INTRODUCTION

The remuneration report provides an overview and understanding of Remgro’s remuneration principles, policy and practices with specific reference to executive and non-executive directors and members of the Management Board. The information provided in this report has been approved by the Board on recommendation by the Remuneration and Nomination Committee.

REMUNERATION AND NOMINATION COMMITTEE

The functioning of this dedicated Board committee is well established within Remgro’s mode of operation. In essence it is the committee’s role to ensure that directors and executives are remunerated fairly and responsibly and that the disclosure of directors’ remuneration is accurate, complete and transparent.

The committee is governed by a mandate that incorporates the recommendations of King III and serves to assist members of this committee in the execution of their role and responsibilities.

The members of the committee for the year under review were:

  • Mr J P Rupert (chairman)
  • Mr P K Harris
  • Mr G T Ferreira
  • Mr F Robertson

The Board acknowledges the principle in King III that the Chairman of the Board should not be the chairman of the Remuneration and Nomination Committee but, given the necessity to align the Company’s remuneration approach with corporate strategy, this arrangement is deemed appropriate.

The committee met twice during the year and details on the attendance of the meetings are set out in the Corporate Governance Report here.

The terms of reference set out in the mandate of the committee include the following:

In respect of its nomination function –

  • Assist the Board with the process of identifying suitable candidates for appointment as directors
  • Ensure the establishment of a formal and transparent process for the appointment of directors
  • Oversee the development of a formal induction pro­gramme for new directors
  • Ensure that formal succession plans for the Board, Chief Executive Officer (CEO) and other Management Board members are developed and implemented

In respect of its remuneration function –

  • Oversee the setting and administering of remuneration of all directors, Management Board members and other employees
  • Oversee the establishment of a remuneration policy
  • Advise on the remuneration of non-executive directors
  • Ensure that the remuneration, in cash, share appreciation rights (SARs) and other elements, meets Remgro’s needs and strategic objectives
  • Oversee the preparation and recommending to the Board of the remuneration report to be included in the Integrated Annual Report

The committee is satisfied that it has carried out its responsi­bilities for the year in compliance with its mandate.

REMUNERATION APPROACH

Remgro has a Remuneration Policy for directors and members of the Management Board. The remuneration policy is aligned with the Company’s approach of rewarding directors and senior executives fairly and competitively, according to their capabilities, skills, responsibilities and level of performance. It aims at supporting the Company’s remuneration principles of:

  • Retaining the services of existing directors and senior management
  • Attracting potential directors and senior managers
  • Providing directors and senior management with remu­neration that is fair and just
  • Ensuring that no discrimination occurs
  • Recognising and encouraging exceptional and value-added performance
  • Ensuring that remuneration structures are consistent with the Company’s long-term requirements
  • Protecting the Company’s rights by means of standard contracts of employment

It should be noted that, as in the past, the Board will not ask shareholders for a non-binding approval of the Company’s remuneration policy at the Annual General Meeting on 1 December 2016.

EXECUTIVE DIRECTORS AND MEMBERS OF
THE MANAGEMENT BOARD

These employees are rewarded by means of a two-tier approach in Remgro’s remuneration structures which entails:

Fixed pay

This element, referred to as total guaranteed package, consists of components such as salary, cash or car allowance and the Company’s contributions towards retirement funding and the medical aid scheme.

As part of the annual review process by the Remuneration and Nomination Committee (the committee), guaranteed packages are benchmarked against the upper quartile of the market for comparable companies as indicated per independent survey(s). The services of an independent remuneration consultancy are contracted for this purpose.

The annual review is based on the executive’s level of responsibility, his/her overall performance and the achieve­ment of specific agreed objectives. The CEO, who attends all committee meetings by invitation, can propose increases To the guaranteed packages, excluding his own, during such
review meetings.

During the year under review, the executive directors and members of the Management Board received an average salary increase of 7.3% (2015: 11.7%), compared to an average salary increase paid to general staff of 7.0% (2015: 7.1%). The main reason for the higher average increase awarded to executive directors and members of the Management Board in the prior year, was the once-off adjustment to the guaranteed package of
Mr Jannie Durand in order to adjust his package to a market-related level.

