The remuneration committee is responsible for the group’s remuneration philosophy, overseeing performance-based criteria and incentives for executive directors and senior executives, and recommending to the board grants made in terms of the Reunert share option schemes.
The committee is tasked with ensuring that individual awards are linked to performance and aligned with the interests of shareholders.
Composition and meetings
NDB Orleyn (chairman), SD Jagoe, TS Munday, JC van der Horst
The remuneration committee consists of at least three independent non-executive directors. The chairman of the Reunert board may not act as chairman of this committee. The committee meets at least twice a year to make recommendations to the board on compensation and conditions of service for executives, and to approve salaries and bonuses for employees who earn more than R700 000 per year. The chief executive attends meetings by invitation.
With the exception of the chairman, all members are independent non-executive directors. The board is satisfied that Thandi Orleyn is the most suitable chairman for the remuneration committee given her relevant experience. The board is confident that her non-independence, according to King III, does not impede her ability to chair the committee.
| The table below records attendance at the committee’s meetings: |
| |
|
16 Nov 2010 |
|
17 Feb 2011 |
|
17 May 2011* |
|
30 Aug 2011* |
|
6 Sep 2011* |
|
6 Oct 2011* |
|
14 Nov 2011 |
| |
|
|
|
|
|
Special |
|
Special |
|
Special |
|
Special |
|
|
| NDB Orleyn |
|
 |
|
|
|
|
|
|
|
|
|
|
|
|
| TS Munday |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| JC van der Horst |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| SD Jagoe |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| * |
The special meetings held by the committee were convened primarily to deliberate various changes proposed by management to the remuneration philosophy and structures of Reunert. |
|
Remuneration activities
The committee dealt with the following matters in the year:
- Reviewed the base salary and other compensation elements for executive directors and group executives
- Approved the bonuses earned in respect of the 2011 financial year
- Approved the performance measures, targets and allocation guidelines for short-term incentives for the 2012 financial year
- Approved the performance criteria for the award of share options to executive directors and group executives in the 2012 financial year
- Conducted a comprehensive review of the group’s remuneration philosophy
- Approved the overall salary increases for all employees in the group.
Executive remuneration
The remuneration structure at senior management level consists of fixed pay, variable pay in the form of incentive bonus schemes, and long-term incentives in the form of employee share incentive schemes. Senior management remuneration is determined by considering market comparisons and assessing performance against pre-determined targets. Strategic and business objectives, which are reviewed periodically, as well as a general assessment of performance, are taken into account.
The remuneration committee and the board conduct an annual review of the fixed salary (cash package) earned by senior management. Packages are set with due consideration of relevant external market data and an assessment of individual experience. Diversity is also considered given the group’s commitment to transformation at senior management level.
The variable (cash incentive) component of senior executive pay, which includes executive directors, is linked to performance and capped at 140% of the fixed salary, including all cost-to-company items. The performance criteria for determining variable pay is the same for all executive directors and is set annually.
The group’s current philosophy is to pay a lower fixed salary with a higher cash-incentive component.
Incentive bonus scheme
The incentive bonus scheme is based on the achievement of pre-determined targets and an assessment of the individual’s overall performance. The targets include corporate and, where applicable, operational performance measures, as well as individual performance against pre-determined objectives related to key business strategies and requirements.
Share incentive schemes
The objective of the group’s share incentive schemes is to align shareholder and management interests, and assist in attracting, retaining and rewarding management appropriately.
Reunert currently operates a share incentive scheme in terms of which the vesting of options depends on remaining in the employ of the group. The purpose of the scheme is to assist in retaining key employees and those with high potential.
In 2012, as recommended by King III, Reunert will amend the scheme’s criteria to include the introduction of performance shares, which will vest only if certain performance conditions are met. Performance conditions will be related to the company’s medium-term business plan. Targets will include growth in earnings per share, total shareholder return and return on capital employed. The targets set will be challenging, but realistic.
Actual awards each year will be made considering the job level and cash package of the participating employee, individual performance and the combined value of the awards in relation to appropriate benchmarks.
Reunert accounts for share option awards as equity settled instruments in terms of IFRS 2 Share-based Payments. The costs associated with the settlement of awards under the share schemes do not qualify for a tax deduction.
