corporate governance - woolworths holdings limited

In the current year, the overall target was set at
a pre-defined level of profit before taxation and
exceptional items (PBTAE). The modifiers used
were headline earnings per share, return on
equity, cost effective availability, market share,
performance management and achievement of
black economic empowerment targets.
During the current year the targeted PBTAE
was achieved and the majority of the modifiers
were attained.
A revised short-term incentive plan has been
implemented for the 2007 financial year.
long-term incentives – share scheme
The share scheme is designed to align the
behaviour of senior executives with the
achievement of sustainable long-term financial
goals and the interests of shareholders. Shares
are considered an essential element of senior
executive remuneration and comprise a
material part of their remuneration. Grants are
reviewed on an annual basis against our
comparator group to ensure alignment with the
market.
The number of shares that are granted each
year depends on company performance against
the pre-defined stretch targets. Grants are
allocated at varying multiples of annual
guaranteed total package. Grants are not
awarded if minimum targets are not met.
The share scheme includes the following
performance criteria and respective weightings:
Performance criteria
Weighting
Total Shareholder Return (TSR) 25%
Financial measures
(HEPS growth and ROE%) 50%
Value added measures 25%
The criteria and weightings are reviewed on an
annual basis.
TSR is measured relative to the performance of
a comparator group of other retailers against a
combination of the General Retailers Index and
the Food and Drug Retailers Index. Targets set
for growth in headline earnings per share and
return on equity are also externally
benchmarked against the above comparator
group. On an annual basis the remuneration
committee reviews the appropriateness of the
comparator group.
The table on page 29 shows the share
allocation awarded for performance achieved in
the 2006 financial year. The Chief executive
officer received a grant of shares equal to 140%
of his annual guaranteed total package, while
the other senior executives received a grant of
shares equal to 100% their annual guaranteed
total package.
A general meeting will be convened on
15 November 2006 immediately following the
annual general meeting in order to table
amendments to the Woolworths Holdings
Share Trust for shareholder approval. The effect
of the amendments will be to revise the terms
of the executive share scheme.
Details relating to the share trust are set out in
the directors’ report on page 54.
The non-executive directors do not participate
in short or long-term incentive schemes.
executive directors’ service contracts
The executive directors have employment
contracts which do not contain notice periods
exceeding twelve months and do not provide
for pre-determined termination compensation
in excess of one years’ salary and benefits.
directors’ fees and emoluments
Fees for non-executive directors are recommended by the remuneration committee to the board
prior to approval by our shareholders at the annual general meeting.
The 2006 fees for non-executive directors were approved at the 2005 annual general meeting.
The proposed fees for 2007, which will be tabled for approval at the forthcoming annual general
meeting, are set out below together with the fees approved for 2006;
Proposed Approved
2007 2006
Services as directors
Fees:
Chairman of the board R500 000 R450 000
Director (SA) R102 000 R95 000
Director (UK) £30 000 £29 400
Audit Committee
Chairman R112 000 R100 000
Member R62 500 R60 000
Risk Committee
Chairman R79 000 R74 000
Member R39 500 R37 000
Remuneration Committee
Chairman R90 000 R84 000
Member R45 000 R42 000
Transformation Committee
Chairman R79 000 R74 000
Member R39 500 R37 000
Nominations Committee
Member R10 500 R10 000
* Sustainability Committee
Chairman R13 000 -
Member R6 500 -
* Established as a formal committee on 22 August 2006.
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