Grant of options and adoption of LTCIP

11 September 2024

Newmark Security plc

("Newmark", the "Company" or the "Group")

Grant of options and adoption of LTCIP

Newmark Security plc (AIM: NWT), a leading provider of electronic, software and physical security systems, announces an update to its management incentive structure in order to incentivise and retain key senior executives within the Company. The updated structure includes the introduction of a long term cash incentive plan (the "LTCIP") as well as grants of options over ordinary shares of 5p each ("Ordinary Shares") under the Company's existing option plans, further details of which are set out below.  

The Company engaged independent remuneration advisory firm, MM&K, to advise on its updated management incentive structure which is linked to the delivery of Newmark's new five-year strategic business plan (the "2029 Strategic Growth Plan"), details of which were set out in the Company's annual report and accounts for the year ended 30 April 2024, which was published yesterday and is available on the Company's website, www.newmarksecurity.com. The 2029 Strategic Growth Plan sets out how Newmark's management expect to grow the business over the next five years and includes stretching internal targets for revenue and EBITDA growth, as well as lowering debt and increasing net assets. These metrics are key KPIs for the business and the updated management incentive structure has been designed to ensure that management are rewarded appropriately in the case of creating a far more valuable asset for shareholders.

Options

Cancellation of CEO options

Under her service agreement, Marie-Claire Dwek (CEO) is entitled to receive options over Ordinary Shares representing 20% of her annual salary, subject to the achievement of certain operational performance criteria in each financial period. Prior to the matters set out below, Marie-Claire Dwek held options over 746,514 Ordinary Shares, equivalent to approximately 8% of the Company's current issued share capital.

In order to increase headroom to grant options to other executives, the Company and Marie-Claire Dwek have agreed to cancel 454,570 options held by Marie-Claire Dwek which were exercisable at a price of 90p per share, subject only to time based vesting criteria and continued employment (the "90p Options").

Grant of new options

Following the cancellation of the 90p Options, the Company has granted a total of 663,323 options over Ordinary Shares to members of the Group's Senior Management under the LTI Plan (the "Management Options"), including the following grants to persons discharging managerial responsibilities ("PDMRs"):

The Management Options are all exercisable at a price of 5p per Ordinary Share and vest as to 50% after three years (Newmark's full year ending 30 April 2027 "FY27") and the remaining 50% after five years (Newmark's full year ending 30 April 2029 "FY29"). The Management Options are subject to additional performance based vesting criteria that are aligned with revenue targets in the 2029 Strategic Growth Plan, such that: i) if "Stretch" revenue targets are achieved then 100% of the options will vest; ii) if "Target" revenue targets is achieved 50% of the options will vest; and iii) if "Threshold" revenue targets are achieved 25% of the options will vest. If the "Threshold" is not achieved, none of the options will vest. Achievement of the Stretch targets would see a resulting doubling of Group revenue by the end of FY29.

Following the grant of Management Options and cancellation of the 90p Options, the Company has a total of 1,335,267 options outstanding over Ordinary Shares, representing 14.24% of the Company's current issued share capital.

LTCIP

In order to limit dilution to shareholders, the LTCIP has been introduced to create cash incentive pools to supplement the granting of options. Marie-Claire Dwek is currently constrained from exercising any options as she is part of a concert party under the UK Takeover Code (details of which were announced on 1 June 2020) and so the LTCIP forms an important part of her incentive structure. The LTCIP is also important for individuals based outside of the UK, who are not able to benefit from tax efficient share options, in order to incentivise them as the Company pursues a global sales approach.  

Cash incentive pools will be allocated to each of the (a) the PLC team; (b) Grosvenor; and (c) Safetell, subject to the achievement of cumulative EBITDA targets that are aligned with the 2029 Strategic Growth Plan in: i) the three consecutive financial years ending FY27 ("FY27 Period"); and ii) the two consecutive financial years ending FY29 ("FY29 Period"). Participants in the PLC team will be measured against cumulative Group EBITDA targets and participants in the Grosvenor and Safetell teams will be measured against cumulative EBITDA targets for their respective Group subsidiary companies.

Payouts will be achieved if the cumulative EBITDA targets are met for FY27 Period and FY29 Period. 100% of the awards will be achieved if the "Stretch" targets are met, 50% of the award will be made if "Target" targets are met (being 95% of the Stretch target) and 25% of the award will be met if "Threshold" targets are met (being 85% of the Stretch target).  No payouts will be made if Threshold targets aren't met. If "Stretch" targets are exceeded, awards will increase by the same percentage of the actual cumulative EBITDA achieved above those Stretch targets. Payouts are subject to malus and clawback provisions. Achievement of the Stretch targets would see a resulting c. five times increase in Group EBITDA by the end of FY29.

Related party transactions

The following members of the Group's Senior Management, who are Group company directors and therefore related parties under the AIM Rules for Companies ("Related Parties"), will take part in the LTCIP and their cash awards if the "Stretch" targets are met are set out in the table below.

The cancellation of Marie-Claire Dwek's 90p Options and grant of new options to her, and the awards to Related Parties under the LTCIP constitute related party transactions pursuant to the AIM Rules for Companies.  The Directors of Newmark (excluding Marie-Claire Dwek, Paul Campbell-White and Maurice Dwek), having consulted with the Company's nominated adviser, consider the terms of these transactions to be fair and reasonable insofar as shareholders are concerned.

Notification and public disclosure of transactions by persons discharging managerial responsibilities and persons closely associated with them are set out below.

About Newmark Security plc

Newmark is a leading provider of electronic, software and physical security systems that helps organisations protect human capital and provide safe spaces seamlessly and securely.

From our locations in the UK and US, we operate through subsidiary businesses positioned in specialist, high-growth markets.

We foster an open and inclusive work environment amongst our c.100 employees, serving hundreds of blue-chip customers.

Our product portfolio consists of Human Capital Management and Access Control Systems providing both hardware and software and Physical security installations to various sectors.

Newmark Security plc is admitted to trading on AIM (AIM:NWT).

For more information, please visit: www.newmarksecurity.com

Notification and public disclosure of transactions by persons discharging managerial responsibilities and persons closely associated with them.