Chairmans Statement

Dear Shareholder,

On behalf of the Board, I am pleased to present the Remuneration Committee's ("the Committee") Directors' Remuneration Report for 2015.

Similarly to last year, this report is split into three sections: the Annual Statement; the Directors' Remuneration Policy; and the Annual Report on Remuneration (with the Annual Statement and Annual Report on Remuneration being subject to an advisory Shareholder vote at the 2016 AGM). 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 2015 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. SIG's goal is to be the leading specialist solutions provider to the construction industry.

Key activities

The activities of the Committee and key decisions taken in 2015 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 an assessment of individual experience and performance, pay conditions across the Group, economic factors and the Group's environment. Following this review, the Committee agreed that base salaries for the Chief Executive, Group Finance Director and members of the Senior Leadership Team would not increase for 2016, whilst the average increase across the remainder of the Group, effective 1 January 2016 was 1.5%.

Annual bonus

For the year ended 31 December 2015, underlying profit before tax ("PBT") was £87.4m and Return on Capital Employed ("ROCE") was 9.3%. The objective linked to savings from the Group Strategic Initiatives was partially achieved and the Health & Safety target was achieved. The resulting annual bonus outcome was therefore 17.7%of salary for both the Chief Executive and Group Finance Director. However, in the context of the challenging operating conditions and the Group's performance in 2015, both the Chief Executive and Group Finance Director have taken the decision to waive their entitlement to the 2015 annual bonuses.

Following a review of the annual bonus in 2014, the Committee made an evolutionary change to the mix of performance measures to better support the Company ethos of "Stronger Together", as reflected in the 2015 bonus metrics. The metrics for the 2016 annual bonus will remain unchanged from 2015, and will be linked 55% to Group underlying PBT, 20% to ROCE, 15% to savings from the Group Strategic Initiatives and 10% to Health & Safety.


Awards granted in 2013 under the Long-Term Incentive Plan ("LTIP") will vest in early 2016 based on performance to 31 December 2015. 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 19.5% of the awards will vest.

For 2016, 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 and malus provisions.

Malus and clawback

Last year, the Committee noted the requirement for both malus and clawback provisions to be included in incentives under the updated UK Corporate Governance Code. I am pleased to report that the Committee took action in 2015 in order to implement clawback provisions in the Company's incentive schemes. Malus and clawback provisions are in place for awards made in or after September 2015 in respect of the LTIP, and for awards made on or after 1 January 2016 in respect of the Deferred Share Bonus Plan ("DSBP") and annual bonus.

The Committee reviewed the Remuneration Policy during the year, and determined that it remained appropriately aligned with strategy and fit for purpose. The policy will be reviewed comprehensively later in the year, ahead of the 2017 AGM.

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
8 March 2016