance targets and no more than 20% of the bonus opportunity will be based on personal performance measures. The split between financial, strategic and personal performance measures will be kept under review and set annually by the Committee.
Subject to the Committee’s discretion to adjust the formulaic out-turn, normally no more than 20% of the bonus is payable at the trigger point, dependent on the stretch in the targets, with a graduated scale operating thereafter through to the maximum bonus being payable for out-performing the Group’s targets for the year.
Long-Term Incentive Plan (LTIP)
Purpose and link to strategy
To incentivise the delivery of long-term sustainable operational performance and the growth potential of the Group.
To align the interests of Executive Directors and shareholders.
To attract and retain executives of the calibre required to drive the Group’s long-term strategic ambitions.
Maximum opportunity
The maximum “core” award in respect of any financial year is 150% of base salary.
For the awards to be granted in respect of 2026, a multiplier of up to 2x for the CEO and up to 1.8x for the CFO will apply, giving an overall maximum of 300% of salary for the CEO and 270% of salary for the CFO.
The current intention is that the multiplier will apply only to the awards in respect of 2026. However, the Committee retains discretion to apply a multiplier of up to 2x to future awards to which this Policy applies and where practical would consult with shareholders before applying it to future years’ awards.
Operation
Awards are subject to a performance period of normally no less than three years, with a subsequent holding period of up to two years.
Performance targets are normally set annually by the Remuneration Committee to ensure they are appropriately stretching.
The Committee has the discretion to adjust the final level of vesting of awards if it does not consider that it reflects underlying performance.
LTIP awards are normally in the form of conditional awards of shares, although the Remuneration Committee may decide to make awards in other forms, such as nil-cost options, if considered appropriate.
Dividend-equivalent payments accrue during the performance period and holding period. These will normally be paid in shares on a reinvested basis.
LTIP awards are subject to malus and clawback provisions.
Performance measures
Awards vest based on an appropriate balance of financial, shareholder return and strategic measures.
Not less than 75% of a core LTIP award will be based on financial and/or shareholder return measures. Subject to the Committee’s discretion to adjust the final level of vesting of awards, up to 20% of the core LTIP award vests for performance at the trigger point, increasing to 100% of the maximum for maximum performance. For 2026, the multiplier is based on absolute TSR and applies from a threshold of 1.0x the core LTIP award (i.e. no increase) to a maximum of 2.0x the core LTIP award for the CEO and 1.8x for the CFO (applied on a straight-line basis between these two points). The application of the multiplier is subject to an underpin that the Committee may reduce the outcome of any vesting if it is not satisfied that performance has been delivered in a responsible way.
For 2026, the threshold target for the operation of the multiplier is TSR growth of 10% p.a.; at this level of growth or below there will be no additional LTIP vesting. For the maximum multiplier to apply, 2.0x (1.8x for the CFO), TSR growth must be at least 25% p.a.
The performance measures selected by the Committee may change from time to time in appropriate circumstances, for example to reflect any change in the Group’s strategy. If the Committee was to introduce a new performance measure, it would consult with the Company’s largest shareholders in advance, as appropriate.
The performance measures will be disclosed in the Directors’ Remuneration report for the relevant year.
Shareholding guidelines
To align the interests of the Executive Directors with shareholders, the Company operates a shareholding guideline for Executive Directors of 200% of salary. A newly appointed Executive Director will have five years from the date of their appointment to the Board to build up such a holding.
Following cessation of employment, an Executive Director must retain for two years shares acquired from DBSP and LTIP awards as having a value equal to the lower of 200% of salary and their actual holding on departure. No post-cessation restrictions will apply to shares purchased by Directors from their own funds.
Shares subject to LTIP awards for which the performance period has ended (i.e. which are in a holding period) and shares subject to DBSP awards can be counted towards the required level of shareholding, in each case on a net of assumed tax basis.
The Committee retains discretion to vary the application of the shareholding policy in exceptional circumstances.
Notes to the policy table
The deferred share element of the Annual Bonus Plan and the Long-Term Incentive Plan shall be operated in accordance with the rules of the respective plan. The Committee may adjust and amend awards in accordance with the DBSP and LTIP rules.
The Committee reserves the right to make any remuneration payments and/or payments for loss of office (including exercising any discretion available to it in connection with such payments), notwithstanding that they are not in line with the policy set out above, where the terms of the payment were agreed: (i) before the policy set out above came into effect; or (ii) at a time when a previous policy, approved by shareholders, was in place, provided the payment is in line with the terms of that policy; or (iii) at a time when the relevant individual was not a director of the Company and, in the opinion of the Committee, the payment was not in consideration of the individual becoming a director of the Company. For these purposes, “payments” includes (but is not limited to) the Committee satisfying awards of variable remuneration and, in relation to an award over shares (including legacy awards under the 2008 Approved Share Option Plan (ASOP)), the terms of the payment being “agreed” at the time the award is granted.
Changes to the Policy
The key changes that have been made to this Policy, compared with the last Policy approved by shareholders, are summarised in the Committee Chair’s statement.
Committee discretion in relation to future operation of the Remuneration Policy
The Committee will operate the annual bonus (including DBSP), the LTIP and any “all-employee” share plan in accordance with their rules. All discretions under those rules will be available under this Policy, except where expressly limited under this Policy. For share awards, in the event of a variation of the Company’s share capital or a demerger, delisting, special dividend, rights issue or any other event that may affect the Company’s share price, the number of shares subject to an award and/or any exercise price applicable to the award and/or any performance condition attached to the award may be adjusted.
The Committee may make minor amendments to the Policy set out above for, for example, regulatory, exchange control, tax or administrative purposes or to take account of a change in legislation, without obtaining shareholder approval for that particular amendment.
Performance measures and approach to target setting
Annual bonus
Performance measures for the short-term incentive arrangements are selected annually by the Committee to align with Zotefoams’ annual business plan.
Performance targets for the financial element are set to be appropriately stretching, by reference to the Group’s internal business plan, and to align with the delivery of returns to shareholders. Performance targets for the strategic element are determined annually by the Committee and set to incentivise the delivery of key strategic priorities over the course of the year.
Long-Term Incentive Plan
Performance measures for the long-term incentive arrangements are selected annually by the Committee to align with Zotefoams’ long-term business strategy and to reflect the Group’s growth ambitions and desire to efficiently manage capital employed and returns to the shareholders.
The performance targets for the Long-Term Incentive Plan are reviewed annually and set by taking into account market conditions, external market forecasts, internal business forecasts and market practice.
Amendment of performance measures
Performance measures for the annual bonus and LTIP may be adjusted if the Committee considers that it would be appropriate to amend them (for example to take into account a material acquisition or divestment) so that they achieve their original purpose.
Malus/clawback arrangements for the cash annual bonus, DBSP and LTIP
The Remuneration Committee may, in its absolute discretion and in circumstances where the Remuneration Committee considers such action is appropriate, decide at any time prior to the third anniversary of the date of payment of a cash bonus or grant of an award under the DBSP, or the fifth anniversary of the date of grant of an award under the LTIP, to:
a) reduce the number of shares to which a DBSP and LTIP award relates
b) cancel a DBSP or LTIP award
c) impose further conditions on a DBSP or LTIP award
d) require a cash repayment
e) require a transfer of shares delivered under incentive plans.
Such circumstances include, but are not limited to:
- a material misstatement of the Group’s (or any subsidiary’s) audited financial results
- an error in assessing the performance conditions
- corporate failure
- deliberately misleading management, the market and/or shareholders regarding financial performance
- material failure of risk management
- overpayments due to material abnormal write-offs
- payments based on erroneous or misleading data
- reputational damage resulting from misconduct or otherwise
- serious misconduct or conduct that causes significant financial loss.
