FirstGroup : Remuneration Report

Introduction	Strategic report	Governance report	Financial statements	FirstGroup Annual Report and Accounts 2024 124

Remuneration Committee report

Sally Cabrini

Chair, Remuneration Committee

Main responsibilities

The Remuneration Committee is primarily responsible for determining the policy for Executive Director remuneration and setting the remuneration for the Chairman, the Executive Directors

and senior management.

The Committee also reviews wider workforce remuneration and related policies and the alignment of incentives and rewards with culture, taking these into account when setting the policy for Executive Director remuneration.

The terms of reference are available on the Group's website.

Membership

Sally Cabrini (Chair)

Claire Hawkings

Jane Lodge

Peter Lynas

Dear Shareholder,

I am pleased to present the Directors' Remuneration report for the 53 weeks ended 30 March 2024.

The Remuneration Report covers the required regulatory information and provides further context and insight into our pay arrangements for Directors and other Group employees.

We set out our key decisions since last year, the assessment of FY 2024 performance and determination of pay, and our approach to ensuring executive pay outcomes are fair in the context of wider employee pay.

FY 2024 was another year of strong financial performance for the Group, driven by continued growth in First Bus and our First Rail open access operations. Group adjusted operating profit increased to £204.3m (FY 2023: £161.0m).

Passenger volumes in First Bus increased by 7% compared to last year's levels which resulted in total passenger revenue of £769.1m (FY 2023: £660.0m). Our strong cash position has allowed us to further progress our investment in the electrification of our First Bus fleet and grow our portfolio of businesses.

In First Rail, open access operations performance was ahead of expectations underpinned by strong demand. Lumo has now carried more than 2.5m passengers since its launch in October 2021. WCP have been awarded a National Rail contract with a minimum three-year term to October 2026.

We have had another very successful year where we have made considerable financial progress as we continue to transform our leading First Bus and First Rail businesses.

Our strong balance sheet puts us in a good position to grow and create further value for all our stakeholders and to continue to invest to build our portfolio to ensure our business remains profitable and resilient in the long term.

Principles

The principles that underpin the Committee's approach to executive remuneration are set out in the Directors' Remuneration Policy (see pages 144-155) that will be put to shareholders for approval at the 2024 AGM. As described on page 144, after a review of the existing policy it was determined that no material changes were needed to support our current business

and future growth strategy. The Committee considered the UK corporate governance landscape, including the relevant provisions of the UK Corporate Governance Code and the views of our investor base in deciding FY 2024 pay outcomes and developing the 2024 Policy.

Overview of financial performance, operating achievements

and strategic progress

FY 2024 has been a year of strong financial performance:

• Group adjusted operating profit increased significantly to £204.3m (FY 2023: £161.0m)
• FY 2024 final dividend of 4.0p recommended in line with the progressive dividend policy
• We have returned c.£118m in share buyback programmes in FY 2024
• Our strong balance sheet puts us in a good position to grow and create value for our shareholders
• Revenue and profits from open access rail businesses exceeded expectations

The Group has delivered strong financial performance in FY 2024, with operating profit and cash flow exceeding the outlook for the year. For the 53 weeks ended 30 March 2024, FirstGroup outperformed the FTSE 250 with 83.5% return to shareholders compared to 11.3% return from the FTSE 250 index.

As a Committee we believe it is imperative to strike the right balance between incentivising the management team, rewarding strong performance and being equitable in the broader context, taking into account the experience

of our wider stakeholders, including our employees and shareholders.

FY 2024 Executive Annual Bonus Plan (EABP): The FY 2024 EABP was based 70% on financial metrics (60% adjusted Group operating profit, 10% adjusted Group cash flow) and 30% on non-financial metrics (personal objectives).

The Committee carefully considered performance against each of the financial and non-financial targets and then a broader consideration of overall performance. Achievement of operating profit and cash flow both exceeded maximum. In respect of personal objectives, the Committee awarded both Graham Sutherland and Ryan Mangold 80% of maximum.

The formulaic EABP award for the Executive Directors resulted in awards of 94%

of maximum for both Graham Sutherland and Ryan Mangold. The Committee reviewed the overall outcome in the context of the Group's underlying performance and were satisfied with this level of payout.

