Sustainability

Our approach is guided by the Global Reporting Initiative. Since 2008, sustainability reporting has been part of, and has been integrated with, our annual report. It is contained in a section entitled Sustainability at Bidvest.

As members of a multi-faceted, decentralised group, our divisions may face different sustainability issues. Reporting meaningfully in totality presents a challenge, although some key issues are common.

Sustainability at Bidvest is about being Proudly Bidvest and offers employees a fresh way of thinking that inspires them, and enables a new generation of entrepreneurs to create business value that integrates evolving financial, social and environmental needs and expectations.

An online internet-based data collection tool has been developed to facilitate the collation, management and reporting of sustainability issues.

Group environmental and HIV/Aids policies have been adopted by the risk committee and board while some divisions have developed specific environmental policies relevant to their businesses.

The Bidvest communications team uses various media tools to build awareness of business sustainability issues, including themes such as “Green is Gold” to highlight the growth, profit and savings potential of environmental initiatives.

Relationships with shareholders

The Group pursues dialogue with institutional investors based on constructive engagement and mutual understanding of objectives, covering statutory, regulatory and other directives on the dissemination of information by companies and directors.

To foster dialogue and communicate Group strategy and performance there are regular presentations to, and meetings with, investors and analysts. High standards of promptness, relevance and transparency underpin our information effort. Information is distributed via a broad range of communication channels, including the internet. Great care is taken to maintain the security and integrity of information while ensuring that critical financial information reaches all shareholders simultaneously.

We’re Proudly Bidvest and take pride in presenting a full, fair and honest account of our performance.

Board committees

Specific responsibilities have been delegated to several committees, each with detailed terms of reference.

Transparency and full disclosure characterise communication between board committees and the board. Committees are free to take independent outside professional advice and are subject to regular board evaluation of their performance and effectiveness.

The executive committee consists of the chief executive, Group financial director and the divisional chief executives of major divisions. The committee considers major decisions and refers decisions that have their sanction to the board for approval. Non-executive directors are invited to attend.

The South African executive committee consists of the chief executive (chairman), Group financial director, the divisional chief executives of the South African divisions, LI Jacobs, L Madikizela, SG Mahalela, P Nyman, AC Salomon and SA Thwala. The committee considers major decisions relating to South African operations and refers them to the board for approval.

The remuneration committee consists of DDB Band (chairman), D Masson and JL Pamensky and, in consultation with the chief executive and Group financial director, is responsible for the performance assessment and approval of a remuneration strategy for the board directors, including the chief executive, Group financial director and divisional executives.

A closer look at the remuneration committee

Our remuneration philosophy promotes the Group’s entrepreneurial culture within a decentralised environment with the aim of achieving sustainable growth within all businesses. Our philosophy emphasises the fundamental value of our people and their role in attaining this objective.

The board defines remuneration philosophy and aligns business strategy and objectives. We seek a balance between employee and shareholder interests while supporting entrepreneurial drive.

Deliberations of the remuneration committee are informed by performance reviews at absolute and relative levels – from individual, divisional and Group perspectives.

A critical success factor for the Group is its ability to retain and motivate the talent required to achieve strategic and operational objectives. Both short- and long-term incentives are used to this end.

Delivery-specific short-term incentives are viewed as strong drivers of performance. A significant portion of top management’s reward is variable as it is determined by the achievement of realistic profit targets and an individual’s personal contribution to the growth and development of their immediate business and the wider Group.

Long-term incentives align the objectives of management and shareholders for a sustained period.

Policy

• Salary structures and policies, as well as cash and share-based incentives, motivate sustained high performance and are linked to realistic performance objectives
• Stakeholders are able to make a reasonable assessment of reward practices and governance processes
• Compliance with all applicable laws and codes

GOVERNANCE

Board responsibility

The board carries ultimately responsible for remuneration policy. The committee operates to a board-approved mandate. The board may refer matters for shareholder approval; for example, new and amended share-based incentive schemes and non-executive directors’ attendance and committee fees. During the year, the board accepted the recommendations made by the committee.

The remuneration committee

An independent non-executive director presides. Our annual report carries an attendance register.

• reviewing Group remuneration philosophy and policy
• determining (subject to board and shareholder approval) the remuneration of executive directors, the Group chairman and non-executive directors
• determining percentage increases of the guaranteed remuneration of executive directors across the Group, as well as short-term incentives
• agreeing incentive schemes and awards for executive directors

The chief executive attends meetings by invitation. Other members of executive management can be invited when appropriate.

No individual, irrespective of position, is present when their remuneration is discussed.

To determine the remuneration of executive and non-executive directors and certain senior executives, the committee reviews market and competitive data and considers performance reviews while remaining cognizant of local conditions.

The committee assesses market practice relating to share-based incentive plans and considers market-related information in its review of board and committee fees. The board reviews committee proposals and, where required, submits them to shareholders for approval at the annual general meeting.

STRUCTURE

Non-executive directors

Terms of service
Non-executive directors are appointed by the shareholders at the AGM. Interim board appointments are permitted between AGMs. Appointments are made in accordance with Group policy. Interim appointees retire at the next AGM when they make themselves available for re-election. Non-executive directors are required to retire on the third anniversary of their appointment and may offer themselves for re-election. The board proposes their re-election to shareholders. There is no limit to the number of times a non-executive director may seek re-election.