These provisions are set to reflect a timeframe in which the company’s financial reporting, audit and risk procedures would typically identify one of the malus and clawback trigger events. The Committee retains the discretion to extend the clawback period in the event of an ongoing investigation.
Remuneration structure for employees below the Board
The remuneration for senior management immediately below the Board has a similar structure to that used for the Executive Directors. UK-based middle management participates, at the discretion of the Remuneration Committee, in the 2018 Approved Share Option Plan, subject to the plan’s rules. There are also general staff discretionary bonus schemes globally which are based on the performance of the Group or local entity and other factors. Other arrangements are also in place for specific areas of the Group, including a Share Incentive Plan open to all UK employees under which they currently receive a free share for every four shares purchased.
Illustration of application of Remuneration Policy
These charts show how the composition of each of the Executive Directors’ remuneration packages varies at different levels of performance achievement.
Illustrative scenario charts
The assumptions used in the charts above are as follows:
| Minimum | On target performance | Maximum performance | Maximum performance + 50% share price growth |
|---|---|---|---|---|
Fixed pay1, 2 | √ | √ | √ | √ |
Annual | Χ | √ (90% of salary, being 60% | √ (150% of salary for the CEO and 100% | √ (150% of salary for the CEO and 100% |
Long-term incentive | X | √ (90% of salary, being 60% | √ (For 2026, 300% of salary for the CEO | √ (For 2026, 300% of salary for the CEO and 270% of salary for the CFO3 plus 50% share price growth4) |
1 Comprises base salary for 2026 (assuming a 3.5% base salary increase effective 1 April 2026), benefits (as per the 2025 single figure) and pension contribution/cash in lieu of pension for 2026.
2 Based on salary expected to be earned over the full year taking into account a 3.5% base salary increase with effect from 1 April 2026.
3 Based on salary including 3.5% increase applying with effect from 1 April 2026.
4 An additional maximum performance scenario is provided showing the maximum performance with an additional 50% share price growth on the long-term incentive, as required by the UK reporting regulations. The charts below do not take into account share price appreciation, unless otherwise stated, or dividends.
Remuneration Policy on recruitment
Area
Policy and operation
Principles
The Remuneration Committee takes into consideration all relevant factors, including local market practice in the individual’s home country, appropriate market data, internal relativities, the current remuneration arrangements applicable for other Executive Directors on the Board and the Committee’s desire to recruit an Executive Director of the required calibre to develop and deliver the business strategy, while at the same time ensuring that remuneration arrangements offered are in the best interests of both Zotefoams and its shareholders.
The Committee endeavours to align the remuneration arrangements of new recruits with the Policy outlined on the previous pages.
Other elements may be included in the following circumstances:
- an interim appointment being made to fill an Executive Director role on a short-term basis
- if exceptional circumstances require that the Company Chair or a Non-Executive Director takes on an executive function on a short-term basis
- if an Executive Director is recruited at a time in the year when it would be inappropriate to provide an incentive for that year as there would not be sufficient time to assess performance. Subject to the limit on variable remuneration set out below, the quantum in respect of the months employed during the year may be transferred to the subsequent year so that reward is provided on a fair and appropriate basis.
In the event that an internal candidate was promoted to the Board, legacy terms and conditions would normally be honoured.
The Committee will make every effort to explain the rationale for the remuneration arrangements for a new recruit in the Remuneration report following the recruitment of a new Director.
Base salary
Set at a level to recruit the candidate with the required calibre, skills and experience to deliver the Group’s strategy.
Benefits and pension
To be provided in line with normal policy.
In the event that an Executive Director is required to relocate to undertake the role, the Committee may provide additional benefits to reflect the relevant circumstances (on a one-off or ongoing basis).
Incentive awards
When appointing a new Executive Director, existing incentive arrangements will be used where possible.
The Committee has the discretion to include any other remuneration component or award that it feels is appropriate, taking into account the specific commercial circumstances, and subject to the limit on variable remuneration set out below. The key terms and rationale for any such component would be appropriately disclosed.
The maximum level of annual variable pay and long-term incentive awards that may be awarded to a new Executive Director in respect of their recruitment, excluding any buy-out awards, is 450% of salary. Such variable remuneration may be made in the form of cash or shares, subject to performance conditions as selected by the Committee, and may vest immediately or at a future point in time.
Buy-outs
To facilitate recruitment, the Remuneration Committee may "buy out" any remuneration arrangements forfeited by the new Executive Director from a previous engagement. In doing so, the Committee will consider all relevant factors, including the form of the awards (i.e. cash or equity), performance conditions attached to the awards, the likelihood of such conditions being met and the timeframe of the awards.
Typically, any buy-outs will be made on a like-for-like basis.
On recruitment, the Committee retains discretion to grant awards under a new arrangement where required, in accordance with the Listing Rules, which allow for the grant of awards specifically to facilitate, in unusual circumstances, the recruitment of an Executive Director.
Non-Executive Directors
The remuneration arrangements for new Non-Executive Directors will normally be aligned with those outlined in the Policy table.
Service contracts and termination policy
When determining leaving arrangements for an Executive Director, the Committee takes into account any pre-established contractual agreements, including the provisions of any incentive plans, pension entitlements, typical market practice, the performance and conduct of the individual and the commercial justification for any payments.
The following summarises our policy in relation to Executive Director service contracts and payments in the event of loss of office:
Area
Policy and operation
Notice period
- The Committee’s policy is that Executive Director contracts will normally provide up to twelve months’ notice by the Company and up to twelve months’ notice by the Executive Director.
Contract commencement date
- R Cox, Group CEO – 2 April 2024.
- N Wright, Group CFO – 22 September 2025.
Expiry date
- The contracts for the Executive Directors are rolling service contracts with no expiry date.
Termination payments
- If the Company terminates an Executive Director’s contract without full notice, then the Executive Director has the right to a termination payment to reflect the unexpired term of the notice.
- Our policy is that termination payments in lieu of notice will be based on base salary, unless the Committee decides that a payment in lieu of pension and/or benefits should also be made or that certain benefits should continue to be provided rather than making payment in lieu of them.
- Termination payments may be subject to mitigation and may be paid in instalments.
- Rights to an annual bonus, DBSP awards, LTIP awards, ASOP and all-employee share plan awards are governed by the respective plan rules.
- The Committee reserves the right to make any other payments in connection with a Director’s cessation of office/employment where the payments are made in good faith in the discharge of an existing legal obligation (or by way of damages for breach of such an obligation) or by way of settlement of any claim arising in connection with the cessation of the Director’s office/employment. Any such payments may include, but are not limited to, payments in respect of accrued but untaken holiday, any fees for outplacement assistance and/or the Director’s legal and/or professional advice fees in connection with their cessation of office/employment.
Other information
Annual bonus
- Under the Annual Bonus Plan, the Remuneration Committee would normally treat someone as a “good leaver” if they leave employment because of death, disability, ill health, injury, retirement, their employing company or business being sold/transferred out of the Group, redundancy or any other circumstance at the discretion of the Remuneration Committee.
- A “bad leaver” is someone who leaves employment for any other reason.
- For “good leavers”, rights to any outstanding annual bonus in the year of cessation will be determined at the discretion of the Remuneration Committee, normally after the end of the financial year, and taking into account the level of performance achieved during the performance period. Any payments will be made in such proportions of cash and shares as the Committee considers appropriate. Outstanding DBSP awards will normally vest at the end of the normal vesting period or, at the Committee’s discretion, two years post cessation of employment (if earlier). The Remuneration Committee may, at its discretion, allow the award to vest earlier.