Full details of targets and performance achieved are set out on pages 131-133.

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Remuneration Committee report continued

2021 LTIP: The vesting of the LTIP granted in 2021 was subject to the following performance measures:

• 50% EPS
• 40% relative total shareholder return (TSR) vs FTSE 250
• 7.5% zero emission (ZE) fleet transformation
• 2.5% carbon intensity

Performance against the 2021 measures is as follows:

• the Company delivered strong earnings growth, with EPS of 16.7p, resulting in 100% vesting under this element (50% of the overall award)
• relative TSR vs FTSE 250 performance was at the 97th percentile versus the peer group, resulting in 100% vesting under this element (40% of the overall award)
• the Company outperformed against our ZE fleet transformation target with a total of 574 new ZE buses by 30 March 2024, resulting in 100% vesting under this element (7.5% of the overall award)
• carbon intensity outturn was lower than expected at 157 tCO2e per £1m, resulting in 100% vesting under this element (2.5% of the overall award)

Therefore, the formulaic vesting of the 2021 LTIP award was 100%. The Committee carefully reviewed the overall formulaic vesting outcome in the context of the Group's underlying financial performance and were satisfied that there was no need to exercise discretion. The shares will be held for an additional two years to provide alignment with our shareholders.

Full details of the 2021 LTIP are set out on page 133-134.

2023 LTIP: The Committee determined that the 2023 LTIP award made to the CEO, CFO and other senior leaders would be measured against EPS, relative TSR and a Sustainability Scorecard (comprising two environmental measures), over a three-year period.

Full details of targets are set out on pages 134-135.

Review of our Directors'

Remuneration Policy

The Committee has undertaken a thorough review of the existing Directors' Remuneration Policy, which was approved at our 2021 AGM with c.96% shareholder support. As part of our review we engaged c.70% of our shareholders requesting feedback on both our proposed policy and proposed implementation for

FY 2025. The conclusion of the review

was that our existing policy fully supports our current position as a UK-based transportation provider and our future growth strategy.

The Committee also concluded that the policy retains the flexibility to ensure remuneration remains aligned to our strategy and operations. Therefore, no material changes to our existing policy are proposed.

The policy will be put to shareholders for consideration at the 2024 AGM.

The full policy can be found on pages 144-155.

Remuneration for FY 2025

The Committee carefully considered base salary increases for the Executive Directors holistically, taking into account FY 2025 base salary increases applied to the wider workforce and investor guidance that base salary increases for Executive Directors should be aligned with those provided to the wider workforce.

Therefore, the Committee approved an increase of 4% for Graham Sutherland and Ryan Mangold, effective 1 April 2024. See page 137 for more information.

The Executive Directors have an opportunity to receive a maximum of 150% (half of which is deferred into shares for three years) of base salary under the FY 2025 EABP. Changes from FY 2024 include a reduction in the weighting of the personal element from 30% to 10% and the inclusion of a new operational scorecard weighted at 20%.

The FY 2025 EABP is based on the following metrics:

• 60% adjusted Group operating profit
• 10% adjusted Group cash flow
• 20% operational scorecard
• 10% personal objectives

Details on the metrics are set out on page 137. The Committee considers the forward-looking annual bonus targets to be commercially sensitive, but full disclosure of targets and performance outcome will be set out in next year's Annual Report on Remuneration.

It is the Committee's intention to make awards under the LTIP this year, and it is anticipated that the approach regarding metrics will be similar to the 2023 LTIP with the only change being the addition of diversity and inclusion metrics, aligned with our equality, diversity and inclusion (ED&I) strategy. The 2024 LTIP consists of 50% EPS, 30% relative TSR and 20% on an ESG Scorecard. The targets for these awards are set out on page 137.

Remuneration fairness

As a Remuneration Committee we take our responsibility to consider senior team pay in the context of wider workforce pay, policies and practices, and a number of items are tabled at Committee meetings every year to ensure the approach throughout the Group is fair, particularly during the cost of

living crisis.

The 'Remuneration in context' section of the report on pages 128-129 provides a summary of the items and the factors that the Committee considers when making executive reward decisions as well as support we have provided to our employees during the cost of living crisis.

