The following section provides detail of remuneration earned by the Directors during the year in line with the Directors' Remuneration Policy approved by the shareholders at the Annual General Meeting held on 20 October 2017, along with details of how the Policy to be proposed to the shareholders at the 2020 Annual General Meeting will be applied in the 2021 financial year. The sections of the 2020 Annual Report on Remuneration that are audited by PricewaterhouseCoopers LLP (PwC) are indicated below.

Executive Directors' Remuneration (Audited)

Single Total Figure of Remuneration

The table below sets out the total remuneration for each person who has served as an Executive Director in the period ended 30 June 2020. The table shows the remuneration for each such person in respect of the year ended 30 June 2020 and, if they were an Executive Director in the year ended 30 June 2019, their remuneration in that year:

Executive Director	Year	Salaries £000	Benefits £000	Annual Bonus £000	Long Term Incentive £000	Pension £000	Total £000	Total Fixed £000	Total Variable £000
Ian Page	2020	517	59	145	806	72	1,599	648	951
	2019	500	60	360	2,045	70	3,035	630	2,405
Paul Sandland	2020	200	14	56	N/A	8	278	222	56
	2019	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
Tony Griffin	2020	330	9	92	244	35	710	374	336
	2019	309	10	223	582	34	1,158	353	805
Total 2020	2020	1,047	82	293	1,050	115	2,587	1,244	1,343
Total 2019	2019	809	70	583	2,627	104	4,193	983	3,210

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

1. Salaries – this is the cash paid or received in respect of the relevant period.
2. Benefits – this represents the taxable value of all benefits paid or received in respect of the relevant period. The benefits provided include the use of a fully expensed car, medical cover and life assurance. SAYE options granted in the year have also been included in the benefits column in respect of any year in which there was a grant. These have been valued using the fair value as per note 27 to the Group's financial statements.
3. Annual Bonus – this is the amount of cash bonus paid in respect of the financial year.
4. Long Term Incentives – this is the value of any long term incentives vesting where the performance period ended in the relevant period.
5. Pension – this is the cash value of the employer contribution to the Group stakeholder personal pension scheme or, in the case of Tony Griffin, defined contribution pension plan, plus the value of any salary supplement paid.
6. The 2019 value assigned to the long term incentives for Ian Page and Tony Griffin was shown in last year's Annual Report as an estimate, with the value determined by reference to a share price of £27.085 (being the average market value of a share over the last quarter of the Company's financial period ended on 30 June 2019). This has been restated to show the actual value determined by reference to a price of £27.92 (being the market value of a share on 19 September 2019, the date of vesting).
7. Tony Griffin's remuneration is paid in Euros but reported in Sterling for the purpose of this table. The exchange rate used for this purpose was 1.1345 for 2019 and 1.096 for 2020. His salary was €361,632 for 2020 (reflecting two months at a salary of €352,813 and ten months at a salary of €363,396) and €351,100 for 2019 (reflecting two months at a salary of €342,537 and ten months at a salary of €352,813).
8. Paul Sandland was appointed as an Executive Director on 30 October 2019 and the remuneration reported in the single figure table is from this date.

Additional Disclosures in Respect of the Single Figure Table

Salaries and Fees

As disclosed in the Directors' Remuneration Report in the 2019 Annual Report, the Executive Directors' base salaries were reviewed in September 2019, in alignment with the Group's performance development review calendar to provide a clearer link between performance and reward.

Executive Director	2020 Salary	2019 Salary	% increase	Effective from
Ian Page	£520,000	£500,000	4%	1 September 2019
Tony Griffin	€363,396	€352,813	3%	1 September 2019

Both Ian Page's and Tony Griffin's salary increases were broadly in line with the average range of increases awarded to employees in the wider Group. Ian Page had previously notified the Committee that he did not wish to receive a pay increase in 2018 and 2017.

The Committee's approach to Executive Directors' salaries for the year ending 30 June 2021 is summarised on Implementation of the Directors' Remuneration Policy in the Year Ending 30 June 2021.

