2012 Integrated report - Sappi

Governance and compensation continued
Compensation report continued
Members of the committee
The committee comprised of four members in 2012.
Professor M Feldberg is the chairman of the committee and he
has held this position for three years and served as a committee
member since 2005. Professor Feldberg will be retiring
from the board in December 2012. Sir A N R Rudd will act
as interim chairman of the committee until February 2013
when the composition of all board committees will be reviewed.
Sir Rudd has served on the committee since October 2006.
Mr J D McKenzie has served on the committee since
November 2007.
Mr N P Mageza has served on the committee since
February 2010.
All committee members are independent non-executive directors
and no member has any personal financial interest or conflict of
interest or any form of cross directorship or day-to-day
involvement in running the business.
Dr D C Cronjé (group chairman) attended committee meetings
ex officio and Mr R J Boëttger (group chief executive officer) and
Ms L A Swartz (group head human resources) attended meetings
by invitation.
Mr D J O’Connor (company secretary) attended the meetings as
secretary to the committee.
During the year, the committee had four scheduled meetings
and one telephone conference. Prior to each meeting, the
chairman of the committee; the group head human resources
and the company secretary review the agenda and documents
to be tabled.
Attendance at meetings is provided on page 67.
Committee activities during the year
> Approved the compensation packages of Mr S R Binnie (the
newly appointed chief financial officer) and Mr M van Hoven
(the newly appointed group head strategy and legal).
> Reviewed and approved the recommended salary increases
and share plan allocations for executive directors and other
key senior managers for 2011/2012.
> Reviewed non-executive directors’ fees for 2012 and agreed
the recommended fee levels to the Sappi Limited board and
shareholders for approval.
> Reviewed the content of the company’s compensation policy
and practices, which was put to shareholders for a nonbinding
vote at the 2012 annual general meeting.
> Reviewed the compensation report for inclusion in the 2011
integrated report.
> Reviewed and approved the vesting or otherwise, of the 2008
performance share plan awards.
> Reviewed and approved the 2011 and 2012 management
incentive scheme awards and the performance levels of
executive directors and other key senior managers.
> Approved the allocation of 2012 performance share plan
awards to executive directors and all other eligible participants.
> Approved the 2013 management incentive scheme rules, and
reviewed the share incentive plan rules.
> Reviewed with the assistance of the audit committee, the
funding levels and investment arrangements of all benefit plans
across the group.
> Reviewed and approved in principle, the transfer of the Sappi
Southern Africa medical aid scheme from a closed scheme to
an open scheme.
Independent advice
During the year, the committee and group management received
advice from the Hay Group, who reviewed the compensation
packages of executive directors and other key senior managers in
each of the regions.
Kepler Associates assisted management with the amendments to
the annual management incentive scheme and independently
calculated the performance of the group in terms of Total
Shareholder Return (TSR) relative to the peer group, to determine
the vesting of performance share plan awards.
KPMG was engaged by management to verify Sappi’s
performance on Cash Flow Return on Net Assets (CFRONA)
relative to that of a peer group, to determine the vesting of
performance share plan awards.
Two legal firms, namely Bowman Gilfillan in South Africa and
Cravath, Swaine and Moore L L P in the US and UK, provided
legal and tax assistance in determining the rules incorporated into
the amendments of the annual management incentive scheme.
Group companies also participate in local industry/national
surveys to benchmark compensation practices.
Compensation policy and practices
Sappi’s compensation programmes are designed to attract,
motivate and retain exceptional employees who deliver on the
achievement of financial and strategic goals which build long term
shareholder value, and who contribute to making Sappi a great
place to work at.
The programmes take appropriate account of corporate
governance codes and best practice guidelines published by
regulators and institutional shareholder bodies.
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