Remuneration Policy 2020 – EPS Condition

 6 April 2020

Drax Group plc

("Drax" or the "Company"; Symbol:DRX)

Remuneration Policy 2020 - EPS Condition

At the annual general meeting ('the AGM') of Drax, due to be held on 22 April 2020, shareholders will be asked to approve a new Remuneration Policy ('the Policy'). At the same meeting, shareholders will also be asked to approve a new long-term incentive plan ('the Plan').

In the event the Policy and the Plan are approved, it is intended following the AGM to grant LTIP's under the Plan to participating employees, including executive directors and other PDMRs.

The vesting of awards to be granted in 2020 ('the 2020 Grants') shall be subject to satisfying two performance criteria over the financial years 2020, 2021 and 2022. 50% of the 2020 Grants will be measured based on Relative Total Shareholder Return and the remaining 50% will be measured based on Cumulative Adjusted Earnings per Share.

In the Annual Report and Financial Statements for the financial year ended 31 December 2019, the Company explained that the details of the Cumulative Adjusted EPS target had yet to be determined and would therefore be disclosed to shareholders in an RNS.

Following a meeting of the Remuneration Committee, the proposed Cumulative Adjusted EPS target for the 2020 Grants has been agreed. The EPS target was set after considering the Company's internal forecasts (which does not include the potential impact of Covid19), market expectations and sector peers.

Vesting between the threshold and maximum will be on a straight-line basis.

The EPS target is 'Adjusted EPS', derived from Adjusted Results as reported in the Company's audited financial statements. Instances where such adjustments might apply include acquisition and restructuring costs, asset obsolescence charges, costs on debt restructuring and certain remeasurements on derivative contracts. For more information on Adjusted Results applicable for 2019, see note 2.7 of the Company's Annual Report and Financial Statements.

There may arise circumstances during the performance period where adjustment or discretion is applied by the Remuneration Committee by reference to exceptional items and the Remuneration Policy. The application of such adjustments would be considered during and upon completion of the performance cycle. In making their assessment, the Remuneration Committee will take into account appropriate advice (for example from Deloitte as auditors, PwC as Remuneration Committee advisers or the Audit Committee) and also give due consideration to the shareholder experience. The Remuneration Committee would also take into account exceptional and unforeseen circumstances in assessing the appropriate level of vesting judged against the performance of the Company and management at the end of the performance period.

Following release of the Company's results for 2019 and in conjunction with the shareholder approval being sought, the latest analyst consensus for EBITDA and Adjusted EPS for the three years 2020-2022 have published and this can be found on the Company's website at https://www.drax.com/wp-content/uploads/2020/04/Company-Collected-Consensus-March-2020.pdf.

Total Shareholder Return relative to the FTSE350 will be measured over the three-year period (2020-2022) consistent with the approach previously approved by shareholders.

Ends

Enquiries:

Group Company Secretary: Brett Gladden
[email protected]
+44 (0)7936 362586