Benefits

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

Annual Bonus

The Company operates an annual cash incentive scheme for the Executive Directors. Annual bonuses were awarded by the Committee in respect of the 2020 financial year having regard to the performance of the Group and personal performance objectives for the year. The amount achieved for the year ended 30 June 2020 against targets for the 2020 financial year is set out below. The Committee considers that the level of payout is reflective of the overall performance of the Group in the year and is appropriate.

					Bonus earned (percentage of salary)
					Ian Page	Paul Sandland	Tony Griffin
Underlying profit before tax (up to 90% of salary)	Threshold (10% of salary) £112.7 million	Target (50% of salary)£118.7 million	Maximum (90% of salary) £130.5 million	Actual (at budgeted rates)£113.9 million	18%	18%	18%
Personal Objectives (up to 10% of salary)	Each Executive Director could earn a bonus of up to 10% of salary by reference to the achievement of personal objectives based on key aspects of delivering the Group's strategy (see table below)				10%	10%	10%

The personal objectives of each Executive Director for the year ended 30 June 2020 are set on an individual basis and are closely linked to the corporate, financial, strategic and other non-financial objectives of the Company. This enables the Committee to reward the Executive Directors' contribution to both the annual financial performance and the achievement of specific objectives. A summary of the objectives is set out below along with a description of the performance against them. The Committee reviewed the performance of each Executive Director against their specific objectives based on a report by the Chief Executive Officer and, with respect to the Chief Executive Officer, a report by the Chairman.

Director	Link to Strategic Enabler	Objective	Performance
Ian Page	Acquisition	Build the pipeline of acquisition opportunities	Completed the acquisition of Ampharmco and the product acquisition of Mirataz and post year end the Osurnia product acquisition
	Manufacturing	Drive improved continuity of supply and oversee management controls	Significant investment in organisation design, capital investments approved and in progress
	Geographical Expansion	Support and maintain close focus on the growth of the International business	Key milestones achieved in the ongoing integration of acquired international businesses
	People	Shape and enhance the Senior Executive's capability to support and deliver future growth Onboard new Chief Financial Officer	New Chief Financial Officer appointed and restructured Senior Executive Team
	People	Sponsor and embed the stakeholder engagement agenda into the organisation	Key milestones achieved, however some disruption to the plan due to COVID-19
Paul Sandland	Finance	Lead re-financing and Bond Placing	Private Placement completed
	IT	Take leadership of Group IT Function	Restructure complete and redeveloping the strategy
	IT	Drive efficiencies through implementation of technology solutions	Hyperion milestones achieved, approved Global Payroll system, roll out commencing 2020
	Manufacturing	Support development of fit for purpose S&OP process	Improvement of on-time delivery and out of stock situation
	Shareholder	Effective engagement with shareholders in results presentations and in support of financing	Significant engagement due to Private Placement and Share Placing
Tony Griffin	Acquisition	Realise the planned synergies for AST Farma and Le Vet acquisitions	Incremental growth of sales and margin as products return to Dechra Sales team from Le Vet distributors
	People	Develop new European Marketing and Sales structures	Research carried out in terms of customer needs and implemented the pilot of Dechra 'Coach' sales team in France
	Customers	Progress the Corporatisation Plan	Conducted research with customers and rolling out new position of key account managers across Europe
	Manufacturing	Support Manufacturing and Supply Chain to ensure improved processes and more robust Sales and Operations planning	Restructured Supply and Demand teams preparing to implement Integrated Business Planning

Long Term Incentive Plan

The LTIP awards granted on 2 March 2018 are due to vest in September 2020. The performance targets for these awards are as follows: one third of the award is subject to a performance condition based on the Company's total shareholder return (TSR) performance relative to the constituent companies of the FTSE 250 index (excluding investment trusts) over the performance period as follows:

TSR performance	Vesting percentage
Below median	0%
Median	class="A3"25% of the TSR portion will vest
Between median and upper quartile	Pro rata vesting between 25% and 100% based on the Company's ranking in the comparator group
Upper quartile	100% of the TSR portion will vest

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

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

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

The Company's TSR performance was over 59.97% compared with a 25.38% TSR for the upper quartile company in the comparator group (FTSE 250 Index (excluding investment trusts)). Therefore, 100% of the TSR element will vest. In addition, the compound annual growth in the Group's underlying diluted EPS for the performance period was 12.7%. Accordingly, 60.6% of the EPS element will vest. Overall, taking into account that ROCE performance for 2020 was 15.4%, the LTIP awards will vest as to 73.7% of the maximum opportunity.

