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Prior to the commencement of the remuneration survey, the same
remuneration consultancy was contracted to perform a greenfields job
sizing of the same top 150 jobs. Only 12 jobs changed in size, and by no
more or less than one job size.
In aggregate, total guaranteed remuneration for the group is expected to
increase by 7.75%, in the forthcoming financial year.
Retirement funding and healthcare
Executives also participate in the membership of a company appointed
retirement fund which is compulsory for all permanent employees. In
South Africa, they participate as members of a restricted membership,
in-house defined contribution provident fund, offering both retirement
funding and insured benefits. Members are entitled to elect their pensionable
salary within defined parameters. A small number of executives remain
members of a closed defined benefit pension fund.
Membership of a company appointed medical aid is compulsory for all
non-bargaining unit employees and in South Africa executives belong to
a restricted membership scheme offering a variety of plans.
Variable remuneration
In addition to paying market related guaranteed packages, the remuneration
strategy at the executive and senior management level also comprises
variable remuneration in the form of bonus incentive schemes and share
incentive plans.
The primary bonus incentive scheme comprises participation in the
executive bonus scheme (EBS), comprising ‘EVA ® ’ (economic value added)
and ‘EBITDA’ target components.
Additionally, and where appropriate, executives also participate in
share incentive plans in the form of share plans which are subject to predetermined
performance criteria, as applicable.
The remuneration committee annually approves the determination of share
awards and sets and reviews the performance conditions and vesting of
such awards.
Executive Bonus Scheme (EBS)
The EBS is a target based scheme that defines the required performance
criteria in terms of maximising long term growth and return on investment
(EVA ® ) as well as short term cash flow (EBITDA), with amounts payable at
varying levels of achievement against criteria determined by the committee
prior to the commencement of the financial year. This scheme aligns
shareholder and management objectives by providing participants with
fair and equitable short term incentives, reinforcing and derived from
unit, divisional and group objectives, dependent on where the participant
is employed.
Participants of the EBS are primarily senior managers and executives.
Uniform parameters are used to determine eligibility and participation
levels and individual bonuses are calculated as a percentage of the
guaranteed package.
In respect of the executive directors, senior mangers and executives, the
participation levels and earning potential are as follows:
� 70% of the EBS bonus is derived from EVA ® performance; and
� 30% from EBITDA achievement.
The EBS also incorporates a bonus bank mechanism as one third of
bonuses in excess of targets are paid to participants following the end of
the financial year to which it relates and two thirds are deferred to a
bonus bank for payment up to the target percentages in years when
targets are not met. The bonus bank attracts interest and serves as a
retention mechanism as it is forfeited upon resignation or dismissal.
Share incentive plans
REMUNERATION REPORT continued
Share option scheme
Due to changes in the regulatory environment and best practice, awards
under the existing share option scheme have been discontinued, and
accordingly, no further options have been granted under this scheme
since 30 June 2006. The share option scheme nevertheless remains in
place for options already granted under the scheme, until such time as
these options are exercised or lapse.
The share options of the executive directors as well as the aggregated
share options of the three highest paid employees are disclosed below. In
addition, the value of existing future awards in respect of the vested but
unexercised share options based on the share price as at 30 June 2010
is disclosed.
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