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226 NEDBANK GROUP Limited INTEGRATED REPORT 2010Group Remuneration committee membershipand charterThe committee functions according to a charter approved by the board ofdirectors of Nedbank Group Limited. The board delegates responsibility tothe committee for the investigation and benchmarking of remunerationpractices and for considering and approving, according to rules set outin the committee charter, all proposals made on remuneration practicesthat have a direct or indirect financial impact within the group.A board initiative was implemented to review all board committeecharters with a view to streamlining these into one board charter withaddenda specific to each committee. The committee’s responsibilities asdefined in the new, combined charter are as follows:• To evaluate remuneration proposals and practices for the groupto ensure alignment with best practice and the latest governanceprinciples.• To manage the overall financial liability related to all elements ofremuneration for the entire group.• To recommend to the board for approval all elements of remunerationon an individual basis for the Chief Executive, executive directors andother members of the Group Executive Committee (Group Exco).• To review and approve the annual performance scorecards of theChief Executive, executive directors and other members of the GroupExco.• To approve the corporate performance targets related to the vestingof long-term incentive allocations and matched shares.• To approve overall remuneration increases for all staff.• To approve proposed bonus awards to individuals in excess of adefined limit.• To approve, on an individual basis, all share-based long-termincentive allocations in excess of a defined limit.• To review the material terms and conditions of service of all staffof the group (where appropriate) to ensure that they are fair andcompetitive.• To make recommendations to the board on the remuneration of theChairman of the board.• To review and comment on proposals for non-executive directors’ feesand submit these to an independent committee for consideration.• To define the appropriate peer group against which groupremuneration will be evaluated.• To review any issues raised by the Group Risk and CapitalManagement Committee that are related to remuneration.• To make use of independent external advice where necessary.• To prepare an annual remuneration report for the board forpublication in the group’s integrated report.• To report back to the board after each meeting and more frequentlyif required.In 2010 the committee initially comprised three independent nonexecutivedirectors, namely Prof B de L Figaji (Chairman), Mr CJW Ball,and Ms NP Mnxasana and one non-executive director, namelyMr RM Head. On 19 February 2010 Mr DI Hope replaced Mr RM Headas a non-executive member of the committee. On 1 March 2010Mr MI Wyman was appointed as an independent non-executive memberof the committee.The Chief Executive, Group Executive: Human Resources and ChiefOperating Officer are permanent invitees to committee meetingsand recuse themselves from discussions on their own remuneration.The Group Executive: Human Resources resigned from Nedbank inSeptember 2010 and a replacement was appointed in February 2011. Thecommittee met five times during 2010.All members of the committee act as trustees of the 1994 and 2005Long-term Incentive Employee Group Schemes.The committee applies the guiding principles of the remuneration policyas far as is feasible, but both the board and the committee retain theright to use their discretion to deviate from this policy in exceptionalcircumstances.As in previous years, a self-assessment of the committee was conductedin July 2010 to evaluate the committee’s effectiveness against theobjectives of the committee’s charter and to highlight and thereforefocus on areas where its performance could be enhanced. High-levelfeedback confirmed the following:• Committee performs its responsibilities according to its charter andoften exceeds the objectives that have been set.• There is good interaction between the board and the committee.• Committee meetings are productive and well-facilitated, withappropriately robust discussions and debate.• The remuneration of executives is well-researched, with goodbenchmark information against industry standards.Advice to the committeeThe committee has full access to independent executive remunerationconsultants, and has utilised the services of Vasdex Associates (Pty)Limited.The Old Mutual plc Remuneration Unit also provided the committeewith advice, specifically around international remuneration practices andtrends.The committee is informed of market-related remuneration informationbased on a number of independent remuneration surveys in whichthe group participates. These include PWC Remchannel, the GlobalRemuneration Solutions Top Executive Remuneration Survey, theLMO Executive Remuneration Survey and a number of smaller nicheremuneration surveys. Specialists within the Group RemunerationServices Department collate and analyse the information sourced fromexternal service providers.