The Committee considered that the level of vesting reflected the underlying performance of the Group over the period.

In the single figure table on Single Total Figure of Remuneration the value attributable to this award is calculated by multiplying the number of shares in respect of which the award is expected to vest by £27.404 (being the average market value of a share over the last quarter of the Company's financial period ended on 30 June 2020). As part of his award, Ian Page was granted a tax qualifying option over 1,197 shares at an exercise price of £25.06 per share. The option was subject to the same performance conditions as applied to the LTIP award. If the tax qualifying option is exercised at a gain, the number of shares that may be acquired under the LTIP award is reduced by the same value so that the total pre-tax value of the LTIP award is not increased by the grant of the tax qualifying option; accordingly, the tax qualifying option is ignored when calculating the single figure table value.

The March 2018 awards were granted when the value of a share was £25.06 (being the three day average middle market quotation preceding the grant). The following table shows the amount of the award attributable to share price appreciation from that value to £27.404 (being the average market value of a share over the last quarter of the Company's financial period ended on 30 June 2020).

Executive Director	Number of shares in respect of which the Award is expected to vest	Amount of award attributable to share price at grant £000	Amount attributable to share price appreciation £000	Total award £000
Ian Page	29,409	737	69	806
Tony Griffin	8,916	223	21	244

Each award is subject to a two year holding period. Other than shares sold to satisfy tax liabilities arising in connection with the acquisition of shares or to fund the exercise price of the tax qualifying option, no shares acquired may be sold before the second anniversary of vesting. The Company has measures in place to prevent the shares from being sold or transferred during the holding period. During the holding period, the Executive Directors, as beneficial owners of the shares, will be entitled to any dividend payments and will be able to vote at any general meeting of the Company.

SAYE

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

The aggregate gain made by the Executive Directors on share options and LTIP awards exercised during 2020 was £2,625,303 (2019: £2,897,470).

Pension

Ian Page and Paul Sandland were members of the Dechra Pharmaceuticals PLC Group Stakeholder personal pension scheme throughout the year. Ian Page elected to receive his entire pension contributions as a salary supplement.

Tony Griffin was a member of the Basispensioen, a defined benefit pension plan established in the Netherlands up to 31 December 2018, the transfer value as at this date was €283,000. This was transferred to a defined contribution scheme. From 1 January 2019, Tony Griffin has received contributions to two defined contribution pension schemes (the existing defined contribution pension scheme and the defined contribution pension scheme which replaced the Basisipension) in the Netherlands in respect of earnings up to €100,000 and a salary supplement in respect of earnings above this amount.

Contributions made by Dechra Pharmaceuticals PLC on behalf of the Executive Directors during the year equated to no more than 14% of pensionable/base salary for both Ian Page and Tony Griffin. The contributions for Ian Page and Tony Griffin reflect long standing contractual entitlements, and not considered excessive in the context of their base salaries. These pension contributions will be aligned with the rate available to the UK wider workforce by the end of 2022 (this will include enhancing the UK wider workforce rate alongside a reduction in the rate for Executive Directors).

Prior to Paul Sandland's appointment as an Executive Director, as a member of the higher band of senior and professional employees within the UK Group with over five years' service, the employer contribution was 12% of his base salary. Following his appointment as an Executive Director, this pension contribution was reduced to 4% which is in line with the majority of our UK workforce.