What the Remuneration Committee has looked at in the last 12 months

The Committee has:

• conducted a thorough review of the Remuneration Policy, that is being put to shareholders for approval at the 2024 AGM, including engaging in a shareholder consultation process with c.70% of
  our shareholders
• approved FY 2024 EABP payout for Executive Directors and other senior employees
• determined the vesting of the 2021 LTIP
• reviewed and approved the FY 2023 Directors' Remuneration report
• approved the 2023 LTIP awards
• agreed FY 2025 EABP approach
• reviewed the 2023 gender and ethnic pay gap reporting ahead of publication
• reviewed wider workforce remuneration and related policies
• approved the launch of the 2023 SAYE
• reviewed its terms of reference

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FirstGroup Annual Report and Accounts 2024 126

Governance

The Committee actively monitors developments in corporate governance and the guidelines produced by shareholders and their representative bodies.

Our Group Employee Director is encouraged to attend all Committee meetings, and regularly does so. I also periodically attend meetings

of the Employee Directors' Forum to hear directly from our network of Employee Directors. In these meetings I explain how executive remuneration aligns with wider workforce pay and Employee Directors have the opportunity to ask questions about last year's Directors' Remuneration Report.

We have provided further details on our approach to pay throughout the Group on pages 128-129.

In conclusion

We will continue to monitor governance developments and are committed to maintaining an open and transparent dialogue with our shareholders on executive remuneration. We consider ongoing engagement to be vital in ensuring that our approach to remuneration continues to be aligned with the long-term interests of the Group's shareholders and wider stakeholders.

We welcome the feedback received during the year and hope to receive your support at our upcoming AGM.

Sally Cabrini

Chair, Remuneration Committee

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Remuneration at a glance

This section summarises the pay our Executive Directors received in FY 2024.

FY 2024 single figure total remuneration (£'000s)

CEO

Key remuneration outcomes for FY 2024

FY 2024 Executive Annual Bonus Plan (EABP)		Outcome
	Threshold	Target	Maximum	as % of
	maximum	Link to
Weighting Measure	(0% payment)	(50% payment)	(100% payment)	award	strategy

Spend on pay

Expenditure on pay vs distributions to shareholders

£1,398

CFO

£2,857

Base salary 41%

Pensions 2% and benefits

EABP 57%

LTIPn/a*

Base salary 17%

Pensions 3% and benefits

EABP 23%

LTIP 57%

60%	Adjusted Group operating profit	60%
	Target	105.8	117.5	135.1
	Performance
				£156.6m
10%	Adjusted Group cash flow		10%
	Target	(3.5)	12.8	38.2
	Performance
				£67.7m
30%	Personal objectives
	Target	0%	50%	100%
	CEO				24%
			80%
	CFO			80%	24%
	Total bonus achieved (as % of maximum)
	CEO			94.0% (141.0% of base salary)
	CFO			94.0% (141.0% of base salary)

Executive	0.3%
Directors' pay
Total employee	91.3%
pay
Distributions to	8.4%
shareholders

Read more on pages 130-134

• Graham Sutherland, the CEO, joined on 16 May 2022, therefore does not have an LTIP vesting in 2024.

Shareholding requirement - progress in FY 2024

Requirement:	At 30 March 2024
200%	CEO 116%
CFO 589%
of base salary

2021 Long-Term Incentive Plan (LTIP) vesting outcome	Outcome
					as % of
		Threshold	Maximum	maximum	Link to
Weighting	Measure	(0% payment)	(100% payment)	award	strategy
50%	EPS				50%
	Target	5.8	9.9
	Performance
			16.7p
40%	Relative TSR				40%
	Target	Median	Upper Quartile
	Performance
			97th percentile
7.5%	ZE Fleet				7.5%
	Target	260	400
	Performance
			574
2.5%	Carbon intensity		2.5%
	Target	221 tCO2/£1m	212 tCO2/£1m
	Performance			157
	Total (as % of maximum)		100%

Key to our strategic pillars

Deliver day in, day out

Diversify our portfolio

Lead in environmental and social sustainability

Drive modal shift

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Remuneration in context

In setting the remuneration for Executive Directors, the Committee takes account of the overall approach to rewarding other employees in the Group. Due to the varied nature of the operations of our divisions and their respective employment markets, we have a range of remuneration practices across the organisation. These are designed to be relevant to each individual market. Almost 85% of our employees are covered by collective bargaining arrangements.