227Reports andcertificationsConsolidatedannual financialstatementsShareholdermeeting mattersDefinitions andabbreviationsInstrumentcodesContactdetailsremuneration reportEducation of committee membersAs part of the ongoing education of directors, an in-depth session on keyremuneration practices was conducted by Vasdex Associates.Remuneration governanceFollowing the global financial crisis, the financial services industry hasexperienced significant challenges in the governance and managementof total remuneration. To this end the group has actively implementeda number of initiatives aimed at ensuring compliance with regulatoryand statutory frameworks. The board and the committee support theseinitiatives and are of the opinion that Nedbank Group is compliant withthese requirements.The committee assists the board in discharging its corporate governanceduties related to remuneration strategy, policy and practices. The boardensures that the committee is:• constituted in a way that enables it to exercise competent andindependent judgement on remuneration policy and practices, whilealso considering the management of risk, capital and liquidity;• independently engaged by the Group Risk and Capital ManagementCommittee for specific risk-related decisions;• functioning in compliance with statutory requirements, codes ofrelevant best remuneration practice as well as applicable regulatoryrequirements; and• continuously evolving in terms of risk-adjusted remunerationpractices.In terms of remuneration governance the key roles of the committee are:• actively to oversee the remuneration policy and practices,independently from the Nedbank Group executive managementteam;• to ensure that the remuneration policy and practices operate asagreed;• to regularly review remuneration outcomes, risk and performancemeasurements, and risk outcomes to ensure consistency withintentions;• actively to oversee all components of remuneration on an individualbasis for executive directors and members of the Group Exco; and• to approve the overall Nedbank Group short-term and long-termincentive pools.As highlighted in a number of regulatory compliance requirements,the independence of staffmembers in the financial and risk controlenvironment is critical. In response to this requirement, the committeeensures that all staffmembers engaged in the financial and risk controlenvironments are independent, have appropriate authority, and areremunerated in a manner that is sufficiently independent of the businessareas they oversee and commensurate with their key role in the group.Effective independence and appropriate authority of such staff isnecessary to preserve the integrity of financial and risk management’sinfluence on reported results and individual remuneration.For such roles the committee oversees that their remuneration isadequate to attract and retain qualified and experienced staffmembers.Their performance measures as per their balanced scorecards are basedprincipally on the achievement of the objectives of their respectivefunctions.All the Nedbank Group remuneration components are aligned with riskoutcomes. The committee ensures that the underlying remunerationpractices support and are in compliance with the overall intent, whileensuring that the relevant risks are identified and mitigated accordingly.In terms of the pool size and individual allocation of variable remuneration,an appropriate range of risks are considered, in particular:• the cost and quantity of capital required to support the business riskprofile; and• the cost and quantity of the liquidity and interest rate risk assumedin the conduct of business.Remuneration philosophyThe overall purpose of total remuneration in Nedbank Group is toattract, retain, motivate and reward all its people appropriately. The totalremuneration philosophy is aimed at encouraging sustainable long-termperformance of the group and at all times aligning performance with thestrategic direction and specific value drivers of the business, as well as theinterests of stakeholders, in a manner that does not encourage excessiverisk-taking.The group defines total reward as a combination of all types of rewards,including financial and non-financial, indirect and direct, intrinsic andextrinsic rewards, and its total remuneration policy forms part of totalreward and supports the Nedbank Employee Value Proposition (EVP).The group’s market position is to pay for performance, while ensuringthat there is a distribution of remuneration around the market medianwhen performance is on par with predetermined financial and nonfinancialtargets. To this end all staffmembers have balanced scorecardsin place, which is a key input into determining individual remuneration.The key principles underpinning the remuneration policy are:• The governance and management of remuneration in the group bythe committee, Group Exco and management to ensure statutoryand regulatory compliance as well as alignment with codes of goodremuneration practice.• Supporting the Nedbank EVP by offering an appropriate mix of totalreward for its various employee groups that will attract, motivate andretain talented employees, and will stimulate employee satisfactionand engagement.• Transparency of and regular communication to all staff on remuneration.• Paying for performance, while ensuring appropriate distributionaround the desired market position and reflecting the skills indemand.• Managing remuneration and ensuring fairness, and internal andexternal equity.
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