Variable pay

It is important to note that, due to the nature of the Company’s operation as an investment holding company and in order to align the interests of management with those of shareholders, no short-term incentives are paid to executives.

Remgro currently has one long-term incentive plan, i.e. the Remgro Equity Settled Share Appreciation Right Scheme (the SAR Scheme). The SAR Scheme is an equity settled scheme and has the aim of retaining the services of executives by incentivising them based on long-term growth in the market capitalisation of the Company. This approach ensures alignment between personal wealth creation and corporate strategy.
All permanent employees of the Company participate in the SAR Scheme.

Participants in the SAR Scheme are remunerated with Remgro shares to the value of the appreciation of their rights to a specific number of Remgro ordinary shares that must be exercised within a period of seven years after the grant date. The earliest intervals at which the SARs are exercisable
are as follows:

  • One-third after the third anniversary of the grant date
  • An additional third after the fourth anniversary of the grant date
  • The remainder after the fifth anniversary of the grant date

No specific performance criteria are stipulated. Awards to executives in terms of the SAR Scheme are made from time to time by the committee and such awards are usually based on a multiple of the total guaranteed package.

No award will be made to a single participant if at the time of or as a result of the making of such grant, the aggregate number of Remgro ordinary shares in respect of which any unexercised SARs granted to the participant may be exercised, shall exceed 2 197 399 Remgro ordinary shares.

Similarly, no award will be made if at the time of or as a result of the making of such grant, the aggregate number of Remgro ordinary shares in respect of which any unexercised SARs may be exercised, shall exceed 21 000 000 Remgro ordinary shares.

For detail of the current status of awards that were made to executive directors and members of the Management Board in terms of the SAR Scheme, refer here.

If it is assumed that all of the participants to the SAR Scheme exercise all options awarded to them on 1 July 2016, Remgro will have to deliver 1.1 million shares in order to settle its obligations. This calculation is based on Remgro’s closing share price on 30 June 2016 of R254.66. A 10% increase or decrease in the Remgro share price will require the number of shares to be delivered to be 1.2 million shares and 0.9 million shares, respectively.

At 30 June 2016 Remgro held sufficient treasury shares to settle its obligations to deliver shares to the SAR Scheme participants.

The different components of the remuneration paid as described above, are summarised in the table below.

rem-1

Contracts of employment

Executive directors and members of the Management Board do not have fixed-term contracts, but are employed in terms of the Company’s standard contract of employment. The notice period for termination of service is one calendar month and the normal retirement age is 63. Executive directors and members of the Management Board also do not have exceptional benefits associated with the termination of their services.

NON-EXECUTIVE DIRECTORS’ REMUNERATION

Independent non-executive directors

Independent non-executive directors do not have any employment contracts and do not receive any benefits associated with permanent employment. Furthermore, they do not participate in the Company’s long-term incentive plan.

The Board, on recommendation by the Remuneration and Nomination Committee, has decided that independent non-executive directors should not be remunerated by means of a base fee and attendance fee in respect of their Board and committee obligations. The fee payable to non-executive directors will thus, as in the past, be a fixed annual fee. The fee structure is reviewed annually on 1 July subject to prior approval by shareholders at the Company’s Annual General Meeting. The fees are market related and take into account the nature of Remgro’s operations. Remgro also pays for all travelling and accommodation expenses reasonably and properly incurred in order to attend meetings.

The annual fees payable to independent non-executive directors for the period commencing on 1 July 2015 were approved by shareholders on 23 November 2015.

Non-independent non-executive directors

Mr J P Rupert, Dr E de la H Hertzog and Mr J Malherbe are regarded as non-independent non-executive directors.

Mr Rupert receives no emoluments from Remgro, while Dr Hertzog and Mr Malherbe also receives the approved annual director’s and committee fees paid to independent non- executive directors.

