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ADDITIONAL CORPORATE GOVERNANCE INFORMATION

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

The committee implements the board’s remuneration policy to ensure:

• 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.

The committee is tasked with:

• 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.

Package components include:

• 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.