A number of items are tabled at Committee meetings each year to ensure the approach throughout the organisation is consistent and fair:

• report summarising wider workforce pay policies and practices with updates provided on a regular basis
• Gender and ethnicity pay gap reports including statistics from each
  UK reporting entity
• actions management are taking to improve diversity in the workforce and close pay gaps where they exist
• CEO pay ratio and underlying statistics

The table on page 129 (Wider workforce remuneration) summarises the FirstGroup approach to pay. The main difference between the structure of our most senior employees' remuneration and that of the wider workforce is that senior employee remuneration is more heavily weighted to variable pay, that is linked to business performance.

Treating our people fairly

Effective 1 April 2024, First Bus became a Real Living Wage employer. This commitment impacted c.1,300 colleagues who received

a pay increase in line with this commitment. First Bus have also committed to go beyond the accreditation requirements and pay all apprentices the Real Living Wage within

18 months of 1 April 2024.

The approach to pay rises for non-collectively bargained employees in First Bus has been to skew the salary increase budget to have a greater impact on lower earners in recent years. For FY 2023, First Bus applied a flat increase to base salary in order to have a greater impact on lower earners for FY 2023. For FY 2024, non-collectively bargained colleagues in

First Bus received an increase of 3% + £800, for an average base salary increase of c.5.2%. For FY 2025, non-collectively bargained colleagues in First Bus received an increase of 4%. Depending on participation in our annual bonus schemes, colleagues also received a flat increase of up to £800 in addition to the 4% increase. For the collectively bargained population, average increases in FY 2023 were over 7% and in FY 2024 were c.8%.

In First Rail, offers have been made for pay increases for FY 2023 and FY 2024 of 9% (i.e. 5% for FY 2023 (minimum of £1,750 increase) and 4% for FY 2024). These increases have been implemented for our non-collectively bargained population and collectively bargained populations where an agreement has been reached. At the time of publication Aslef, who represent train drivers, have not put

their pay offers for FY 2023 or FY 2024 to their members, but we remain open and willing to engage in national level talks to resolve the dispute. FY 2023 pay increases were made for members of RMT, TSSA and Unite; FY 2024 pay increases are currently in progress.

We also offer other benefits to our employees to support them through the cost of living crisis, including extensive retail discounts through our shopping portal, discounts of 4-5% at several large supermarkets. In 2023, colleagues saved over £590,000 on their shopping bills.

For FY 2024, we relaunched the Save as You Earn (SAYE) scheme, which allows colleagues to purchase discounted shares at the end of a three-year savings contract. We had a high acceptance rate for the SAYE scheme with applications for about 15.6 million options from over 3,450 applicants and will be launching the scheme again for FY 2025.

TOCs provide free travel for employees and their families across their own network. First Bus provides employees and their families with free travel on the First Bus network. All employees, regardless of employer, receive discounted rail travel across our network.

All employees have access to our Employee Assistance Programme, which among other things, provides free, individual and confidential financial advice.

In FY 2024, First Bus ran a series of Financial Wellbeing webinars to offer support around the cost of living crisis. We have also introduced two new healthcare benefit schemes that are available to all of our First Bus colleagues.

The SimplyHealth scheme allows First Bus colleagues to claim back healthcare costs, including optical, dental and muscular health as well as contributions for health diagnostics.

The SmartHealth scheme is a free app that provides access to a number of services, including GP appointments, mental health support, second medical opinion, nutrition advice, fitness plans and health checks.

Employee engagement

While the Committee does not formally consult with employees on Executive Director remuneration, a number of different mechanisms are in place to gather feedback and insights from employees across a range of issues.

Information on how we engage our employees is set out on page 99.

The Group also engages with its workforce through our Employee Directors and the Group Employee Director is invited to attend all of the Committee's meetings, and regularly does so. Our Committee Chair, Sally Cabrini, will also periodically attend the Employee Director Forum meetings to explain how executive remuneration aligns with wider workforce pay and answer questions on last years' Directors' Remuneration report. More information on the role of our Group Employee Director is set out on page 105.