- For “bad leavers”, rights to annual bonus and unvested DBSP awards will normally be forfeited.
Long-Term Incentive Plan
Leavers during the performance period
- Under the Long-Term Incentive Plan, a “good leaver” is someone who leaves employment because of death, disability, injury, ill health, redundancy, retirement, their employing company or business being sold/transferred out of the Group, or any other circumstances at the discretion of the Remuneration Committee.
- A “bad leaver” is someone who leaves employment for any other reason.
- For “good leavers”, rights to any awards under this plan will normally, unless the Remuneration Committee determines otherwise, be pro-rated by reference to the proportion of the performance period that has elapsed on cessation and will vest, subject to performance, at the normal time. Awards will be released at the end of the originally envisaged holding period or, at the discretion of the Committee, would be released at the later of the end of the performance period and two years after cessation of employment or the expiry of such shorter period as the Committee may determine.
- The Remuneration Committee retains the discretion to accelerate vesting in certain circumstances, e.g. death.
- For “bad leavers”, rights to unvested awards under this plan will normally be forfeited.
Leavers during the holding period
- Where a participant who is subject to a further holding period in relation to their award ceases to be employed by the Group, the award will normally be delivered at the end of the holding period or the expiry of such shorter period as the Committee may determine.
- In cases where the individual leaves employment, and where the Company is entitled to dismiss the individual without notice, the award will lapse on cessation of employment.
2008 Approved Share Option Plan (ASOP)
- Under the 2008 Approved Share Option Plan, a “good leaver” is someone who leaves employment because of death, disability, injury, redundancy, retirement, their employing company or business being sold or transferred out of the Group or any other circumstance at the discretion of the Committee.
- A “bad leaver” is someone who leaves employment for any other reason.
- For “good leavers”, rights to any awards under this plan will normally be pro-rated from the start of the performance period to cessation and will vest based on performance to the date of cessation. The Remuneration Committee has the discretion to adjust the final level of vesting of these awards.
- For “bad leavers”, rights to unvested awards under this plan will normally be forfeited.
“All-employee” share plans
In the event of a cessation of employment, the treatment of any Executive Director’s awards under any ”all‑employee” share plans that the Company establishes from time to time will be determined in accordance with the rules of the relevant plan.
Where a "buy-out" or other "one-off" award is made, the leaver provisions would be determined at the time of the award.
Area
Policy and operation
Change of control
- The Committee will determine the treatment of any annual bonus award at the time, taking into account such circumstances as it considers appropriate.
- In the event the Company is taken over, ASOP, DBSP and LTIP awards vest early. The extent to which LTIP awards vest will be determined by the Committee, taking into account the performance conditions and, unless the Committee determines otherwise, the proportion of the performance period that has elapsed.
- In the event of a change of control or other relevant event, the treatment of any Executive Director’s awards under any "all-employee" share plans that the Company establishes from time to time will be determined in accordance with the rules of the relevant plan.
- If there is a demerger, special dividend, delisting or any other event that may materially affect the Company’s share price, the Committee may allow awards to vest on the same basis as for a takeover.
- Awards may be exchanged for new awards if the Committee considers this appropriate.
Incidental expenses and other payments
- The Company may meet relocation and other incidental expenses on termination of employment, for example relocation expenses, outplacement fees, the fees of legal or other professional advisers, and accrued but untaken holiday. In appropriate circumstances, the Committee may agree that certain benefits (such as medical insurance) may be continued for a reasonable period following termination of employment.
Copies of the Executive Directors’ service contracts and deeds of indemnity in favour of the Directors are available for inspection at the Company’s registered office.
External appointments
Executive Directors may be invited to become non-executive directors of other companies. These appointments provide an opportunity to gain broader experience outside Zotefoams and therefore benefit the Group. Providing that appointments are not likely to lead to a conflict of interest and the Board agrees, Executive Directors may accept non-executive appointments and retain the fees received. There are currently no such appointments.
Remuneration Policy for Non-Executive Directors
Approach to fees
Operation
Other items
Fees for the Company Chair and Non-Executive Directors (NEDs) are set at an appropriate level to reflect:
- the time commitment required to fulfil the role
- the responsibilities and duties of the positions
- typical practice in other companies.
Fees are reviewed at appropriate intervals by the Board.
Base fees are subject to any applicable limit in the Company’s Articles of Association from time to time or as otherwise approved by shareholders.
Our NED fee policy is to pay:
- a base fee for membership of the Board
- an additional fee for being Chair of a Committee and/or Senior Independent Director to reflect the additional responsibilities and time commitments of the role.
The Company Chair receives an inclusive fee for the role.
Additional fees for membership of a committee, chairing or membership of Subsidiary boards, for other roles or for a time commitment significantly greater than anticipated, or other fixed fees, may be introduced if considered appropriate.
Fees can be paid in cash and/or shares as appropriate (and a payment in shares may include a non‑performance based nil or nominal cost award over Company shares, which may incorporate a right to dividend equivalents over the award’s vesting period).
The Company Chair and NEDs are not eligible to participate in the bonus or any long-term incentive arrangements.
NEDs do not currently receive any taxable benefits.
Benefits (such as travel and accommodation allowances to allow the NEDs to fulfil their duties, along with a gross-up to reflect any tax liability arising on such allowances) may be provided in the future if the Board considers this appropriate.
Non-Executive Directors and the Company Chair have appointment letters setting out their duties and the time commitment expected. Appointment letters are currently for terms of three years. Appointments may be terminated by either party with six months’ written notice.
Considering employment conditions elsewhere in the Group
Budgeted salary increases for the wider employee group are taken into consideration when determining increases for the Executive Directors. The Remuneration Committee does not consult with employees directly when formulating the Remuneration Policy for Executive Directors but takes account of pay levels within the Group and seeks feedback from the Chief People Officer where appropriate.
Considering shareholders’ views
The Remuneration Committee is committed to engaging in an open dialogue with the Company’s shareholders and will seek views and opinions on significant matters relating to the remuneration of the Executive Directors as appropriate. We are committed to aligning shareholder and executive interests, maintaining an open and transparent dialogue with our shareholders on executive pay and listening to our shareholders’ views. As part of formulating the Remuneration Policy, a consultation was undertaken with 13 institutional shareholders, who between them hold approximately 58.4% of Zotefoams’ shares, and the Committee refined the approach to the Policy to take account of feedback received. The Committee would like to thank shareholders for the time they provided and their input into the consultation.
The Company Chair and the Chair of the Remuneration Committee are available to answer requests, should a shareholder wish to raise a matter on remuneration. Such requests should be made to the Company Secretary.
Directors’ Remuneration report
The Directors’ Remuneration report has been prepared in accordance with the relevant provisions of the Listing Rules, Section 421 of the Companies Act 2006 and Schedule 8 to the Large and medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013.
Implementation of Directors’ Remuneration Policy in 2026
A resolution to approve the new Remuneration Policy will be proposed at the 2026 Annual General Meeting. A summary of how the Remuneration Policy will be implemented in 2026 has been set out below.
Executive Directors
Element and purpose/link to strategy
Implementation for 2026
Salary
Positioned at a level needed to recruit and retain Executive Directors of the calibre required to develop and deliver the business strategy.
The base salaries for the Group CEO and Group CFO will be increased in line with the base salary increases for the wider workforce on 1 April 2026, expected to be 3.5%.
Benefits
Provide market-competitive benefits for the Executive Directors, to assist in carrying out their duties effectively.
Benefits to be provided in line with the approved Remuneration Policy.
Retirement benefits
Provide competitive post-retirement benefits and reward sustained contribution.