Non-Executive Directors' Remuneration (Audited)

Single Total Figure of Remuneration

The table below sets out the total remuneration for each person who has served as a Non-Executive Director in the period ended 30 June 2020. The Chairman and the other Non-Executive Directors are paid a fee for their role. The table shows the remuneration for each such person in respect of the year ended 30 June 2020 and the year ended 30 June 2019:

	Additional responsibilities	Base fee £000		Additional fee £000		Total £000
		2020	2019	2020	2019	2020	2019
Tony Rice	Chairman and Nomination Committee Chair	129	126	5	5	134	131
Ishbel Macpherson	Senior Independent Director and Remuneration Committee Chair	52	50	15	13	67	63
Julian Heslop	Audit Committee Chair	52	50	10	10	62	60
Lawson Macartney		52	50	–	–	52	50
Lisa Bright*	Employee Engagement Designated Non-Executive Director	52	21	5	2	57	23
Alison Platt†		17	–	–	–	17	–
Total		354	297	35	30	389	327

* Lisa Bright was appointed on 1 February 2019.

†Alison Platt was appointed on 1 March 2020.

 

The Non-Executives are not eligible to participate in any of the Company's share schemes, incentive schemes or pension schemes.

The Senior Independent Director, Employee Engagement Designated Non-Executive Director and the chairmen of the Audit Committee, Nomination Committee and Remuneration Committee receive an additional fee for those roles. As disclosed in the Directors' Remuneration Report in the 2019 Annual Report, it had been agreed that there would be no changes to the additional fees, with the exception of the Remuneration Committee Chair which increased from £8,000 to £10,000. With regards to the base fees it was agreed to increase this as disclosed in the table below.

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

The Committee's approach to the Chairman's and Non-Executive Directors' fees for the year ending 30 June 2021 is summarised on Implementation of the Directors’ Remuneration Policy in the Year Ending 30 June 2021.

Further Information on Directors' Remuneration

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

Long Term Incentive Awards (Audited)

Awards were made under the Dechra 2017 Long Term Incentive Plan on 6 September 2019, as set out in the table below.

	Type of award	Maximum opportunity	Number of shares	Face value at grant*	% of award vesting at threshold	Performance Period
Ian Page	Nil cost option under the LTIP	200% of salary	35,087	£1,039,979	25%	1 July 2019 – 30 June 2022
Paul Sandland	Nil cost option under the LTIP	100% of salary	6,106	£180,982†	25%	1 July 2019 – 30 June 2022
Tony Griffin	Conditional award under the LTIP	100% of salary	10,984	£325,566	25%	1 July 2019 – 30 June 2022

*Based on a share price of £29.64 being the three day average middle market quotation preceding the grant

†Paul Sandland's award was granted before his appointment to the Board and was based on his pre-appointment salary

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

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

Two thirds of each award is subject to a performance condition based on the growth in the Group's underlying diluted EPS over the performance period. As discussed in the letter from the Remuneration Committee Chairman, the EPS targets have been considered in the light of transactions which have taken place in the year. As noted in the letter from the Remuneration Committee Chairman, the EPS for the final year of the performance period (the financial year to 30 June 2022) will be adjusted to reflect actual R&D costs associated with the Akston deal, recognising these were not included in the base year. The targets set out below are those which were originally set; as noted in the letter from the Remuneration Committee Chairman, it is our intention to increase the upper end of the EPS target by 1% to take into account the Mirataz and Osurnia acquisitions and the associated Share Placing.

EPS compound annual growth rate (CAGR)	Vesting Percentage
<8% CAGR	0%
8% CAGR	25% of the EPS portion will vest
CAGR between 8% and 16%	Pro rata vesting between 25% and 100%
>16% CAGR	100% of the EPS portion will vest

Both the TSR element and the EPS element are subject to an additional ROCE performance measure. Unless the Group's ROCE is 10% or more in the final year of the performance period, the awards will lapse in full regardless of TSR and EPS performance. Ian Page's and Tony Griffin's awards are subject to a two year holding period. Other than shares sold to satisfy tax liabilities arising in connection with the acquisition of shares, no shares acquired may be sold before the second anniversary of vesting. Paul Sandland's award was granted before his appointment to the Board and, consistent with other below Board LTIP awards, is not subject to a post-vesting holding period.