The Committee believes that it is important for our employees to understand how the remuneration of our Executive Directors is determined and utilises the different communication channels operating across

the Group to ensure our employees are aware of the information available in the Directors' Remuneration report.

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Remuneration in context continued

Wider workforce remuneration

Eligibility	Element	Definition
All employees	Base salary	" Base salaries are reviewed annually
(c.31,000)		" When considering salary for Executive Directors and Executive Committee members, the Committee considers increases available
		to the wider workforce
	Pension	" We are committed to helping our colleagues save for retirement through a variety of Company pension arrangements, designed in
		line with market practice. We operate a number of different pension plans that reflect the history and requirements of our various
		businesses. See page 130 for more information on the average pension contribution
	All employee share scheme	" All UK employees with at least six months of service are eligible to participate in our HMRC approved all employee share plans.
		Under SAYE eligible employees can make monthly savings over a period of three years with the option to purchase FirstGroup
		shares at a discount of up to 20% of the market value of shares on grant. Under Buy as You Earn, our Share Incentive Plan (SIP),
		eligible employees can purchase shares from their pre-tax salary and become shareholders in the Company
	Benefits	" Our Employee Assistance Programme offers all employees access to free, 24/7 confidential telephone, online and face-to-face
		advice for problems they may be experiencing at home or work. Other benefits include discounted travel on our rail and bus
		services, discounts on shopping, entertainment and eating out
		" Our larger businesses have dedicated in-house Occupational Health teams and our other businesses use external specialist
		advisers to support employees with health problems that may affect performance
		" All divisions run workplace health and wellbeing programmes to support employees in staying fit and healthy
Senior executives	Annual bonus	" Senior executives and management population - incentivises successful execution of our business strategy and operational goals
and management		with participants including both corporate centre and divisional roles
(c. 1,100)		" Our TOC businesses also offer commission schemes for Customer Hosts, Guards and Revenue Protection staff to drive revenue
Senior executives	LTIP	" Senior executives with sufficient line of sight to drive long-term sustained value creation for our shareholders
(c. 150)
Executive Committee	Shareholding guidelines	" Senior executives ensuring alignment with the shareholder experience
and Executive Directors
(5)

Strategic alignment of remuneration

The table below sets out how each of the performance metrics used in our incentive plans for FY 2025 are aligned to the Company's strategy. See pages 17-29 for more information on our strategy.

				Lead in
				environmental
		Deliver	Diversify	and social	Drive
	Measure	day in, day out	our portfolio	sustainability	modal shift
	Adjusted Group operating profit
EABP1	Adjusted Group cash flow
Operational performance
	Personal objectives
	EPS
LTIP	Relative TSR
	ESG Scorecard

1 The Remuneration Committee makes a holistic safety assessment at year end which can reduce the formulaic outturn to reflect safety performance.

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Annual report on remuneration

The annual report on remuneration sets out

• Directors' remuneration for FY 2024, pages 130-136
• the statement of the planned implementation of policy in FY 2025, page 137

This part of the Directors' Remuneration report has been prepared in accordance with Part 3 of The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended) and Rule 9.8.6 of the Listing Rules. The annual report on remuneration and Chair's statement will be put to an advisory shareholder vote at the 2024 AGM.

Single total figure of remuneration for Executive Directors (audited)

						Annual Bonus
						value of			Total
		Taxable		Total fixed	Annual Bonus	deferred			variable	Total
	Salaries	Benefits	Pension	remuneration	cash	shares	LTIP2,3	Other4	remuneration	remuneration
Graham Sutherland - CEO
FY 2024 £'000s	567	1	28	596	399	399	-	4	802	1,398
FY 2023 £'000s1	484	1	24	509	341	341	-	-	682	1,191
Ryan Mangold - CFO
FY 2024 £'000s	475	14	71	560	335	335	1,623	4	2,297	2,857
FY 2023 £'000s	461	14	69	544	325	325	2,312	-	2,962	3,506