All Executive Directors receive an employer pension contribution of 7%, aligned with the wider UK workforce.
Annual bonus
Incentivise Executive Directors to achieve specific financial and predetermined strategic goals aligned with the Group’s annual business plan.
Deferred proportion of annual variable pay provides a retention element and alignment with shareholders.
Maximum opportunity – Group CEO up to 150% of salary; Group CFO up to 100% of salary.
For 2026, the bonus will be assessed against the following measures for all Executive Directors:
Measure | Weighting |
|---|---|
Profit before tax | 60% |
Net working capital as a percentage of sales | 10% |
Individual objectives | 20% |
Environmental, social and governance (ESG) | 10% |
The portion of the annual bonus based on financial measures is 70% of maximum.
An underpin will apply that enables the Committee to adjust the bonus outcome in cases where: (i) safety performance is considered to have reduced to unacceptable levels, and/or (ii) the formulaic out-turn does not produce a result that fairly reflects overall performance.
The underlying performance targets for these measures have not been disclosed in advance as they are considered to be commercially sensitive. Underlying targets will be provided, where appropriate, in next year’s Directors’ Remuneration report.
The Group CEO and Group CFO are actively working towards meeting their shareholding requirement of 200% of salary. They will continue to be required to defer one-third of their annual bonus for three years until the 200% of salary shareholding guideline has been achieved.
Element and purpose/link to strategy
Implementation for 2026
Long-Term Incentive Plan (LTIP)
To incentivise the delivery of long-term sustainable operational performance and the growth potential of the Group.
To align interests of Executive Directors and shareholders.
To attract and retain executives of the calibre required to drive the Group’s long-term strategic ambitions.
The maximum core LTIP award will be 150% of salary and will be subject to the following performance conditions:
Measure | Weighting | Threshold1,2 | Maximum1 |
|---|---|---|---|
EPS growth | 45% | 5% p.a. compound growth | 15% p.a. compound growth |
Relative TSR | 35% | Median | Upper quartile |
ROACE | 15% | 17% | 20% |
ESG | 5% | 8% | 10% |
1 Straight-line vesting occurs between threshold and maximum.
2 Threshold results in 20% vesting.
3 In line with the approach for the previous LTIP awards, the EPS targets have been set based on a constant tax rate. The Committee retains the discretion to override this where it considers it appropriate.
4 Relative to the constituents of the FTSE SmallCap Index excluding investment trusts, measured on ranked basis and based on a three-month averaging period prior to the start and end of the performance period.
5 The ROACE targets set out above do not reflect the investment to be made in the new manufacturing and innovation facilities in Vietnam and South Korea. The Committee will review these targets in due course to ensure that performance is assessed on a fair and consistent basis with the stretch envisioned and intended at the time of grant.
As set out in the Remuneration Committee Chair’s letter, for 2026 a one-off transformation mechanism will apply alongside the existing LTIP. The one-off transformation mechanism is only activated to the extent that the core LTIP targets are achieved. This will operate as a multiplier to the core LTIP award (that vests at the end of the three-year performance period) based on the achievement of absolute TSR. Executives will only receive value from this additional element if significant shareholder value is delivered.
Participant | Multiplier on core award that vests | Absolute TSR growth1 | Implementation |
|---|---|---|---|
Threshold |
|
|
|
Group CEO and | x 1.0 | 10% p.a. growth | If TSR growth is 10% p.a. or less there would be no change in the vesting of the core award. |
Maximum |
|
|
|
Group CEO | x 2.0 | 25% p.a. growth | If TSR growth is 25% p.a. or more, the maximum multiplier will be applied to the core award. |
Threshold | x 1.8 |
|
|
1 Absolute TSR growth will be based on a three-month averaging period prior to the start and end of the performance period.
As set out above, the maximum award for 2026 is therefore 300% of salary for the Group CEO (i.e. 150% of salary core award x 2.0 multiplier) and 270% of salary for the Group CFO (i.e. 150% salary core award x 1.8 multiplier). The maximum award requires the core award to vest at maximum and 25% p.a. if TSR growth is delivered. This will prevent absolute TSR rewarding management for wider market movements.
An underpin condition will also apply where the Committee may reduce the outcome of any vesting if it considers that transformation has not been delivered in a responsible and disciplined way. Any reduction via the underpin will be determined at the Committee’s discretion.
Shareholding requirement and post‑cessation shareholding policy
Aligns the interests of Executive Directors and shareholders.
Executive Directors are required to hold shares in the Company equivalent to 200% of base salary.
Executive Directors are expected to retain their full shareholding requirement for two years post cessation of employment.
Non-Executive Directors
The Remuneration Committee undertook a comprehensive review of the Group Chair fees, while the Group Chair and Executive Directors reviewed Non-Executive Director fees. Taking into account market benchmarks for companies of a similar size and complexity, and the time commitment required, it was agreed that the fees should be increased. These are detailed below.
Purpose and link to strategy
Implementation for 2026
Non-Executive Director fees
The Board Chair and Non-Executive Director base fee will be increased in line with the base salary increases for the wider workforce on 1 April 2026 by 3.5%. No increase is being made to the fee for chairing a Committee. The following fees will therefore apply effective 1 April 2026:
Group Chair fee: £171,551
Non-Executive Director base fee: £55,414
Fee for chairing a Committee: £10,000
Single total figure of remuneration (audited)
The following tables set out the single total figure for remuneration for Directors for the 2025 and 2024 financial years.
Executive Directors
Salary (£) | Benefits (£) | Matching Shares3 (£) | Bonus (£) | LTIP3,4 (£) | Pension (£) | Total fixed pay (£) | Total variable pay (£) | Total (£) | |
|---|---|---|---|---|---|---|---|---|---|
R Cox | |||||||||
2025 | 440,186 | 16,001 | 519 | 443,415 | – | 30,813 | 487,565 | 443,415 | 930,934 |
2024 | 321,638 | 36,875 | 108 | 267,203 | – | 22,515 | 381,136 | 267,203 | 648,339 |
N Wright1 | |||||||||
2025 | 81,897 | 3,648 | – | 75,000 | – | 14,813 | 100,358 | 75,000 | 175,358 |
2024 | – | – | – | – | – | – | – | – | – |
G McGrath2 | |||||||||
2025 | 286,300 | 15,077 | 519 | 237,930 | 241,028 | 36,461 | 338,407 | 478,958 | 817,315 |
2024 | 275,000 | 14,864 | 398 | 206,080 | 208,952 | 34,247 | 324,509 | 415,032 | 739,541 |
1 N Wright joined the Company and the Board on 22 September 2025 as Group CFO Designate. The single total figure of remuneration data is calculated for the entire period of employment from 23 September 2025 to 31 December 2025.
2 G McGrath resigned from the Board on 31 October 2025 and remained an employee of the Company until 28 February 2026. The single total figure of remuneration data is calculated for the period he was a member of the Board, from 1 January 2025 to 31 October 2025. The remuneration he received from 1 November 2025 to 31 December 2025 is disclosed in the Payments made to past Directors section.
3 The values for Matching Shares and the LTIP have been calculated on the basis of the average share price over the three months to 31 December 2025 of £4.06. The value of the LTIP attributable to share price appreciation for G McGrath was £7,232.
4 The LTIP value has been restated to reflect the actual share price of £2.58 on the date of vesting, 29 April 2025. The figure disclosed in the 2024 single figure table was based on an estimate, using the three-month average share price to 31 December 2024 of £3.59. There is no share price appreciation attributable to the LTIP value as the share price at grant was greater than £2.58.