SAYE (Audited)

There were no SAYE options granted to Executive Directors during the year ended 30 June 2020.

Payments to Past Directors (Audited)

There were no payments to Past Directors during the period.

Payments for Loss of Office (Audited)

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

Dilution Limits

Awards granted under Company LTIP, Executive Share Option Schemes and SAYE Schemes are met by the issue of new shares when the awards/options are exercised. The Committee monitors the number of shares issued under each of these schemes and their impact on dilution limits. The Company's usage of shares compared to the Investment Association dilution limits as at 30 June 2020 is as follows:

Executive Share Plans	All Share Plans
Limit: 5%	Limit: 10%
Usage: 2.3%	Usage: 3.0%

Shareholdings (Audited)

Executive Directors

In respect of the financial year ended 30 June 2020, the Company's shareholding guidelines required Executive Directors to have acquired and retained half of any shares acquired under the LTIP and, if relevant, any recruitment award (after sales to cover tax) until such time as their holding has a value equal to 200% of salary. Shares which are vested, but which remain subject to a holding period and/or clawback, may count towards the holding requirement on a net of assumed tax basis. The holdings of each person who served as an Executive Director during the period ended 30 June 2020 and their families as at 30 June 2020 are as follows:

Name	Appointment date	Ordinary shares Number	Ordinary shares £000*	% of salary
Ian Page	13 June 1997	625,723	17,798	3,423
Paul Sandland	30 October 2019	5,069	144	48
Tony Griffin	1 November 2012	70,606	2,009	609

* Calculated using the share price as at 30 June 2020.

Executive Directors' Total Interest under Shares Schemes (Audited)

Awards held under the Long Term Incentive Plan (and, in the case of Paul Sandland, market value options) for each person who was a Director during the year ended 30 June 2020 are as follows:

	Award date	Type of award	Option price for market value options (£)	Number of shares as at 1 July 2019	Granted	Lapsed	Exercised	Number as at 30 June 2020	Status	Performance Period
Ian Page	19-Sep-16	LTIP	N/A	73,260	–	–	73,260	–	Vested and exercised in the year	2016–2019
	02-Mar-18	LTIP1	N/A	39,904	–	–	–	39,904	Unvested2	2017–2020
	26-Oct-18	LTIP	N/A	46,168	–	–	–	46,168	Unvested	2018–2021
	06-Sep-19	LTIP	N/A	–	35,087	–	–	35,087	Unvested	2019–2022
Tony Griffin	19-Sep-16	LTIP	N/A	20,858	–	–	20,858	–	Vested and exercised in the year	2016–2019
	02-Mar-18	LTIP	N/A	12,099	–	–	–	12,099	Unvested2	2017–2020
	26-Oct-18	LTIP	N/A	14,444	–	–	–	14,444	Unvested	2018–2021
	06-Sep-19	LTIP	N/A	–	10,984	–	–	10,984	Unvested	2019–2022
Paul Sandland	15-Sep-153	Approved	£9.75	923	–	–	–	923	Vested	2015–2018
	19-Sep-163	Approved	£13.69	526	–	–	–	526	Vested	2016–2019
	19-Sep-163	Unapproved	£13.69	2,474	–	–	–	2,474	Vested	2016–2019
	02-Mar-183	Approved	£25.06	550	–	–	–	550	Unvested	2017–2020
	02-Mar-183	Unapproved	£25.06	2,450	–	–	–	2,450	Unvested	2017–2020
	26-Oct-183	Unapproved	£21.66	3,000	–	–	–	3,000	Unvested	2018–2021
	06-Sep-19	LTIP	N/A	–	6,106	–	–	6,106	Unvested	2019–2022

1. Ian Page was granted a tax qualifying option over 1,197 shares at an exercise price of £25.06 as part of his LTIP award. This tax qualifying option is linked to the nil cost option such that, at the time of exercise, to the extent there is a gain in the tax qualifying option, the nil cost option will be forfeited to the value of that gain.
2. Will vest on 7 September 2020 as to 73.7%
3. Paul Sandland holds market value options. These options and awards were granted to Paul Sandland prior to his appointment as an Executive Director. These options are subject to a performance condition based on the percentage growth in the adjusted diluted EPS, which must exceed the sum of the percentage growth in RPI and 12%.