1. Graham Sutherland was appointed to the Board as Chief Executive Officer on 16 May 2022 with an annual base salary of £550,000. Graham Sutherland did not receive any payments in relation to recruitment remuneration, including any buyout awards. Graham Sutherland's FY 2023 bonus has been pro-rated based on the date he was appointed to the Board.
2. The value of the 2021 LTIP, which has a three-year performance period ending 30 March 2024, was calculated using the average share price for the period of 1 January to 30 March 2024 (167.28p). In line with reporting requirements, the LTIP values include dividend equivalent amounts of £59,794 for the Chief Financial Officer, and £775,354 of the value for the Chief Financial Officer at vesting is attributed to share price growth as the share price at award was 84.29p in 2021.
3. The value for FY 2023 relates to the 2020 LTIP which had a three-year performance period ending 25 March 2023. As a result of the downwards adjustment of 10%, 88.4% of the award vested in June 2023. The value of the 2020 LTIP reported in the 2023 report (£1,877,592) was an estimate based on the average share price over the last three months of FY 2023 (106.3p). The actual value of the 2020 LTIP on the 8 June 2023 vesting date was £2,312,450 (based on adjusted closing share price of 131.31p); this includes dividend equivalents of £34,681.
4. Graham Sutherland and Ryan Mangold both participate in the 2023 SAYE scheme, more detail on the scheme can be found on page 129. The value of their options under the 2023 scheme has been valued as the number of options subscribed for, multiplied by the difference between the closing share price on the date before grant (£137.6p) and the option price (£111.0p) which is a 20% discount.

More detail can be found on pages 130-134.

Benefits (audited)

Benefits for Executive Directors include the provision of a company car allowance and private medical cover. Graham Sutherland's benefits for the year comprised £604 for UK private medical insurance. Ryan Mangold's benefits for the year comprised a £12,000 car allowance and £1,509 for UK private medical insurance.

Pension (audited)

Graham Sutherland received a pension allowance of 5% of his base salary, £28,325. Ryan Mangold received a pension allowance of 15% of his base salary, £71,280. The average pension benefit for the wider workforce is in excess of 15% of base salary.1

No Director has a prospective benefit under a defined benefit pension.

1 We operate a number of different pension arrangements across the Group including defined benefit pension schemes. Over 60% of our UK workforce are in a defined benefit pension with the remainder in defined contribution schemes on varying rates.

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FY 2024 performance and reward decisions

As a Committee, we believe it is imperative to strike the right balance between incentivising the management team, rewarding strong performance, and being equitable in the broader context.

When assessing the performance of the Executive Directors, the Remuneration Committee takes a broad view of financial performance delivered, the shareholder experience and the outcome for the Company's stakeholders, including customers, employees and the communities in which we operate. When considering remuneration outcomes, the Committee takes into account performance against specific metrics on safety, including workplace fatalities and injuries, and customer satisfaction, as well as environmental, social and governance matters such as significant environmental incidents, large or serial fines or sanctions from regulatory bodies, and significant adverse legal judgments or settlements. The Committee has broad discretion to ensure incentive outcomes

are appropriate.

FY 2024 Executive Directors' annual bonus

For FY 2024, the annual bonus maximum opportunity was 150% of salary for both Executive Directors. As in previous years, the EABP aimed to incentivise improved performance against a range of financial and non-financial metrics. The structure of the bonus was weighted so that 70% was based on financial metrics and 30% on non-financial metrics. The Committee retains overriding discretion to adjust the overall bonus outturn (including to £nil) if a serious safety failing or deterioration is identified.

The chart below sets out the targets, performance achieved and corresponding bonus outturns on a formulaic basis against the financial and qualitative targets.

FY 2024 annual bonus outcome (audited)

Measure	Weighting	Threshold	Maximum	Actual Result	Bonus Achievement	Payout %
Adjusted Group operating profit (Pre-IFRS 16 basis)1	60%	£105.8m	£135.1m	£156.6m	100%	60%
Adjusted Group cash flow2	10%	£(3.5)m	£38.2m	£67.7m	100%	10%
Personal objectives	30%	N/A	N/A	See below	80%	24%

1. Adjusted Group operating profit is assessed on a pre-IFRS 16 basis as this more appropriately reflects the underlying risk given that the majority of IFRS 16 impacts are not for our account. Pre-IFRS 16 basis is readily understood by management teams and is used in banking covenants. Group operating profit post-IFRS 16 is £204.3m. See note 4 for the reconciliation.
2. Group adjusted cash flow is assessed from continuing operations on a pre-IFRS 16 basis. It excludes growth investments (-£20.7m), Employee Benefit Trust share purchases (-£16.8m), interest & tax (-£5.1m), transit earnout from North America (+£67.6m), Hitachi joint venture (+£15.1m), dividends to shareholders and non-controlling interests (-£36m) and share buyback (-£117.6m).