As in the case of independent non-executive directors, these directors do not participate in the Company’s long-term incentive plan. It should, however, be noted that, subsequent to the acquisition of VenFin Limited during November 2009, Remgro SARs were awarded to Mr J Malherbe to compensate him for the cancellation of the VenFin Share Appreciation Right Scheme. Mr Malherbe does not qualify for any further allocation of SARs.

Details of the fee structure payable to non-executive directors for the years ended 30 June 2016 and 30 June 2015 are presented in the table below.

Type of fee (R) Fee for the
year ended
30 June
2016
Fee for the
year ended30 June
2015
Board member 300 000 245 000
Chairman of the Audit and Risk Committee 200 000 165 000
Member of the Audit and Risk Committee 100 000 83 000
Member of the Remuneration and Nomination Committee 50 000 41 000
Chairman of the Social and Ethics Committee 50 000 41 000

The proposed fee structure payable to non-executive directors for the year ending 30 June 2017 is presented in the table below.

Type of fee (R) Proposed fee for
the year ending
30 June 2017
Board member 321 000
Chairman of the Audit and Risk Committee 214 000
Member of the Audit and Risk Committee 107 000
Member of the Remuneration and Nomination Committee 53 500
Chairman of the Social and Ethics Committee 53 500

Details of the remuneration paid to executive directors and fees paid to non-executive directors for the year under review, are set out below. The current status of all offers made to the above groups in terms of the SAR Scheme is also presented.

The information for Messrs P R Louw and P J Uys, as well as for Mr N J Williams until his appointment as Chief Financial Officer, who are members of the Management Board and also prescribed officers in terms of the Companies Act, are presented separately.

DIRECTORS’ EMOLUMENTS

(The information on the following pages was audited)

Fixed pay

R’000 30 June 2016 30 June 2015
     Fees      Salaries Retire-
ment
fund
   Other
benefits(7)
     Total      Fees      Salaries Retire-
ment
fund
   Other
benefits(7)
     Total
Executive
W E Bührmann 300 2 800 615 297 4 012 245 2 649 574 280 3 748
L Crouse(1) 225 5 540 1 035 236 7 036 245 6 254 1 289 297 8 085
J J Durand 300 9 815 2 006 322 12 443 245 9 204 1 874 302 11 625
N J Williams(2)  75 650 173 80 978
Subtotal 900 18 805 3 829 935 24 469 735 18 107 3 737 879 23 458
Non-executive
(independent) 
G T Ferreira 350 350 286 286
P K Harris 350 350 286 286
N P Mageza(3)  400 400 328 328
P J Moleketi 400 400 328 328
M Morobe 300 300 245 245
F Robertson 450 450 369 369
S E N De Bruyn Sebotsa(4)  350 350 61 61
H Wessels(5)  684 684 556 556
Subtotal 3 284 3 284 2 459 2 459
Non-executive
(non-independent) 
E de la H Hertzog 300 300 245 245
J Malherbe 300 300 245 245
J P Rupert(6)
Subtotal 600 600 490 490
Total  4 784 18 805 3 829 935 28 353 3 684 18 107 3 737 879 26 407
(1) Mr L Crouse retired as Chief Financial Officer with effect from 31 March 2016.
(2) Mr N J Williams was appointed as Chief Financial Officer with effect from 1 April 2016.
(3) During the year under review Mr N P Mageza also received R502 000 (2015: R455 000) as director’s fees from RCL Foods Limited, a subsidiary company
of Remgro Limited.
(4) Ms S e n De Bruyn Sebotsa was appointed as independent non-executive director with effect from 16 March 2015.
(5) In addition to his director’s fees and fee as chairman of the Audit and Risk Committee and chairman of the Social and Ethics Committee, an amount of
R134 400 (2015: R105 000) was also paid to Mr H Wessels during the year under review for his attendance of meetings of subcommittees of the Audit
and Risk Committee.
(6) Mr J P Rupert receives no emoluments.
(7) Benefits include medical aid contributions and vehicle benefits.


