Corporate governance  
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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 shortterm 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. 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% and for 2009 it was capped at 10%.

The short-term incentive for executive management in operating divisions 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 twoyear 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.

Nomination committee >

MJ Shaw (chairman), SD Jagoe, TS Munday and 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 the following dates, all with full attendance. Mr TS Munday was elected to the committee effective 24 November 2008.
  Date   Apologies 
  5 February 2008   — 
  28 August 2008   — 
  24 November 2008   — 

Group executive and risk management committee >

G Pretorius (chairman), BP Gallagher, GJ Oosthuizen and 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.

Sponsor >

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.

External audit >

The board has appointed Deloitte & Touche to perform an independent and objective audit on the group’s annual financial statements. The financial statements are prepared in terms of International Financial Reporting Standards (IFRS). The board has considered the extent of non-audit related services provided by the external auditors and is satisfied that the independence of the external auditors is not compromised.

Accounting and internal controls >

Accounting and internal controls focus on critical risk areas. The controls are designed to provide reasonable assurance that assets are safeguarded from loss or unauthorised use and those financial records may be relied on for preparing the financial statements and maintaining accountability for assets and liabilities. The identification of risks and the implementation and monitoring of adequate systems of internal, financial and operating controls to manage such risks are delegated to senior executive management. The board acknowledges its responsibility for ensuring that management implements and monitors the effectiveness of systems of internal, financial and operating controls. The board, via the audit and risk committee, receives regular reviews from management on the effectiveness of established controls and procedures to ensure the accuracy and integrity of the accounting records and monitors the wider group’s businesses, risks and performance.

The board has not been informed by executive management or internal audit of any issue that would constitute a material breakdown in the functioning of these controls during the financial year under review.

Internal audit >

Instituted, comprehensive internal controls assist management and the directors in fulfilling their responsibility for preparing the annual financial statements, safeguarding assets and providing answers on transactions that are executed and recorded in terms of company and group policies and procedures.

Internal audit responds to these requirements by performing periodic independent evaluations of the adequacy and effectiveness of all controls, financial reporting structures and the integrity of all information systems and records.

Internal audit reports to the audit and risk committee and has unrestricted access to the chairman of the board.

Non-financial matters >

Reunert is committed to upholding and maintaining best international practices in the social, ethical, safety, health and environmental spheres of its business and acknowledges the responsibility it bears as a corporate citizen in society. The group sets the highest level of ethical standards for all its officers and employees in conducting business and dealing with all stakeholders.

Employment equity >

The group supports employment equity and is committed to providing equal opportunities for all employees. All business units have employment equity programmes that comply with legislative objectives and requirements. Various skills development, mentoring and training programmes exist within the group. An in-depth review of Reunert’s focus on people development is available in the sustainability report on pages 26 to 34.

Environmental issues >

Systems and policies are in place to control or influence issues that may have an impact on the environment. To see more on how we address these issues go to pages 33 and 34.

Communications with stakeholders >

Reunert is committed to ongoing and effective communication with all stakeholders. It subscribes to a policy of open, frank and timely communication in line with JSE guidelines and sound corporate governance practice. Executive directors conduct one-on-one interviews during open periods, whilst executive management interacts with investors and shareholders through participative, open investor days.

Numerous channels are used to disseminate information according to the preferences of the intended target audiences. These include ongoing dialogue with institutional investors, analysts and the media, and a corporate website with up-to-date information on the group.

Dealing in the company’s shares and closed periods >

Employees are restricted from dealing either directly or indirectly in the company’s shares on the basis of privileged price-sensitive information before it is publicly announced to the market.

Senior executives require permission from the chief executive before shares are purchased or sold. All directors require permission from the chairman before dealing in the company’s shares.

The group operates a closed period prior to the publication of its interim and year-end results.

During these periods, the group’s directors, officers and senior management may not deal in the shares of the company, nor may they discuss the group’s financial prospects with any outside party. Additional closed periods are enforced as required by any corporate activity.

Code of ethics >

The group’s code of ethics is printed on page 4 and is displayed on the company website. All employees are required to adhere to this code.

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