The Committee has made an evolutionary change for 2015 to the mix of performance measures to better support the 'Stronger Together' ethos.

Chris Geoghegan Chairman OF THE Remuneration Committee

Dear Shareholder,

On behalf of the Board, I am pleased to present the Remuneration Committee's ("the Committee") Directors' Remuneration Report for 2014.

Similarly to last year, this report is split into three sections: the Annual Statement, the Directors' Remuneration Policy and the Annual Report on Remuneration. Our Remuneration Policy remains consistent with that approved by Shareholders at the 2014 AGM, and is reproduced in full for both ease of reference and in order to provide context to the decisions taken by the Committee during the year.

SIG's strategy over 2014 has been to focus on seeking to grow our three core markets of Insulation and Energy Management, Exteriors and Interiors by combining the reputational strengths of our local brands with the scale efficiencies and know-how of a multinational group. Moreover, with its focus on specialist expertise and high customer service levels, SIG aims to continue to outperform its markets and thereby generate sustainable long-term growth in shareholder value.

Key activities

The activities of the Committee and key decisions taken in 2014 are set out in the Annual Report on Remuneration and are summarised below. During the year, the Committee considered SIG's Remuneration Policy and concluded that the current structure, made up of base salary and benefits, an annual bonus plan and a single long-term incentive plan, continues to be appropriate.

Review of base salaries

Towards the end of the year the Committee reviewed the salaries of our Executive Directors. This review took into account a number of factors including market pay levels, an assessment of individual experience and performance, and pay conditions across the Group. Following this review, the Committee agreed that the base salaries for the Chief Executive and Group Finance Director will increase by 1.5%, in line with the average increase across the Group, effective 1 January 2015.

Annual bonus

For the year ended 31 December 2014, underlying profit before tax ("PBT") increased by 9.0% and Return on Capital Employed ("ROCE") by 90bps, and the annual bonus outcome was 57.0% of salary for both the Chief Executive and Group Finance Director. These bonus outcomes reflect both the strong financial performance of the Group and the exceptional individual contributions made by the two Executive Directors over the last year.

Following a review of the annual bonus, the Committee made an evolutionary change to the mix of performance measures to better support the Company ethos of 'Stronger Together'. Therefore, in 2015 the annual bonus will be linked 55% to Group underlying PBT, 20% to ROCE, 10% to HS&E, and 15% to personal objectives (linked to the Group's Strategic Initiatives).


Awards granted in 2012 under the 2004 Long-Term Incentive Plan ("LTIP") will vest in early 2015 based on performance to 31 December 2014. These awards were based two-thirds on ROCE and one-third on underlying earnings per share ("EPS"); the performance conditions were partially met to the extent that 10.5% of the awards will vest.

For 2015, the LTIP will continue to be linked to ROCE and EPS, have a three year performance period plus a two year holding period on vested shares, and remain subject to clawback/malus provisions.

Malus and clawback

The Committee concluded that no changes to the Remuneration Policy were required at this time. However, the Committee notes the requirement for malus and clawback provisions in incentives in the updated UK Corporate Governance Code, and is taking steps to implement the changes. The Company already operates malus provisions in the Deferred Share Bonus Plan ("DSBP") and the LTIP, and is introducing clawback from 1 January 2016 in respect of the annual bonus, and from awards due to be made in Autumn 2015 in respect of the LTIP.

The Annual Report on Remuneration will be subject to an advisory vote at the forthcoming AGM. We continue to value any feedback from Shareholders and hope to receive your support at the AGM.

Chris Geoghegan

Chairman of the Remuneration Committee
11 March 2015