Details of the awards made during the year, as approved by the remuneration committee and the board, are detailed in note 19.
Other benefits
Membership of an approved company pension fund is compulsory for all senior management and life insurance benefits are provided. Other benefits include the provision of medical aid.
Executive directors’ remuneration
| R’000 |
Salary |
Bonus
and
perfor-
mance
related
payments |
Travel
allow-
ances |
Retire-
ment
contri-
butions |
Medical
contri-
butions |
Leave
payment |
Other |
Sub
total |
Gains
options
exercised |
|
Total |
| 2011 |
|
|
|
|
|
|
|
|
|
|
|
| NC Wentzel1 |
3 839 |
1 800 |
126 |
389 |
58 |
– |
12 000 |
18 212 |
– |
|
18 212 |
| BP Gallagher |
2 159 |
875 |
– |
217 |
24 |
– |
– |
2 400 |
1 120 |
|
4 395 |
| MC Krog2 |
451 |
300 |
16 |
35 |
– |
– |
– |
502 |
– |
|
802 |
| GJ Oosthuizen |
1 805 |
– |
108 |
189 |
23 |
– |
– |
2 125 |
1 130 |
|
3 255 |
| DJ Rawlinson |
2 029 |
875 |
60 |
209 |
52 |
– |
– |
2 350 |
1 344 |
|
4 569 |
| |
10 283 |
3 850 |
310 |
1 039 |
157 |
– |
12 000 |
25 589 |
3 594 |
|
31 233 |
| |
|
|
|
|
|
|
|
|
|
|
|
| 2010 |
|
|
|
|
|
|
|
|
|
|
|
| NC Wentzel |
655 |
500 |
21 |
65 |
9 |
– |
– |
1 250 |
– |
|
1 250 |
| G Pretorius |
2 828 |
2 887 |
50 |
313 |
17 |
3 065 |
7 113 |
16 273 |
– |
|
16 273 |
| BP Gallagher |
1 877 |
825 |
120 |
201 |
22 |
– |
– |
3 045 |
– |
|
3 045 |
| GJ Oosthuizen |
1 648 |
875 |
108 |
173 |
21 |
– |
– |
2 825 |
– |
|
2 825 |
| DJ Rawlinson |
1 799 |
1 175 |
102 |
191 |
58 |
– |
– |
3 325 |
– |
|
3 325 |
| |
8 807 |
6 262 |
401 |
943 |
127 |
3 065 |
7 113 |
26 718 |
– |
|
26 718 |
| 1 |
NC Wentzel and the company reached a mutual separation agreement on 21 September 2011, in terms of which severance benefits of R12 million were paid. |
| 2 |
MC Krog was appointed to the board on 21 September 2011 and her remuneration includes that earned as a prescribed officer from 15 July 2011 as well as a director from appointment date. |
|
| Prescribed officers’ remuneration |
| |
Salary
R’000 |
Bonus and
performance
related
payments
R’000 |
Travel
allow-
ances
R’000 |
Retire-
ment
contri-
butions
R’000 |
Medical
contri-
butions
R’000 |
Leave
payment
R’000 |
Other
R’000 |
Sub
total
R’000 |
Gains on
options
exercised
R’000 |
Total
R’000 |
| 2011 |
|
|
|
|
|
|
|
|
|
|
| Officer A |
1 031 |
– |
80 |
151 |
34 |
271 |
1 456 |
3 023 |
6 951 |
9 974 |
| Officer B |
1 506 |
1 728 |
24 |
143 |
49 |
– |
6 |
3 456 |
1 244 |
4 700 |
| Officer C |
1 226 |
2 200 |
38 |
120 |
68 |
– |
6 |
3 658 |
– |
3 658 |
| Officer D |
1 153 |
1 400 |
60 |
123 |
58 |
– |
6 |
2 800 |
– |
2 800 |
| Officer E |
930 |
1 262 |
120 |
167 |
70 |
– |
– |
2 549 |
– |
2 549 |
| Officer F |
887 |
1 165 |
111 |
154 |
36 |
– |
– |
2 353 |
– |
2 353 |
| |
6 733 |
7 755 |
433 |
858 |
315 |
271 |
1 474 |
17 839 |
8 195 |
26 034 |
| Top three executives’ remuneration |
| King III recommends that the remuneration of the top three executives, excluding executive directors and prescribed officers, be disclosed. Due to their specialised skills and the competition for top skills in South Africa, Reunert does not wish to disclose the names of these individuals. However, their remuneration is tabled below: |
