Letter from the Remuneration Committee Chairman

Christopher richards

Dear Shareholder

On behalf of the Board I am pleased to present Dechra's Remuneration Report for the year ended 30 June 2013.

During the year the Remuneration Committee:

  • reviewed the Chief Executive Officer's remuneration package;
  • reviewed the Long Term Incentive Plan ("LTIP") performance metrics; and
  • determine remuneration for the new Chief Financial Officer, Anne-Francoise Nesmes.

In respect of Ian Page's remuneration package the Committee believed that a repositioning was required in order to reflect his experience, performance and overall contribution to the Group. With regards to the proposed changes to the LTIP performance metrics, the Committee was of the opinion that the introduction of another performance measure (alongside relative TSR) would allow for a more balanced assessment of success and reward of long term shareholder value.

The Committee consulted with the Company's major Shareholders on the proposed changes and, taking into account feedback from investors, a number of changes were made to both Ian Page's remuneration package and the LTIP performance criteria. Detail in respect of these changes are contained within the following report. The Committee believes that these changes align and focus remuneration to reward longer term, sustainable performance.

During the year Dechra appointed a new Chief Financial Officer, Anne-Francoise Nesmes. Details of her remuneration package are provided in the following report including details of the one-off recruitment reward which it was agreed to grant her as partial compensation for the loss of share options granted to her by her previous employer. The Board considers Anne-Francoise as pivotal in assisting Ian Page to direct the Group to its next strategic stage and considers that it was in the best interests of the Company to create an overall recruitment package that would attract her to the role within Dechra and to incentivise and motivate her going forward during her career with the Company.

It should be noted that all the Executive Directors and Non-Executive Directors have agreed to waive an increase to their respective salaries and fees for the 2013/2014 financial year. An above inflation fee increase has been made to the Chairman and the reasons for this are detailed in the following report. Below Board level the average pay increase across the Group was 1.5%.

During the coming months, the Committee will review LTIP performance metrics in light of the disposal of the Services Segment and will consult with major Shareholders as appropriate.

Finally, the Committee and I believe that ongoing dialogue with our major Shareholders is of key importance, should you have any queries in relation to this report please do not hesitate to contact myself or the Company Secretary.

Dr Christopher Richards
Remuneration Committee Chairman