Under the rules of the LTIP, participants may also receive an award of shares in lieu of the value of dividends paid over the vesting period on vested shares (paid at the end of the holding period). For the 2023 LTIP this was 3,687 shares for G McGrath with a valuation of £14,976, calculated on the basis of the average share price over the three months to 31 December 2025 of £4.06.
Non-Executive Directors1,2,3,4,5
Fees paid in respect of 2025 (£) | Fees paid in respect of 2024 (£) | |
|---|---|---|
J Carling | 52,193 | 47,363 |
J Clarke | 9,744 | – |
L Drummond | 161,762 | 147,350 |
D Robertson | 61,699 | 55,256 |
M Swift | 61,699 | 55,256 |
C Wall | 52,193 | 47,363 |
1 Non-Executive Directors who also chair a Board Committee receive an additional fee.
2 The Non-Executive Directors excluding the Company Chair received a fee increase to £53,540 p.a. effective 1 April 2025, Committee Chairs received an increase in additional fees to £10,000 p.a.. and the Company Chair received an increase to £165,750 p.a.
3 The Non-Executive Directors' and the Company Chairs' fees will be increased to the following level effective 1 April 2026:
Group Chair: £171,551
Non-Executive Directors: £55,414
Committee Chairs: £10,000
4 J Clarke joined the Board on 28 October 2025 and thus did not receive any remuneration in 2024.
5 D Robertson retired from the Board on 31 December 2025.
Notes to the table (audited)
Base salary
As at 31 December 2025, the base salary for R Cox was £443,415 p.a. (£430,500 p.a. as at 31 December 2024).
As at 31 December 2025, the base salary (before salary sacrifice) for N Wright was £300,000 p.a. (N Wright joined the Company on 22 September 2025 and there is therefore no comparative figure for 2024).
G McGrath resigned from the Board and the position of CFO as of 31 October 2025, at which time his base salary (before salary sacrifice) was £288,400 p.a. (£280,000 p.a. as at 31 December 2024).
Pension contributions
The Company operates a Defined Contribution Pension Scheme (the “DC Scheme”) or a cash contribution equivalent. When participating in the DC Scheme, individuals may elect to enter a salary sacrifice arrangement, whereby their salary is reduced, and the Company makes a corresponding contribution into the DC Scheme.
R Cox receives a cash contribution in lieu of pension contributions of 7% of salary. G McGrath and N Wright opted for the salary sacrifice arrangement of 7% of salary and the amounts shown for their base salary are before salary sacrifice. Similarly, the amounts shown for the pension element of total remuneration include the amounts of salary that were sacrificed.
Benefits
Benefits include a company car allowance, private medical insurance, the value of the Matching Shares (at dates when awarded) acquired during the year under the Share Incentive Plan (SIP).
Annual bonus 2025 – targets and out-turns
The targets for the annual bonus for 2025 for R Cox, N Wright and G McGrath are as set out in the table below:
Weighting (% max) | Targets | Pay-out | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Measure | R Cox | N Wright | G McGrath | Threshold (20%) | Maximum (100%) | Performance achieved | R Cox | N Wright | G McGrath | |
Profit before tax | 60% | 60% | 60% | £19.5m | £21.5m | £21.5m | 100% | 100% | 100% | |
Net working capital as a percentage | 10% | 10% | 10% | 33.1% | 30.1% | 25.2% | 100% | 100% | 100% | |
ESG: Reduce SEC from 5.19 to | 10% | 10% | 10% | 5.19kWh/kg | 5.09kWh/kg | 4.94Wh/kg | 100% | 100% | 100% | |
Individual | 20% | 20% | 20% | See below | See below | See below | 20.0% | 20.0% | 18.8% | |
Total | 100% | 100% | 100% | NA | NA | NA | 100% | 100% | 98.8% | |
1 N Wright joined the Company and the Board on 23 September 2025 and his bonus has been pro-rated from his date of joining the Company to 31 December 2025.
2 G McGrath resigned from the Board on 31 October 2025 and remained an employee of the Company until 28 February 2026. His bonus was pro-rated to reflect the period of employment as a Director. The amount in the single figure table shows the portion of his bonus received for the period he was a Director, and the remainder is disclosed in the Payments made to past Directors section.
The table below sets out the targets and performance for the Executive Directors.
Strategic financial metrics – R Cox, N Wright and G McGrath
Weighting (% of total bonus) | Scoring | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Measure | R Cox | N Wright | G McGrath | Objective | Performance | R Cox | N Wright | G McGrath | ||
Strategy launch and shareholder engagement | 5% | NA | NA | Present and drive the new strategy, starting with the Capital Markets Day, and reinvigorate the Zotefoams investment case, followed by shareholder engagement to drive up the share price. | Achieved | 5% | NA | n/a | ||
Vietnam delivery | 5% | NA | NA | Confirm and complete (vs timeline) Project Crystal implementation including new close-to-customer footwear strategy, Vietnam/Korea expansion and build of associated innovation centres. | Achieved | 5% | NA | n/a | ||
Group restructuring execution | 5% | 5% | 5% | R Cox
N Wright and G McGrath
| Achieved | 5% | 5% | 5% | ||
M&A growth delivery | 5% | 5% | 5% | R Cox Drive strategic growth through successful M&A execution, delivering a minimum of one acquisition and building a robust opportunity pipeline across all regions (North America, EMEA and South/Southeast Asia). N Wright Complete the acquisition of OKC. G McGrath Drive strategic growth through completion (SPA completed) of a minimum of one acquisition aligned with Group objectives. | Achieved | 5% | 5% | 5% | ||
Deliver new finance facility | NA | 5% | NA | Establish new finance facility to support five-year plan and M&A. | Achieved | NA | 5% | n/a | ||
Finance & IT transformation | NA | NA | 5% | Successfully deliver all Finance and IT components of the £4m Group transformation programme, including implementation of enhanced risk management framework, per the work carried out by the Internal Auditor. Achievement of identified cost and efficiency targets across the finance and IT teams, meeting all project milestones on schedule and maintaining positive employee relations with no disruption due to legal cases. | Partially achieved | NA | NA | 3.8% | ||
Deliver five-year plan | NA | 5% | NA | Update and review the five-year plan and budget for approval by the Board. | Achieved | n/a | 5% | n/a | ||
Provision 29 readiness | NA | NA | 5% | Ensure Zotefoams is ready to meet Provision 29 of the 2024 UK Corporate Governance Code on internal control reporting by year end. | Achieved | NA | NA | 5% | ||
The annual bonus was based on base salary before salary sacrifice. The maximum opportunity for the bonus was 100% of salary. 33% of the bonus is deferred into shares held in trust for three years under the DBSP. Full details of the operation of the DBSP are set out in the Directors’ Remuneration Policy.
2025 | Cash bonus (£) | Deferred bonus (£) | Total bonus (£) |
|---|---|---|---|
R Cox | 297,089 | 146,326 | 443,415 |
N Wright1 | 50,250 | 24,750 | 75,000 |
G McGrath1 | 159,414 | 78,516 | 237,930 |
1 Figures for N Wright and G McGrath shown above reflect pro-rated amounts aligned to the single figure table.
In assessing whether the outcome generated by the annual bonus was fair in the context of broader performance, the Committee took into account the underlying financial performance of the Group and the wider stakeholder experience (including, but not limited to, the shareholder experience) over the course of the year. As set out above, significant progress has been made over the year to set Zotefoams up to deliver long-term sustainable success and the Committee felt that the formulaic outcome was an appropriate reflection of performance delivered. It has, therefore, not exercised any further discretion in relation to incentive outcomes during the year.