| |
|
| 2011 |
R’ 000 |
| Employee A |
4 903 |
| Employee B |
2 684 |
| Employee C |
2 573 |
| Share options of executive directors |
|
|
|
|
|
|
|
| |
Balance of
unexercised
share options
as at 1 October
2010 |
Number of
options
granted
during the
year |
Number of
options
exercised
during the
year |
Balance of
unexercised
share options
at 30 Sep
2011 |
Option
price
R |
Market
price on
exercising
R |
Date of
allocation |
Date of
exercising |
Date from
which
exercisable |
| BP Gallagher |
50 000 |
|
(50 000) |
– |
41,90 |
64,30 |
29/8/2005 |
18/11/2010 |
29/8/2008 |
| |
50 000 |
|
|
50 000 |
39,30 |
|
18/6/2009 |
|
18/6/2012 |
| |
|
48 000 |
|
48 000 |
59,55 |
|
17/2/2011 |
|
17/2/2014 |
| GJ Oosthuizen |
50 000 |
|
(50 000) |
– |
41,90 |
64,50 |
29/8/2005 |
25/11/2010 |
29/8/2008 |
| |
50 000 |
|
|
50 000 |
39,30 |
|
18/6/2009 |
|
14/10/2011 |
| |
|
42 000 |
|
42 000 |
59,55 |
|
17/2/2011 |
|
14/10/2011 |
| DJ Rawlinson |
60 000 |
|
(60 000) |
– |
41,90 |
64,30 |
29/8/2005 |
18/11/2010 |
29/8/2008 |
| |
50 000 |
|
|
50 000 |
39,30 |
|
18/6/2009 |
|
18/6/2012 |
| |
|
47 000 |
|
47 000 |
59,55 |
|
17/2/2011 |
|
17/2/2014 |
| |
310 000 |
137 000 |
(160 000) |
287 000 |
|
|
|
|
|
| The share options above do not include the 200 000 share options at R59,06 and the 110 000 share options at R59,55 shares of NC Wentzel as he resigned from the board on 21 September 2011. In terms of the mutual separation agreement with the company, he had until 23 October 2011 to early exercise his options, which he did not and therefore the options were forfeited on that date. |
Non-executive directors’ remuneration
Non-executive directors receive fees for their services as members of the Reunert board and committees. Directors’ fees are recommended by the remuneration committee and the board, and proposed by the chief executive to the shareholders for approval at each AGM.
As required by the Companies Act, the remuneration of non-executive directors will be authorised by special resolution at the AGM. Remuneration for the period 1 March 2011 to 28 February 2012 was approved by special resolution at a general meeting held on 1 July 2011.
The non-executive directors’ fees paid for 2011, as well as the proposed fee structure for the financial year ending
30 September 2012 are set out below:
| |
|
2011
R’000 |
|
2010
R’000 |
| TS Munday |
|
643 |
|
506 |
| BP Connellan (retired 8 February 2011) |
|
64 |
|
193 |
| YZ Cuba (appointed 1 January 2011) |
|
206 |
|
– |
| KS Fuller (retired 2 February 2010) |
|
– |
|
75 |
| SD Jagoe |
|
377 |
|
244 |
| KJ Makwetla (retired 8 February 2011) |
|
55 |
|
150 |
| TJ Motsohi |
|
154 |
|
117 |
| KW Mzondeki (appointed 1 November 2009) |
|
237 |
|
177 |
| NDB Orleyn |
|
252 |
|
154 |
| SG Pretorius (appointed 22 February 2011) |
|
181 |
|
– |
| MJ Shaw (retired 2 February 2010) |
|
– |
|
96 |
| JC van der Horst |
|
250 |
|
166 |
| R van Rooyen (appointed 1 November 2009) |
|
334 |
|
198 |
| |
|
2 753 |
|
2 076 |
Thandi Orleyn
Chairman
14 November 2011
Sandton
|