Graham Sutherland

Objectives

Performance Assessment

Refine Group strategy/equity story including a capital markets day (or equivalent) and take steps to reshape the financial footprint of the Group through M&A, organic growth, decarbonisation, and shareholder capital returns.

Refreshed Group strategy presented and endorsed by the Board. Four strategic pillars introduced to guide decision-making and investment prioritisation across the Group. Introduced two events in the investor relations calendar covering First Bus and First Rail strategies. Acquisition of York Pullman and integration of acquisitions completed in FY 2023. Shareholder capital returns progressed returning c. £115m to shareholders in FY 2024. Significant work completed to enhance Bus and Rail development pipeline.

Monitor and finalise completion of US residual separation issues including First Transit earnout.	First Transit earnout completed. Now largely de-risked in North America.
Enhance the Group's business continuity plans and execution capability in light of the increasing	Significant progress in cyber security defences through incremental protection investments.
threat levels from geo-political change and cyber attacks.

Further review of Group talent and succession plans to be presented to the Board.

Full review of Group talent and succession plans including a robust view of the top leaders in the organisation and respective development needs.

Demonstrate personal leadership of action to protect customers and employees from health and safety	Regular private meetings with safety leads in both divisions to review safety KPIs and discuss individual
risks and continue to improve our health and safety culture.	incidents and key learnings.
Deliver NRCs for WCP on a long-term contract, in line with current Government policy.	The WCP NRC was delivered with a 3+6 contract achieved to October 2032, with the first potential risk
	in October 2026.

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Annual report on remuneration continued

Graham Sutherland continued

Objectives	Performance Assessment
Demonstrate progress against all ESG targets and commitments to ensure the Group moves towards	Scope 1 & 2 emissions reduced by c.27%. Significant improvement on ZE buses (13% of fleet) and depot
a leadership position in the Transport sector.	electrification. On track for net zero 2035 commitment.
Demonstrate leadership and progress on D&I commitments that have been agreed by the Board.	Set D&I targets at the Board. In FY 2024 women in senior leadership roles increased from 33% to 35%.
Bonus Achievement for Graham Sutherland	80%
Payout % for Graham Sutherland	24%
Ryan Mangold
Objectives	Performance Assessment

Progress the equity story for the Group, including a capital markets day (or equivalent), and take steps to reshape the financial footprint of the Group through M&A, organic growth, or shareholder capital returns.

Introduced two events in the investor relations calendar covering First Bus and First Rail strategies. Acquisition of York Pullman and integration of acquisitions completed in FY 2023. Shareholder capital returns progressed returning c. £115m to shareholders in FY 2024. Significant work completed to enhance Bus and Rail development pipeline.

Implement the Hitachi Zero Carbon JV and explore opportunities from the strategic partnership.

Completed the £100m and 1000 EV bus battery JV with Hitachi that included an innovative financing structure allowing for future benefit from battery residual value and the opportunity to benefit from the strategic partnership through the 5% warrants held in Hitachi Zero Carbon.

Progress the Group and Bus pension scheme merger to facilitate operating efficiencies and reduce costs.	Merger completed. Exit from LGPS and removed liability.
Exit strategy of remaining two Greyhound USA real estate assets and ensure the collection of CARES	Successful collection of the outstanding CARES and ARP above expectations.
and ARP attributable to the Group as covered under the SPA with Flix.
Finalise the First Transit earnout.	Completed the negotiation and settlement of First Transit.
Demonstrate personal leadership of action to protect customers and employees from health and safety	Key focus on health and safety in Business Review Meetings and other forums in reviewing Health, Safety
risks and continue to improve our health and safety culture.	and Environment to reinforce the importance in this area.
Deliver NRCs for WCP on a long-term contract, in line with current Government policy and support further	The WCP NRC was delivered with a 3+6 contract achieved to October 2032, with the first potential risk in
growth and sustainability in Affiliate Contracts.	October 2026.
Ensure strong financial and legal management on the exit of TPE contract.	TPE exited with smooth transition to the OLR, retaining all affiliate business.
Demonstrate leadership and progress on D&I commitments that have been agreed by the Board.	Diversity in the finance team is higher than before. Mentoring a participant from our Reach Forward programme.
Bonus Achievement for Ryan Mangold	80%
Payout % for Ryan Mangold	24%