LTIP
The 2023 LTIP award was subject to four performance conditions measured over the three financial years ended 31 December 2025: 30% of the award was subject to relative TSR against the FTSE SmallCap Index (excluding investment trusts), 45% of the award was subject to an EPS growth target, 15% of the award was subject to a ROACE growth target and 10% of the award was subject to a sustainable product development target. Performance is measured over a three-year period and the restricted shares will be released to the participant after two years, to the extent that TSR, EPS, ROACE and sustainability targets over the period have been met, together with additional shares that represent the dividends that would have been paid during the performance period on the restricted shares that have been released.
The total award vesting is the sum of the awards for TSR, EPS, ROACE and sustainability targets. Where performance is below the threshold point for any performance condition, then no part of the award vests in relation to that performance condition. Between the threshold point and the maximum, the award vests on a sliding scale basis.
The table below summarises the performance criteria for the 2023 award, which is due to vest on 29 April 2026.
Threshold1 | Maximum (100%) | ||||||||
|---|---|---|---|---|---|---|---|---|---|
Performance target | % of award vesting | Performance target | % of award vesting | Achievement | Level of vesting (% maximum) | ||||
Relative TSR performance | Median performance against peer group | 6% | Upper quartile performance against peer group | 30% | Ranked between median and upper quartile performance against peer group (41.8% and ranked 40th) | 16.17% | |||
Adjusted EPS2 | 5% per annum (23.61p) | 9% | 15% per annum (31.01p) | 45% | 33.93p2 | 45% | |||
ROACE3 | 11% | 3% | 15% | 15% | 16.0%3 | 15% | |||
Sustainable product development | 4% | 2% | 5% | 10% | 1.2% | 0% | |||
Total | 76.17% | ||||||||
1 Threshold is 20% of maximum.
2 Based on excluding MEL losses and adjusting for a constant tax rate of 19%.
3 ROACE excludes MEL.
Based on the above level of performance, the 2023 LTIP will vest at 76.17%. The Committee considered the formulaic out-turns under the LTIP relative to Group and individual performance and determined that no discretion should be exercised.
Scheme interests granted during 2025 (audited)
The table below sets out details of scheme interests granted to the Executive Directors during 2025:
Type of award | Date of grant | Number of shares granted | Face value¹ (£) | |||||
|---|---|---|---|---|---|---|---|---|
R Cox | Deferred bonus2 | 23.04.2025 | 34,770 | 88,177 | ||||
G McGrath | 26,816 | 68,006 |
Type of award | Date of grant | Number of shares granted | Face value1 (£) | Face value (% of salary) | Threshold for vesting (% of face value) | Performance condition | End of performance period | |
|---|---|---|---|---|---|---|---|---|
R Cox | LTIP3 (conditional shares) | 23.04.2024 | 262,272 | 665,123 | 150 | 20% of maximum (further details set out below) | 35% based 45% on adjusted EPS compound growth,6 15% on ROACE7 and 5% on sustainable product development.8 | 31.12.2027 |
G McGrath | 47,3844 | 120,166 | 150 |
1 Face value calculated using the five working day average share price before the grant date (£2.536).
2 Awards vest on the third anniversary of grant. There are no performance conditions for these awards.
3 Award is subject to a three-year performance period and, subject to performance, is released after a two-year post-vesting holding period.
4 The award for G McGrath was pro-rated to reflect his period of active service during the performance period.
5 Relative TSR growth is measured based on Zotefoams' ranking against the FTSE SmallCap Index (excluding investment trusts). The threshold point for relative TSR performance is ranked median against the peer group, where 7% of the award will vest, to upper quartile ranking against the peer group, where the maximum of 35% of the award will vest.
6 Adjusted EPS is the EPS for the financial year ending 31 December 2027. The threshold point is 5% p.a. compound growth, where 9% of the award will vest, to the maximum 15% p.a. compound growth, where 45% of the award will vest. In line with the approach for previous LTIP awards, the EPS targets have been set based on a constant tax rate reflecting the significant deviation of the reported tax rate. The Committee retains the discretion to override this where it considers it appropriate.
7 Return on average capital employed (ROACE) is defined as operating profit before exceptional items for the year, divided by the average sum of its equity, net debt and other non-current liabilities for the beginning and end of the year. This measure excludes acquired intangible assets and their amortisation cost. The threshold point is average ROACE of 15%, where 3% of the award will vest. Maximum vesting occurs for average ROACE of 19%, where 15% of the award will vest.
8 Sustainable product development is defined as the development of products valued by Zotefoams’ customers for their use-phase resource efficiency (defined by the Sustainability Accounting Standards Board) as a product that, through its use, can be shown to improve energy efficiency, eliminate or lower greenhouse gas (GHG) emissions, reduce raw materials consumption, increase product longevity or reduce water consumption. The threshold point is 5% of revenue, where 1% of the award will vest, to the maximum of 6% of revenue, where 5% of the award will vest.
Total pension entitlements (audited)
The Zotefoams Defined Benefit Pension Scheme (the “DB Scheme”) was closed to future accrual with effect from 31 December 2005. From that date, all active members ceased to accrue further benefits and became entitled to preserved pensions payable from their normal retirement age, or immediately where the member had already reached normal retirement age. While the Defined Benefit Share Scheme remains in force for legacy members, it no longer applies to any Directors.
Payments made to past Directors (audited)
Further to the announcement on 3 March 2025, G McGrath stepped down as Group CFO and as a Director of Zotefoams with effect from 31 October 2025. He remained an employee until 28 February 2026 and was paid his salary and provided with his contractual benefits in the usual way up to this date.
The remuneration he received for the portion of the year for which he was a Director (i.e. to 31 October 2025) is disclosed in the single figure table. The following arrangements applied for the period from 1 November to 31 December 2025.
Salary, benefits and pension continued to be paid until 31 December 2025. This amounted to £48,067 in respect of salary, £2,496 in respect of benefits and £6,129 in respect of pension.
He was entitled to receive a bonus for 2025, pro-rated for the period to 31 October 2025. The performance outcomes are shown here. The value of the bonus received in relation to this period was £237,930, of which one-third is subject to deferral in the usual way. For the avoidance of doubt, G McGrath did not receive a bonus in respect of the period from 1 November to 31 December 2025.
Payments for loss of office (audited)
G McGrath
The arrangements in connection with the cessation of G McGrath stepping down as Group CFO and as a Director of Zotefoams are set out above (in the Payments to past Directors section) and below.
G McGrath did not receive any payment in lieu of notice.
The Committee exercised its discretion to determine that G McGrath was a “good leaver” for the purposes of determining the treatment of his outstanding DBSP, LTIP and ASOP incentive awards. His outstanding DBSP awards were retained and will vest on their usual vesting dates with no acceleration. His outstanding LTIP awards, granted in 2023 and 2024, will vest on their usual vesting dates, pro-rated for the period to 31 October 2025 and tested for performance in the usual way.
A contribution of £3,000 plus VAT was made towards his legal fees in relation to the settlement agreement.
He received no other remuneration payments or payments for loss of office as a consequence of stepping down from the Board.
He will comply with the post-employment shareholding requirement for the period of two years from ceasing to be a Director of the Company.
Statement of Directors’ shareholding and share interests (audited)
In line with the Remuneration Policy adopted at the 2023 AGM, the Executive Directors are required to hold shares in the Company equivalent to 200% of base salary, with a five-year period to build up this holding from appointment to the Board. Executive Directors are expected to retain their full shareholding requirement for one year post cessation of employment and 50% for two years after leaving, unless the shares were acquired from LTIP and DBSP awards granted from 1 January 2023. If the shares were acquired from LTIP and DBSP awards granted from 1 January 2023, Executive Directors are expected to retain their full shareholding requirement for two years post cessation of employment.