Non-Executive Directors (Audited)

By the third anniversary of their appointment to the Board, Non-Executive Directors are required to have acquired and retained a holding of Dechra shares equivalent to the value of at least 50% of their annual base fee. The holdings of the Non-Executive Directors and their families as at 30 June 2020 are as follows:

Name	Appointment date	Ordinary shares number	Ordinary shares £000*	% of base fee
Tony Rice	5 May 2016	20,000	569	438
Ishbel Macpherson	1 February 2013	5,848	166	320
Julian Heslop	1 January 2013	10,000	285	547
Lawson Macartney	1 December 2016	5,880	167	323
Lisa Bright	1 February 2019	–	–	–
Alison Platt	1 March 2020	760	22	42

* Calculated using the share price as at 30 June 2020.

There have been no changes in the holdings of the Company's Directors between 30 June and 7 September 2020.

Performance and Chief Executive Remuneration

TSR

This graph shows the TSR performance of the Company over the past ten financial years compared with the TSR over the same period for the FTSE 250 Total Return Index. Throughout the financial year ended 30 June 2020 the Company has been a constituent member of the FTSE 250; for this reason it is considered that the TSR performance of the FTSE 250 Index is the appropriate comparator for this report.

 

Chief Executive Officer Remuneration for Ten Previous Years

Year ended	Total single figure remuneration £000	Annual bonus payout (% of maximum opportunity)	LTIP vesting (% of maximum number of shares)
30 June 2020	1,599	28	73.7
30 June 2019	3,035	72	100.0
30 June 2018	3,058	76	100.0
30 June 2017	3,420	92	100.0
30 June 2016	2,480	72	96.25
30 June 2015	1,934	80	93.1
30 June 2014	1,589	80	100.0
30 June 2013	1,201	36	100.0
30 June 2012	682	60	0
30 June 2011	984	60	71.1

Annual Percentage Change in Remuneration of Directors and Employees

The table below shows the percentage change in each Director's salary/fees, benefits and bonus between the year ended 30 June 2019 and the year ended 30 June 2020, and the average percentage change in the same remuneration over the same period in respect of the employees of the Company on a full time equivalent basis.

The average employee change has been calculated by reference to the mean of employee pay. Paul Sandland and Alison Platt were appointed to the Board during the year ended 30 June 2020 and, accordingly, they have been excluded from the table below.

	Average employee	Ian Page	Tony Griffin	Tony Rice	Ishbel Macpherson	Julian Heslop	Lawson Macartney	Lisa Bright
Salary/fees	(11.8%)	4%	6.8%	2.3%	3.2%	3.3%	4.0%	3.6%
Taxable benefits	16.3%	(1.7%)	(10.0%)	N/A	N/A	N/A	N/A	N/A
Annual bonus	(47.4%)	(59.7%)	(58.7%)	N/A	N/A	N/A	N/A	N/A

1. Excludes SAYE options granted during the year.
2. Tony Griffin's increase in salary was 3%, however due to exchange rates the increase is artificially inflated.
3. Lisa Bright was appointed to the Board on 1 February 2019. To enable comparison and to provide meaningful reflection of the annual percentage change, her fees for the year ended 30 June 2019 have been annualised.
4. The reduction in the average employee's salary between the 2019 financial year and the 2020 financial year reflects that with effect from 1 July 2019 a number of employees were transferred within the Group to become employees of the Company, such that they are included in the calculation of the average employee's salary for the 2020 financial year but were not included in the average employee's salary for the 2019 financial year.

Chief Executive Officer's Pay Ratio

The table below shows the ratio of the Chief Executive Officer's remuneration for 2020, 2019 and 2018 using the Single Total Figure as disclosed on Single Total Figure of Remuneration to the full time equivalent remuneration of the UK employee whose remuneration was ranked at the 25th percentile, median and 75th percentile. Employees' pay was calculated on the same basis as the Single Total Figure Remuneration except that anyone who joined or left the business part way through the year has been excluded from the calculations along with anybody on reduced pay for illness, maternity, paternity, adoption and shared parental leave.