Remgro Equity Settled Share Appreciation Right Scheme

– Share appreciation rights (SARs)

Participant Balance
of SARs
accepted
as at
30 June
2015  

SARs
accepted
during tshe
year(1) 
   Fair value
of SARs
on offer
date
(R’000) 
     SARs
transferred
during the
year (3) 
       Offer
price
(Rand) 
       Number
of SARs
exercised 
       Date
exercising
SARs 
     Share
price on
exercise
date 
       Increase
in value(4)
(R’000) 
Balance
of SARs
accepted
as at
30 June
2016 
Executive 
W E Bührmann 23 548 97.55 23 548
98 817 147.25 98 817
25 485 191.70 25 485
8 958 253.53 8 958
26 470 2 142 272.00 26 470
L Crouse(2) 51 865 97.55 (51 865) 22/03/2016 259.66 8 408
94 652 147.25 (94 652) 22/03/2016 259.66 10 640
189 300 147.25 (189 300) 04/04/2016 250.94 19 629
79 144 191.70 (79 144) 04/04/2016 250.94 4 688
23 587 253.53 23 587
J J Durand 157 262 97.55 157 262
271 258 147.25 271 258
93 128 191.70 93 128
108 468 253.53 108 468
192 676 15 591 272.00 192 676
N J Williams(3)  18 076 78.30 18 076
19 768 97.55 19 768
81 901 147.25 81 901
22 221 191.70 22 221
16 430 253.53 16 430
27 492 272.00 27 492
Subtotal 1 225 472 219 146 17 733 185 888 (414 961) 43 365 1 215 545
Non-executive 
J Malherbe 50 506 78.30 50 506
6 949 75.38 (6 949) 03/11/2015 279.00 1 415
Subtotal 57 455 (6 949) 1 415 50 506
Total 1 282 927 219 146 17 733 185 888 (421 910) 44 780 1 266 051
(1) SARs were offered on 24 November 2015.
(2) Mr L Crouse retired as Chief Financial Officer with effect from 31 March 2016. In terms of the rules of the SAR Scheme, participants going into retirement are entitled to exercise all their SARs granted to them at any time within 12 months after the date of retirement or before the expiry of the SAR period (being seven years from the grant date), whichever is the earlier.
(3) Mr N J Williams was appointed as Chief Financial Officer with effect from 1 April 2016. SARs transferred refer to the balance of SARs granted and accepted by him prior to 1 April 2016.
(4) This refers to the increase in value of the SAR Scheme shares of the indicated participants from the offer date to the date of payment and delivery.


Remgro Equity Settled Share Appreciation Right Scheme

– Share appreciation rights (SARs)

Participant Balance
of SARs
accepted
as at
30 June
2014  
     SARs
accepted
during the
year(1) 
   Fair value
of SARs
on offer
date
(R’000) 
       Offer
price
(Rand) 
       Number
of SARs
exercised 
       Date
exercising
SARs 
     Share  price on
exercise
date 
       Increase
in value(3)
(R’000) 
Balance
of SARs
accepted
as at
30 June
2015 
Executive 
W E Bührmann 124 771 65.50 (124 771) 13/10/2014 225.04 19 906
23 548 97.55 23 548
98 817 147.25 98 817
25 485 191.70 25 485
8 958 615 253.53 8 958
L Crouse 418 108 65.50 (418 108) 07/10/2014 238.60 72 374
51 865 97.55 51 865
283 952 147.25 283 952
79 144 191.70 79 144
23 587 1 618 253.53 23 587
J J Durand 108 236 78.30 (108 236) 03/11/2014 252.98 18 907
7 572 75.38 (7 572) 03/11/2014 252.98 1 345
235 895 97.55 (78 633) 03/11/2014 252.98 12 222 157 262
271 258 147.25 271 258
93 128 191.70 93 128
108 468 7 442 253.53 108 468
J W Dreyer(2) 90 090 65.50 (90 090) 01/07/2014 230.00 14 820
Subtotal 1 911 869 141 013 9 675 (827 410) 139 574 1 225 472
Non-executive 
J Malherbe 50 506 78.30 50 506
6 949 75.38 6 949
Subtotal 57 455 57 455
Total  1 969 324 141 013 9 675 (827 410) 139 574 1 282 927
(1) SARs were offered on 26 November 2014.
(2) Mr J W Dreyer retired as executive director with effect from 31 December 2013. In terms of the rules of the SAR Scheme, participants going into retirement are entitled to exercise all their SARs granted to them at any time within 12 months after the date of retirement or before the expiry of the SAR period (being seven years from the grant date), whichever is the earlier.
(3) This refers to the increase in value of the SAR Scheme shares of the indicated participants from the offer date to the date of payment and delivery.