Throughout 2025, G McGrath complied with the Policy, holding 337% of base salary at 31 December 2025. R Cox and N Wright joined the Company in 2024 and 2025 respectively. As at 31 December 2025, R Cox held 104% of base salary and N Wright held 0% of salary.1
1 Includes shares owned outright and interests in share incentive scheme without performance conditions. Calculated on the basis of the average share price over the three months to 31 December 2025 of £4.06.
The tables below set out the Directors’ interests (including those of their connected persons) in Zotefoams shares as at 31 December 2025. There were no changes in the Directors’ interests between the year end and the date of this report.
Executive Directors
Shares owned outright¹ | Interest in share incentive schemes without performance conditions2 | Interest in share incentive schemes with performance conditions3 | |
|---|---|---|---|
R Cox | 11,938 | 34,770 | 416,279 |
G McGrath | 103,184 | 111,269 | 151,754 |
N Wright | – | – | – |
1 Includes Partnership Shares, Dividend Shares and vested Matching Shares under the SIP.
2 Comprises: vested Company Share Option Plan awards, DBSP shares, unvested Matching Shares under the SIP, the unvested portion of the 2023 LTIP awards due to vest on 29 April 2026 and the unvested portion of the 2021 and 2022 LTIP awards.
3 Comprises: unvested LTIP shares.
Non-Executive Directors
Shares owned outright | |
|---|---|
J Carling | 3,323 |
L Drummond | 14,723 |
D Robertson | 7,302 |
M Swift | 11,827 |
C Wall | 7,936 |
Scheme interests (audited)
The table below provides details of the current position of outstanding awards made to the Executive Directors who served in the year under review:
Scheme1 | As at 31 Dec | Date of exercise or release | Granted during the year | Exercised or released | Lapsed or cancelled | As at 31 Dec | Market price on exercise date | Exercise price | Date from which exercisable | Expiry date | |
|---|---|---|---|---|---|---|---|---|---|---|---|
R Cox | LTIP (2024) | – | – | 154,007 | – | – | 154,007 | – | – | 08.05.2027 | NA |
SIP2 | 30 | – | 19 | – | – | 49 | – | – | – | – | |
LTIP (2025) | – | – | 262,272 | – | – | 262,272 | – | – | 23.04.2028 | NA | |
DBSP (2025) | – | – | 34,770 | – | – | 34,770 | – | – | 23.04.2028 | NA | |
G McGrath3 | CSOP | 10,344 | – | – | – | – | 10,344 | – | £2.90 | 05.04.2019 | 05.04.2026 |
LTIP (2020) | 20,154 | – | – | (20,154) | – | – | – | – | 21.09.2023 | NA | |
LTIP (2021) | 53,673 | – | – | – | – | 53,673 | – | – | 26.04.2024 | NA | |
LTIP (2022) | 105,910 | – | – | – | (24,921) | 80,989 | – | – | 29.04.2025 | NA | |
LTIP (2023) | 82,487 | – | – | – | (4,583) | 77,904 | – | – | 18.04.2026 | NA | |
LTIP (2024) | 100,167 | – | – | – | (38,954) | 61,213 | – | – | 08.05.2027 | NA | |
LTIP (2025) | – | – | 47,384 | – | – | 47,384 | – | – | 23.04.2028 | NA | |
DBSP (2021) | 2,036 | – | – | (2,036) | – | – | – | – | 29.04.2025 | NA | |
DBSP (2022) | 10,323 | – | – | – | – | 10,323 | – | – | 18.04.2026 | NA | |
DBSP (2023) | 19,223 | – | – | – | – | 19,223 | – | – | 08.05.2027 | NA | |
DBSP (2024) | – | – | 26,816 | – | – | 26,816 | – | – | 23.04.2028 | ||
SIP2 | 1,052 | – | 140 | – | – | 1,192 | – | – | – | NA |
1 Details of the performance conditions applying to each LTIP award can be found in the Directors’ Remuneration report for the relevant year.
2 Matching Shares under the SIP. Participants buy Partnership Shares monthly under the SIP. The Company provides one Matching Share for every four Partnership Shares purchased. These Matching Shares are first available for vesting three years after being awarded or on leaving if the person is considered to be a “good leaver”.
3 G McGrath stepped down from the Board on 31 October 2025 and left the employment of Zotefoams plc on 28 February 2026. Share awards were pro-rated to 31 October 2025 as noted above in the Payments for loss of office section to reflect a reduced performance period.
Details of Directors’ service contracts and appointment letters (unaudited)
The following table sets out the details of the service contracts and appointment letters for the Directors as at 31 December 2025. Copies of the Directors’ service contracts and appointment letters are available for inspection at the Company’s registered office.
Director | Date of current service contract or appointment letter1 | Unexpired terms at |
|---|---|---|
J Carling | 1 April 2023 | 5 months |
R Cox | 2 April 2024 | – |
N Wright | 22 September 2025 | – |
L Drummond | 17 January 2023 | 5 months |
M Swift | 29 September 2023 | 5 months |
C Wall | 1 April 2023 | 5 months |
J Clarke | 28 October 2025 | – |
1 Appointment letters are currently for terms of three years. Non-Executive Directors’ appointments and subsequent re-appointments are subject to annual re-election by shareholders at each AGM.
External appointments
During 2025, Executive Directors did not receive any fees from external appointments.
Change in remuneration of Group Directors and employees (unaudited)
The table below illustrates the percentage change in salary and benefits for the Group Directors from the prior years compared with the average percentage change for the UK workforce.
The employee subset consists of an average of the UK workforce for the period under review. This subset has been selected as this employee representative group is the largest group of employees within the organisation. The Non-Executive Directors receive no taxable benefits or annual bonus.
% change in base salary (2025 to 2024) | % change in taxable benefit (2025 to 2024) | % change in annual bonus UK employees only (2025 to 2024) | % change in base salary (2024 to 2023) | % change in taxable benefit (2024 to 2023) | % change in annual bonus UK employees only (2024 to 2023) | |
|---|---|---|---|---|---|---|
R Cox1 | 36.9 | (56.6) | 65.9 | – | – | – |
G McGrath | 4.1 | 1.4 | 15.5 | 9.0 | 6.2 | (14.8) |
J Carling | 12.6 | 9.0 | – | – | ||
L Drummond2 | 9.8 | 47.9 | – | – | ||
D Robertson | 11.7 | 9.7 | – | – | ||
M Swift2 | 11.7 | 27.2 | – | – | ||
C Wall | 10.2 | 9.0 | – | – | ||
Average employee | 8.3 | (7.4) | (18.3) |
1 R Cox joined the Company on 2 April 2024 and the increase in base salary and bonus reflect the part-year amount in 2024. The decrease in benefits reflects the relocation allowance received in 2024 only.
2 L Drummond was appointed to the Board in January 2023. M Swift was appointed to the Board in September 2023. Their 2024 increases reflect the fact that they were only paid their respective fees in 2023 for part of the year.
3 N Wright and J Clarke have been excluded from the table as there is no prior year comparative.
The UK employees’ salary review is negotiated with the unions and a 3% increase was agreed in relation to 2025. For 2026, the annual salary increase for UK employees is still pending, but will be effective 1 April 2026.
CEO pay ratio
Companies with more than 250 employees are required to publish the CEO-to-employee pay ratio. The ratio compares the total remuneration of the Group CEO against the remuneration of the median employee, and employees in the lower and upper quartiles. These pay ratios form part of the information that is provided to the Committee on broader employee pay policies and practices. The Committee has considered the pay data and concluded that the current ratio is proportionate and allows the business to retain high-calibre individuals capable of delivering the growth strategy.