Year	Method	25th percentile pay ratio	Median pay ratio	75th percentile pay ratio
2020	Option A1	68:1	53:1	28:1
2019	Option A1	139:1	107:1	56:1
2018	Option A1	137:1	109:1	58:1

1. The applicable regulations provide for three methods of calculating the pay ratio. We have chosen Option A and have calculated the pay and benefits of all of the Group's UK employees in order to identify the employees at the 25th, median and 75th percentile. We have chosen this approach reflecting that guidance recognises this as the most statistically accurate method. In each year, the employees at the 25th, median and 75th percentile were identified by reference to remuneration at 30 June that year.

	2020 Total pay and benefits (salary) £000	20191 Total pay and benefits (salary) £000
Chief Executive Officer	1,599 (517)	3,035 (500)
25th percentile employee	24 (21)	22 (18)
Median employee	30 (29)	28 (27)
75th percentile employee	57 (39)	54 (45)

1. The 2020 figure includes share options and awards, which have been valued by reference to £27.404 (being the average market value of a share over the last quarter of the Company's financial period ended 30 June 2020). SAYE options granted in 2019 and 2020 financial years have also been included in the benefits column in respect of any year in which there was a grant. These have been valued using the fair value as per note 27 to the Group's financial statements.

In 2020, there were a total of 441 UK employees (2019: 380 UK employees), 164 of which have been excluded for the above stated reasons (2019: 87), leaving 277 employees within the 'full pay relevant' data set (2019: 293) for comparison against the Chief Executive Officer. We believe that the final figures detailed above are representative of the majority of the data set.

The above decrease to the Chief Executive Pay Ratio can be explained by the reduction in the amount of LTIP which will vest this year compared to last year (from 100% to 73.7%). Only five employees (including the Chief Executive Officer) have LTIP's which will vest this year and they are all within the 75th percentile group of employees. In addition, the Chief Executive Officer's bonus opportunity is greater and in previous years has resulted in 100% of his salary being awarded whereas this year the bonus will represent 28% of his salary.

Of the employees within the 'full pay relevant' data set, 167 worked in our Manufacturing business which is predominately shop floor workers (2019: 178). During the 2020 financial year, we addressed the pay levels of these employees moving them from minimum wage to national living wage and we also awarded all of our frontline workers with a COVID award. These actions have contributed to the reduction in the ratio this year.

Relative Importance of Spend on Pay

The following table sets out the percentage change in distributions to shareholders (by way of dividend and share buyback) and total remuneration paid to or receivable by all Group employees comparing the year ended 30 June 2019 and the year ended 30 June 2020.

	Year ended 30 June 2020 £000	Year ended 30 June 2019 £000	% change
Distributions to shareholders by way of dividend and share buyback	33,300	28,400	17.2%
Overall expenditure on pay	104,000	92,700	12.2%

Implementation of the Directors' Remuneration Policy in the Year Ending 30 June 2021

Subject to approval at the 2020 Annual General Meeting, the Directors' Remuneration Policy outlined will be implemented in the year ending 30 June 2021, as set out below.

Salary and Fees

We have decided to postpone the next review of Executive Directors' salaries from September 2020 to later in the year, which will allow the Committee time to review any impact COVID-19 may have on the business in the forthcoming year. It is planned that any increase for the Executive Directors' salaries will be in line with the range of any increases proposed for the wider workforce. Consequently it has also been agreed to defer a review of the Non-Executive Directors' base and additional fees until later in the year.

Annual Bonus

As noted in the letter from the Remuneration Committee Chairman, notwithstanding the additional flexibility in the new Policy, bonuses for financial year 2021 will continue at the current level of 100% of salary, with two changes to the structure of the bonus compared to previous years:

• for all Executive Directors, the proportion of the bonus based on underlying profit will be reduced to 85%, with ESG measures accounting for 5% (and personal objectives continuing to make up 10% of the total opportunity); and
• for Tony Griffin, half of his profit element will be based on the underlying profit of Dechra Veterinary Products EU and half will be based on Group underlying profit.