PRESCRIBED OFFICERs

Fixed pay

R’000 30 June 2016 30 June 2015
Salaries Retire-
ment
fund
Other
benefits (1)
Total Salaries Retire-
ment
fund
Other
benefits (1)
Total
P R Louw(2)  455 111 80 646
P J Uys 4 694 931 319 5 944 4 383 869 299 5 551
N J Williams(3)  1 997 385 239 2 621 2 345 465 299 3 109
Total 7 146 1 427 638 9 211 6 728 1 334 598 8 660
(1) Benefits include medical aid contributions and vehicle benefits.
(2) Mr P R Louw was appointed on 1 April 2016.
(3) Mr N J Williams was appointed as Chief Financial Officer with effect from 1 April 2016.
(4) Both Messrs P R Louw and P J Uys are members of the Management Board, as well as the Social and Ethics Committee.

Variable pay – long-term incentive plan

Remgro Equity Settled Share Appreciation Right Scheme

– Share appreciation rights (SARs)

Participant Balance
of SARs
accepted
as at
30 June
2015 
     SARs
accepted
during the
year(1
   Fair value
of SARs
on offer
date
(R’000) 
     SARs
transferred
during the
year (2) 
       Offer
price
(Rand)  
       Number
of SARs
exercised 
       Date
exercising
SARs 
     Share
price on
exercise
date 
       Increase
in value (3)
(R’000) 
Balance
of SARs
accepted
as at
30 June
2016 
P R Louw(2)  27 432 97.55 27 432
22 646 147.25 22 646
12 944 191.70 12 944
5 952 253.53 5 952
9 497 272.00 9 497
P J Uys 218 400 183.15 218 400
3 325 191.70 3 325
14 774 253.53 14 774
11 533 933 272.00 11 533
N J Williams(2)  18 076 (18 076) 78.30
25 768 (19 768) 97.55 (6 000) 26/10/2015 278.58 1 086
81 901 (81 901) 147.25
22 221 (22 221) 191.70
16 430 (16 430) 253.53
27 492 2 225 (27 492) 272.00
Total  400 895 39 025 3 158 (107 417) (6 000) 1 086 326 503
(1) SARs were offered on 24 November 2015.
(2) With effect from 1 April 2016, Mr N J Williams was appointed as Chief Financial Officer and Mr P R Louw was appointed as member of the Management Board. SARs transferred refer to the balance of SARs granted and accepted by them prior to 1 April 2016.
(3) This refers to the increase in value of the SAR Scheme shares of the indicated participants from the offer date to the date of payment and delivery.

 

Participant Balance
of SARs
accepted
as at
30 June
2014 
     SARs  accepted
during the
year(1) 
   Fair value
of SARs
on offer
date
(R’000) 
       Offer
price
(Rand)  
       Number
of SARs
exercised 
       Date
exercising
SARs 
     Share
price on
exercise
date 
       Increase
in value (2)
(R’000) 
Balance
of SARs
accepted
as at
30 June
2015 
P J Uys 218 400 183.15 218 400
3 325 191.70 3 325
14 774 1 014 253.53 14 774
N J Williams 18 076 78.30 18 076
38 652 97.55 (12 884) 06/11/2014 255.75 2 038 25 768
81 901 147.25 81 901
22 221 191.70 22 221
16 430 1 127 253.53 16 430
Total  382 575 31 204 2 141 (12 884) 2 038 400 895
(1) SARs were offered on 26 November 2014.
(2) This refers to the increase in value of the SAR Scheme shares of the indicated participants from the offer date to the date of payment and delivery.