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.

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 ended 
30 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.