Fees
Non-executive directors receive fees for service on boards and board committees dependent on attendance. There are no contractual arrangements for compensation for loss of office.

Non-executive directors do not receive short-term incentives nor do they participate in any long-term incentive schemes except where non-executive directors previously held executive office and they remain entitled to unvested benefits arising from their period of employment. The company does not provide pension contributions to non-executive directors. Management reviews non-executive directors’ fees annually. After discussions with the committee, recommendations are made to the board which in turn proposes fees for approval by shareholders at the AGM. The Bidvest annual report gives details of each non-executive director’s fees.

Executive directors

Executive directors receive a remuneration package shaped by a total-cost-to-company philosophy (including basic remuneration and retirement/medical and other benefits) and, like other employees, qualify for long-term incentives.

• salary determined by their market value and the roles they play
• Short-term incentives to encourage the achievement of performance objectives
• Long-term incentives to reward the sustainable creation of shareholder value and align behaviour that is consistent with this goal

As Bidvest operates diversified businesses of various size in different geographies and industries, the remuneration of executive directors varies. Details of each executive director’s emoluments are reflected in our annual report.

Terms of service
The minimum terms and conditions applied to South African executive directors are governed by legislation. The notice period for these directors is one month, unless otherwise stated in their employment contract. Terms of service for executive directors outside of South Africa are governed by local labour legislation.

Short-term incentives
Executive directors participate in performance bonus schemes to reward exceptional performance. Individual awards are based on job level and business unit and individual performance.

Long-term incentives
Share-based incentive plans support the objective of skill retention over the longer term. The intention is to align the interests of the Group, its businesses and employees while attracting and retaining skilled, competent people. The granting of share incentive awards is subject to the achievement of business and individual performance targets. The achievement of these objectives is reviewed and approved by the committee.

Details of benefits accruing to executive directors appear in the annual report.

At the November AGM, the Group will seek approval for a new conditional replacement scheme to replace the current share incentive plan. Under the proposed plan, awards may be made as conditional share awards (a conditional right to receive shares) or as quanto stock units (a conditional right to a future cash bonus). Vesting of shares or cash would be subject to the achievement of specified performance conditions. Group and operational performance conditions, each with different weightings, would be imposed. The anticipated performance period is three years, coinciding with the Group’s financial year. After the performance conditions have been tested, and the number of awards to be settled is determined, the shares or cash would be delivered according to a vesting schedule.

The audit committee consists of NG Payne (chairman), D Masson and JL Pamensky. They all possess the requisite financial and commercial skills and experience. The Group financial director, RW Graham, P Nyman, AC Salomon, the Group internal audit manager and the external auditors are invited. Members of management attend, as required. Internal and external auditors have unrestricted access to committee members. They also have the right to a private hearing without management present. The committee meets at least four times a year. Subsequent to year-end, NP Mageza was appointed to the audit committee.

The audit committee ensures conformity with the corporate governance manual and the principles of good corporate practice and entrenches a Group-wide culture of good governance.

A closer look at the audit committee

Among other things, the committee reviews interim and final financial statements to ensure they accurately reflect our financial position in line with Group accounting policies and in compliance with International Financial Reporting Standards. The committee then recommends to the board the publication of such results.

The committee also assesses whether significant statutory and financial risks have been identified and are being monitored and managed through internal financial controls, and that appropriate standards of accounting, governance, reporting and compliance are in operation.

The audit committee determines the purpose, authority and responsibility of the internal audit function under the internal audit charter. Most divisional internal audit functions are performed in-house under the guidance and coordination of the Group internal audit manager. The committee reviews the scope and coverage of the internal audit function, making recommendations where necessary.

The audit committee recommends to the board, for its consideration and acceptance by shareholders, the appointment of external auditors. The audit committee also sets out the principles for the performance of non-audit services by the external auditors. The audit committee reviews both the Group and divisional audit committee reports.

The Group has adopted the principle of having one set of auditors per division, while rationalising the balance of audit firms engaged to two (Deloitte & Touche and KPMG Inc).

Deloitte & Touche replaced KPMG Inc. as the Group’s lead auditors in the 2008 financial year. The committee has reviewed and confirmed the independence and objectivity of the external auditors. Accordingly, Deloitte & Touche were proposed as the Group auditors for the coming financial year.

Each division has its own audit committee, operating under a delegated authority of the Group audit committee. The divisional audit committees report to divisional boards and the Group audit committee. Each divisional audit committee has at least one member who is a non-executive to the division. A non-executive presides over the divisional committee.

In line with the Corporate Laws Amendment Act (effective, December 2007), the audit committee has been be reconstituted and is made up solely of independent non-executive members.

The risk committee is guided by a charter supported by the Group risk management policy, framework and minimum standards for risk management, which were finalised in June 2007 and implemented by all divisions. The committee comprises: NG Payne (chairman), the chief executive, chief executives of the divisions, chief executives of the Bidfood subdivisions, the Group financial director, D Masson, P Nyman and AC Salomon.

The committee reviews and assesses the interventions required in response to Group-wide risks and operational risks requiring Group action. Insurance and related matters are also dealt with as the Group uses a centralised Group insurance programme.

The committee delegates operational risk responsibilities to divisional risk committees, each headed by the respective chief executives. Divisional risk committees meet regularly and are supported by risk officers in each company.