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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.