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CORPORATE governance  
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Audit and risk committee
KS Fuller (chairman), BP Connellan, SD Jagoe, G Pretorius, DJ Rawlinson

The audit and risk committee, chaired by an independent non-executive director and comprising a majority of independent non-executive directors, meets at least twice a year. The committee reviews the group’s internal and external audit reports and agrees on the scope of audits. The committee operates in terms of its charter and reviews audit, accounting and financial reporting issues and ensures an effective internal control environment in the group. The committee reports bi-annually to the board on the effectiveness of risk controls and management within the group.

During the year, the following meetings took place:
Date   Meeting   Apologies tendered
14 May 2007   Regular  
12 October 2007   Special   G Pretorius
15 November 2007   Regular  
Remuneration committee
SD Jagoe (chairman), MJ Shaw, JC van der Horst

This committee comprises independent non-executive directors only and meets at least twice a year to make recommendations to the board on the framework of executive remuneration. These recommendations include granting share options in terms of the Reunert Share Option Scheme and performance-based incentives. The chief executive attends these meetings by invitation. In the past year, the remuneration committee met on 6 February 2007, 30 August 2007 and 20 November 2007, all with full attendance.
Executive remuneration philosophy
Reunert follows a holistic approach to executive remuneration. The total remuneration paid to executives is made up of a fixed base pay component (cash and benefit payments), a short-term incentive (variable) component and a long-term incentive scheme. Remuneration is market related and benchmarked against publicly available information.

In 2005, a decision was taken to increase the proportion of remuneration at risk relative to the guaranteed base pay component. The base pay component increases were capped at 6% for 2005 and 2006 while the short-term incentive was increased from a maximum of 100% of the cash package in 2005 to a maximum of 140% of the base pay component, with effect from the 2007 financial year. The base pay component increase for 2008 was capped at 8%.

The short-term incentive for executive management is based on economic value-added principles. Growth targets to be achieved on a compound basis were set in 2000 and are still applicable. The incentive is self-funding, where a percentage of returns in excess of the required growth is available for distribution to management, and is smoothed over a three-year period to avoid opportunism. The short-term incentive for executive directors is based on earnings per share.

All executives have, in addition to their financial targets, additional non-financial objectives that form part of the short-term incentive scheme. The scheme is structured to find an appropriate balance between financial and non-financial objectives as well as performance and behavioural criteria. These additional criteria, which are individually set, are only considered when the value-added or earnings targets are achieved.

Long-term incentives are provided through a share option scheme. Eligible executives are periodically, usually at two-year intervals, granted options that become exercisable in equal portions after three, four and five years. Participation in this scheme is limited and the overall number of shares under option, historically, has been less than 10% of Reunert’s issued shares at any time.

In keeping with current practice, a cash-based share purchase scheme and a share-price-linked incentive scheme were introduced during the 2007 financial year. This enables more employees to participate in long-term incentives, guard against excessive dilution and optimise tax planning.
Nomination committee
MJ Shaw (chairman), SD Jagoe, JC van der Horst

This committee comprises independent non-executive directors only and meets at least annually to make recommendations to the board on the composition of the board and to identify and nominate candidates to fill any vacancies. In addition, the committee is tasked to advise the board on succession planning. The committee met on 6 February 2007, 30 August 2007 and 20 November 2007, all with full attendance.
Group executive and risk management committee
G Pretorius (chairman), BP Gallagher, GJ Oosthuizen, DJ Rawlinson

The group executive and risk management committee comprises executive directors only and is constituted to assist the chief executive to manage the group. Executive directors and senior executives meet regularly to guide and control the overall direction of the group and to identify potential risk areas. The internal audit department assists the board and management in monitoring the risk management process.
Company secretary
The board has access to the advice and services of RMS. RMS fulfils the role of company secretary and administers the share option scheme and all statutory requirements of the company and the group. The board believes the management of RMS has the requisite attributes, experience and qualifications to fulfil its company secretarial commitments effectively.
The company continues to use RMB as its sponsor. RMB’s services include advising the board on the interpretation of, and compliance with, the listing requirements of the JSE and reviewing all notices required in terms of its statutes and JSE rules and regulations.
CORPORATE governance  
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