As noted in the Chief Executive Officer's review, performance on the financial measures was strong for the Group as a whole. There was also strong performance in respect of the non-financial measures (as detailed above). The Committee determined that Graham and Ryan had delivered their personal objectives to a high standard. The Committee accordingly awarded both Graham Sutherland and Ryan Mangold 24% out of a possible 30% for their personal objectives.

Taking into account the above outcomes, the formulaic EABP award for both Graham Sutherland and Ryan Mangold resulted in a potential award of 141% of the maximum. The Committee considered this formulaic performance in the context of the Group's wider performance and decided that it did not need to exercise any discretion to reduce this outcome. Under the approved policy, 50% of the award is normally paid in cash with 50% deferred into shares (deferred share awards vest after three years, subject to continued employment, and are not subject to any further

performance conditions).

Introduction	Strategic report	Governance report	Financial statements	FirstGroup Annual Report and Accounts 2024 133

Annual report on remuneration continued

The overall bonus payout for FY 2024 was therefore as follows:

	Graham Sutherland	Ryan Mangold
Maximum EABP opportunity (% of salary)	150%	150%
EABP Achieved (as % of maximum)	94%	94%
EABP (% of salary)	141%	141%
Total EABP	£798,765	£670,032
EABP - Cash	£399,382	£335,016
EABP - Deferred Shares	£399,383	£335,016

Long-Term Incentive Plan

The vesting of 2021 LTIP awards was subject to achieving the following performance conditions over a three-year performance period ending 30 March 2024.

Vesting of 2021 Long-Term Incentive Awards (audited)

				Threshold:	Maximum:	% of award
Metrics	Weighting	Outturn	0%	20%	100%	which vested
EPS	50%	16.7p	<5.8p	5.8p	9.9p	100%
Relative TSR vs FTSE 250	40%	97th percentile	<>	Median	Upper quartile	100%
Sustainability Scorecard
ZE Fleet (# vehicles)	7.5%	574	<260	260	400	100%
Carbon intensity (tCO2e per £1m)	2.5%	157	>221	221	212	100%
Total						100%

As disclosed in the 2021 report, the Committee decided to delay 2021 LTIP target setting to allow adequate time to better understand uncertainties around the impact of Covid-19 on the wider economy and our business and the impact and timing of the sales of our North American businesses.

The 2021 LTIP absolute EPS target was set reflecting the current portfolio (comprising only First Bus and First Rail), therefore, no adjustment was required in respect of the disposals. However, the tender offer that took place in December 2021 reduced the number of shares in issue compared to when the EPS target was set in November 2021. Therefore, in line with market practice,

the EPS targets were restated in order to ensure the EPS targets retain the same level of stretch as before the tender offer. The adjusted targets are shown in the table above and were also disclosed in the 2022 report.

Beginning with the 2021 LTIP, ESG measures have been introduced as part of a Sustainability Scorecard, with the Committee selecting a measure relating to progress in transforming our First Bus fleets through the deployment of zero emissions technology, which will have the most significant impact on reducing our carbon air pollution emissions, and an emissions measure (Carbon Intensity as tonnes of CO2 equivalent per £1m of revenue) which measures performance across our whole business in a way that allows a single measure to be used for both First Bus and First Rail operations and allows for like-for-like comparisons across peer companies and industries. In selecting the measures for use in the Sustainability Scorecard, the Committee considered it important to choose those which most closely aligned with our strategy and investment case, and selected metrics that are quantifiable and capable of being independently verified. Both of these measures meet these tests and are tracked, measured and reported to our banking partners as part of the Company's sustainability-linked revolving credit facility.