The ratios set out below were calculated using the Option A methodology, which uses the pay and benefits of all UK employees as it provides the most accurate information and representation of the ratios. The employee pay data used was based on the total remuneration of all Zotefoams plc’s full-time employees as at 31 December 2025. The Group CEO’s total remuneration has been taken from the single total figure of remuneration for 2025, as disclosed here.
The Committee considers that the median CEO pay ratio is consistent with the relative roles and responsibilities of the Group CEO and the identified employees. Base salaries of all employees, including our Executive Directors, are set with reference to a range of factors, including market practice, location, experience and performance in role. The Group CEO’s remuneration package is weighted towards variable pay (including the annual bonus, LTIP and DBSP) due to the nature of the role, which means that the ratio is likely to fluctuate, depending on the outcomes of incentive plans in each year. The increase in the total pay ratio at the 25th, 50th and 75th percentiles since 2021 is due to no LTIP vesting, low annual bonus pay-out in 2021 and higher LTIP and annual bonus outcomes in both 2022 and 2023.
Year | Method | 25th percentile pay ratio | 50th percentile pay ratio | 75th percentile pay ratio |
|---|---|---|---|---|
2025 – Base salary | Option A | 12:1 | 10:1 | 8:1 |
2025 – Total pay | 23:1 | 20:1 | 15:1 | |
2024 – Total pay | 30:1 | 25:1 | 19:1 | |
2023 – Total pay | 30:1 | 25:1 | 19:1 | |
2022 – Total pay | 23:1 | 20:1 | 15:1 |
Pay data (£’000) | Base salary | Total pay |
|---|---|---|
CEO’s remuneration | 440,186 | 930,980 |
UK employees 25th percentile | 36,733 | 40,301 |
UK employees 50th percentile | 42,310 | 47,081 |
UK employees 75th percentile | 55,000 | 61,210 |
Historical TSR performance and Group CEO remuneration outcomes (unaudited)
The graph below compares the TSR of Zotefoams against the FTSE SmallCap Index (excluding investment trusts), which is considered the most appropriate choice of index by the Remuneration Committee due to the Group’s size and membership of this index.
Workforce alignment
While it remains important to set base salaries on a market-competitive basis reflective of the size and complexity of the business, the Committee has considered alignment of executive remuneration with workforce reward structures.
The table below illustrates the Group CEO’s single figure for total remuneration, annual bonus pay-out and LTIP vesting as a percentage of maximum opportunity.
Group CEO’s single total figure of remuneration (£) | Annual bonus pay-out | LTIP vesting (% of maximum) | |
|---|---|---|---|
2025(R Cox) | 930,980 | 100.0 | NA |
2024 (R Cox) | 648,339 | 83.0 | NA |
2024 (D Stirling) | 651,851 | 67.0 | 76.4 |
2023 (D Stirling) | 1,089,0671 | 95.0 | 70.0 |
2022 (D Stirling) | 757,851 | 91.6 | 34.7 |
2021 (D Stirling) | 441,369 | 22.0 | 0.0 |
2020 (D Stirling) | 491,548 | 28.0 | 23.5 |
2019 (D Stirling) | 637,473 | 37.1 | 47.0 |
2018 (D Stirling) | 794,905 | 35.1 | 100.0 |
2017 (D Stirling) | 676,816 | 84.4 | 58.0 |
2016 (D Stirling) | 497,545 | 55.0 | 37.7 |
2015 (D Stirling) | 418,568 | 44.4 | 50.0 |
1 The Group CEO’s single total figure of remuneration for 2023 has been restated.
Relative importance of spend on pay (unaudited)
The table below illustrates the year-on-year change in total Executive Directors’ remuneration and Executive Directors’ remuneration compared with profit after tax and distributions to shareholders for 2024 and 2023.
% change 2024/2025 | 2025 £’000 | 2024 £’000 | |
|---|---|---|---|
Total remuneration¹ | 9.3% | 34,238 | 31,324 |
Executive Directors’ remuneration2 | (21.1)% | 1,924 | 2,132 |
Profit after tax | – | 22,639 | (2,755) |
Shareholder distributions3 | 4.8% | 3,713 | 3,542 |
1 Social security costs paid by the Group have been excluded from this figure.
2 The Executive Directors’ remuneration for 2024 has been restated to reflect the restated single total figure of remuneration for 2024.
3 Shareholder distributions refer to the dividends paid during the year.
Committee role and advisers (unaudited)
The Group has established a Remuneration Committee, which is constituted in accordance with the recommendations of the UK Corporate Governance Code. J Carling, L Drummond, M Swift, J Clarke and C Wall were members of the Committee as at 31 December 2025 and to the date of this report. All the members are independent Non-Executive Directors, with the exception of L Drummond, who was independent on appointment as Chair of the Company. The Committee was chaired by M Swift throughout the year. The Committee’s Terms of Reference were last updated in August 2023 and may be found on the Group’s website.
None of the Committee members have any personal financial interest (other than fees paid as disclosed on page 88 and as shareholders) in the Company, nor do they have any interests that may conflict with those of the Group, such as cross-directorships. None of the Committee members are involved in the day-to-day management of the business. The Committee makes recommendations to the Board on remuneration matters. No Director is involved in any decision concerning their own remuneration.
The Remuneration Committee met four times in 2025, with full attendance at each meeting. The Company Secretary acts as secretary to the Committee.
In 2025, the Remuneration Committee carried out the following work:
- considered changes to the Directors’ Remuneration Policy, with proposals submitted for shareholder consultation in early 2026
- approved the remuneration package of the new Group CFO
- approved the terms of a settlement agreement with the departing Group CFO
- completed a review of the remuneration arrangements for the Executive Directors and the wider workforce
- approved the 2024 Directors’ Remuneration report
- considered and approved the annual bonus for the Group Executive team
- considered and approved the grant of awards under the LTIP and the DBSP in 2025 and the vesting of awards made in 2022 under the LTIP
- considered the salary levels of the Group Executive team and awarded pay rises in line with the general workforce pay rise level
- approved appropriate market-level remuneration for new members of the Group Executive team
- approved the remuneration package of the new Company Secretary
- considered the performance targets for the 2025 Executive Directors’ bonus and LTIP awards.
Deloitte LLP (Deloitte) was appointed to provide advice to the Remuneration Committee in relation to Directors’ remuneration following a retendering exercise in 2022, and continued to work with the Committee in respect of general remuneration advice. Deloitte is a member of the Remuneration Consultants Group and adheres to its Code on Executive Remuneration Consulting in the UK. The Committee is comfortable that Deloitte does not have connections with Zotefoams plc that may impair its objectivity and independence. Deloitte also provided remuneration advice to the Company’s management during 2025.
Total fees for advice provided in respect of material assistance to the Committee amounted to the following:
2025 (£) | 2024 (£) | |
|---|---|---|
Deloitte LLP | 55,900 | 36,250 |
Total | 55,900 | 36,250 |
Shareholder voting (unaudited)
The table below sets out the results of the votes received on the Directors’ Remuneration Policy approved at the 2023 AGM as well as the 2024 Directors’ Remuneration report approved at the 2025 AGM:
Directors’ Remuneration Policy | % | Report on remuneration | % | |
|---|---|---|---|---|
Votes in favour | 30,838,381 | 95.22 | 26,191,150 | 99.44 |
Votes against | 1,530,762 | 4.73 | 147,866 | 0.56 |
| Total votes cast | 32,369,143 | 100.00 | 26,339,036 | 100.00 |
Votes withheld | 1,101 | – | 13,122 | – |