Mccoll's Regulatory News (MCLS)

22 March 2018

McColl's Retail Group plc (the "Company")

Grant of Long Term Incentive Plan Awards

Notification of Transactions by Executive Directors and Persons Discharging Managerial Responsibilities ("PDMRs")

The Company announces the grant of LTIP Awards on 21 March 2018 to the following Directors of the Company in accordance with the rules of the McColl's Retail Group plc Long Term Incentive Plan (the "LTIP").

The above awards, which are equivalent in each case to 100% of the relevant individual's base salary (based on the mid-market closing price for McColl's shares on 20 March 2018, being the day immediately preceding the date of grant) and are subject to a further holding period of two years following vesting, will vest subject to the following performance conditions measured over the three year performance period commenced 27 November 2017:

These EPS performance targets represent cumulative growth of between 11.3% and 20.9% per annum anticipated to be achieved through delivery of a number of different factors, including a focus on improving like for like sales. A 50% pay out against the EPS performance condition would be achieved for an increase in EPS over the three year performance period equivalent to 14.6% p.a.

The awards are to be satisfied by newly issued shares. The awards will vest subject to the rules of the LTIP and the Remuneration Committee's determination of the extent to which the performance conditions applicable to the award have been satisfied.

Intention to Grant a Further LTIP Award

As reported in the Company's 2017 Annual Report & Accounts, the Remuneration Committee proposes to increase the quantum of LTIP awards to Executive Directors to 150% of base salary for 2018. This increase in LTIP opportunity is intended to improve the competitiveness of our overall remuneration packages without increases to fixed pay. Given the outstanding recent performance of the Company, and the Board's desire to continue this performance, and the increase in size and complexity of the Group in recent years, the Committee is mindful of the importance of retaining and motivating our successful Directors. The business has enjoyed value-creating deals and significant outperformance of retail comparators and these have served to illustrate the high degree of talent within the executive team, each member of which is integral to the continued delivery of McColl's long-term strategy. The intention behind the proposed increase in LTIP potential is to ensure that Executives remain motivated over the longer term and that their interests are aligned with those of our shareholders. By opting to increase the element of our remuneration arrangements which is most closely linked to the performance of the Company over the longer term, the Committee is ensuring the increase will only pay out should strong performance be maintained.

This proposal is consistent with the Company's current remuneration policy limits but represents a change in implementation of that policy. Existing practice has been to grant LTIP awards to Executive Directors equivalent to 100% of salary.

The Remuneration Committee has communicated and engaged with investors representing approximately 65% of all McColl's shares as part of a comprehensive shareholder consultation on changes to the Company's remuneration policy. The Committee was pleased to note that responses to the consultation indicated broad support for the proposals. However, notwithstanding that shareholder consent is not technically required to implement the change at the current time, the Committee recognises that the increase in LTIP potential represents a change in practice and is a matter on which shareholders will rightly have a view. Accordingly, the Committee has decided that the increase should not be implemented in advance of submitting its remuneration proposals to shareholders for approval at the Annual General Meeting on 12 April 2018. It is intended, subject to the resolutions on the Remuneration Report and Remuneration Policy being passed at the Annual General Meeting, to grant a second tranche of LTIP awards after publication of the 2018 interim results. This second tranche would be equivalent to a further 50% of base salaries in order to bring the full LTIP awards granted this year to Executive Directors to 150% of base salary.

The Remuneration Committee is mindful of the need to balance offering this increased opportunity to Executive Directors with appropriately stretching performance targets. At the time of publication of the 2017 Annual Report and Accounts, the performance targets for the 2018 LTIP awards had not been agreed but, consistent with the Committee's commitment to full transparency, and further to the above disclosure on targets applying to the first tranche of LTIP awards, the Committee is now able to confirm that the performance conditions which would apply to this second tranche of LTIP awards would be as follows:

Relative to the first tranche of LTIP awards, the EPS threshold target for the second tranche is significantly higher, with a 50% pay out against the EPS performance condition only achieved if increases in EPS over the three year performance period are equivalent to 16.9% p.a. By maintaining a consistent stretch target for EPS between the first and second tranches, the Committee believes the targets remain motivational for our management team but will avoid encouraging excessive risk-taking.

Achievement of threshold on this second tranche would be consistent with external forecasts for the Group and accordingly the Committee believe that achievement at, or close to, this level, shareholder expectations for the business would have been met. Delivery of results in line with current external forecasts would result in a pay out across both LTIP awards for the year of approximately 45% of salary out of the maximum 105% proposed for the EPS element. The remaining potential 45% of salary out of the proposed 150% award will be based on the relative TSR performance condition.

The division of the 150% LTIP award in the current year is intended to enable shareholder views on executive remuneration to be ascertained at the Annual General Meeting before implementing the increased LTIP opportunity. In future years such a split is unlikely to be repeated and, that being the case, one suitably stretching set of performance conditions would then apply to the entire award.

The information set out below is provided in accordance with the requirements of Article 19(3) of the EU Market Abuse Regulation No 596/2014.

About McColl's Retail Group

McColl's is a leading neighbourhood retailer, with an estate of 1,611 managed convenience stores and newsagents. We operate 1,279 McColl's branded convenience stores as well as 332 newsagents branded Martin's across the UK, except in Scotland where we operate under our heritage brand, RS McColl. Our 22,000 dedicated colleagues serve over five million customers every week, and we are the largest operator of Post Offices in the UK, with 588 in-store counters/branches.

Enquiries

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