In the opinion of the Board, the performance targets applying to the annual bonus are commercially sensitive, and prospective disclosure could provide competitors with insight into the Group's business plans and expectations. However, the Company will disclose how any bonus earned relates to performance against targets on a retrospective basis when the targets are no longer considered commercially sensitive, as shown on Annual Bonus in respect of bonuses for the Group's 2020 financial year.

LTIP

The Committee proposes that LTIP awards for the year ending 30 June 2021 (the 2021 Grant) will be made at the level of 200% of salary for Ian Page, 150% of salary for Paul Sandland and 100% of salary for Tony Griffin. The performance measures for the 2021 Grant will be based on TSR (one third) and EPS (two thirds), with an underpin based on ROCE. The TSR targets will be the same as for the awards made in the 2020 financial year, details of which can be found on LTIP .

The EPS targets for the 2021 Grant are:

EPS compound annual growth rate (CAGR)	Vesting Percentage
<8% CAGR	0%
8% CAGR	25% of the EPS portion will vest
CAGR between 8% and 16%	Pro rata vesting between 25% and 100%
>16% CAGR	100% of the EPS portion will vest

As with the 2020 Grant, the Committee will retain discretion to adjust the vesting outcome where the formulaic outcome is inappropriate in the context of underlying performance or other factors considered by the Committee to be relevant. The awards will ordinarily be subject to a two year post vesting holding period.

Consideration by the Directors of Matters relating to Directors' Remuneration

Purpose

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

Membership, Meetings and Attendance

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

Effectiveness of Committee

The Committee's performance was evaluated as part of the 2020 Board and Committee Internal Evaluation (further details of which can be found on Board Evaluation of the Corporate Governance Report). The Committee considered the results of the evaluation and it was agreed that the Committee remained effective. Following feedback from the evaluation, the performance measures for the bonus have been reassessed with the view of confirming that they remained stretching and have included an ESG factor to increase the Directors' focus on this area.

Responsibilities

The Committee has its own terms of reference, which are approved by the Board. These are reviewed on an annual basis so that they continue to adhere to best practice. During the 2020 financial year this review took place at the June 2020 meeting and they were amended to reflect the 2018 UK Corporate Governance Code requirements. Copies can be obtained via the Company website at www.dechra.com. The Committee Chairman and the Company Secretary are available to shareholders to discuss the Remuneration Policy. An overview of the Committee's terms of reference is provided on Division of Responsibilities.

Advisers

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

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

Deloitte is retained to provide independent advice to the Committee as required. Deloitte is a member of the Remuneration Consultants Group and, as such, voluntarily operates under the Code of Conduct in relation to executive remuneration consulting in the UK. Deloitte's fees for providing remuneration advice to the Committee, which were charged on a time and materials basis, were £30,500 for the year ended 30 June 2020. The Committee considers the advice to be objective and independent, and assesses from time to time whether this appointment remains appropriate or should be put out to tender; in doing so, it takes into account the Remuneration Consultants Group Code of Conduct. Deloitte was appointed by the Committee following a competitive process and has provided share scheme advice and general remuneration advice to the Company. During the year Deloitte also performed tax advisory work for Dechra.

Policy on External Appointments

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

Statement of Voting at Previous Annual General Meeting

The Company remains committed to ongoing shareholder dialogue and takes an active interest in voting outcomes. The following table sets out actual voting in respect of the advisory vote on the Directors' Remuneration Report at the Annual General Meeting on 18 October 2019, and the binding vote on the Remuneration Policy at the Company's Annual General Meeting on 20 October 2017:

Resolution	Votes for	% of vote	Votes against	% of vote	Votes withheld
To approve Remuneration Report	72,519,866	99.27	533,633	0.73	672,695
To approve Remuneration Policy	72,932,631	98.88	823,955	1.12	8,619