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Results for the year ended 30 June 2017 have officially been released.
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Governance
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Remuneration Report
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Remuneration Report


During the reporting period, the decision was made to incorporate the nomination responsibilities to the remuneration committee and have a combined committee responsible for both remuneration and nomination matters. The chief executive officer and the chief financial officer are invited to attend all the meetings but may not participate in discussions on their own remuneration.

The chairman of the board is not eligible for appointment as chairman of the committee, but will preside as chairman when the committee fulfils its oversight responsibilities on nomination matters and board/director interactions.

The committee operates under formal terms of reference of which it is required to meet at least twice a year in order to fulfil the functions assigned to it. The term of reference was updated with nomination responsibilities and recommended practices of King IV for implementation in the current financial year.

Duties and philosophy

The remuneration and nominations committee assists in developing a remuneration strategy and philosophy for the board. The committee determines the remuneration arrangements, profit participation and benefits of the executive directors and executive management, and ensures remuneration policies implemented are aligned with the strategy of the group and linked to company and individual performance.

The remuneration philosophy reflects Accéntuate’s commitment to be compliant with best practice in the areas of remuneration, retention and reward to ensure that the group attracts and retains exceptional talent. The remuneration packages and incentives are regularly evaluated against marketrelated surveys. The interests of shareholders and the financial and commercial well-being of the group are taken into account by the committee. Directors’ remuneration packages are structured on a cost-to-company basis and include contributions to healthcare, disability, life insurance and retirement benefits.

The remuneration committee considers and recommends to the board matters relating to employee benefits and short-term and long-term incentives.

Executive incentive schemes are subject to the approval of the remuneration and nominations committee and are based on market conditions and the achievement of prescribed and measurable performance targets.

The committee is responsible for regularly reviewing and making recommendations on the group’s board structure and the size and composition of the board. The committee furthermore ensures that an appropriate balance exists between executive, non-executive and independent directors and considers and approves the classification of directors as being independent, in line with the King Code. It assists with the identification and nomination of new directors and appointment by the board and/or shareholders and oversees induction and training of directors, also taking into consideration the newly adopted gender diversity policy. The composition of board and subcommittees will be aligned to the requirements of King IV for the financial year ending 30 June 2018.

Executive directors’ remuneration

Executive remuneration comprises three components:

Guaranteed remuneration
Guaranteed remuneration includes a monthly basic cash salary as well as other benefits such as travel and vehicle allowances, retirement funding and medical aid contributions. The executive directors’ guaranteed pay and incentive awards are reviewed annually by the remuneration and nominations committee. The individual salaries of executive directors are adjusted in accordance with their own performance, experience, level of responsibility and group performance. Executive directors do not receive directors’ fees for attending board and sub-committee meetings.

Short-term incentive scheme
The following performance criteria will be measured for the 2017/2018 financial year to determine bonus payments made to executive directors:

- Hurdle 1: 12% return on equity (“ROE”);
- Hurdle 2: 80% of the previous year’s earnings before interest and tax (“EBIT”);
- Hurdle 3: other elements:

- 50% of award based on ROE achieved target (hurdle 1 above)
- 25% of award based on strategic goals and targets achieved
- 15% of award based on operational targets/goals
- 10% of award is at the discretion of the board

Long-term incentive scheme
A notional share performance plan has been adopted and the following performance criteria would be used to measure performance in this regard:

- Performance would be measured on the total movement in total shareholders’ return (“TSR”) as a percentage compared to the percentage movement in the Industrial Share Index (“ISI”);
- Shareholder return calculated using 90-day VWAP leading to the start and the end of the measuring period;
- If ISI is lower at the end of the three-year period than at the time of the award, and TSR movement is also negative, then no vesting can take place; and
- The maximum of options would be based on twice the executive’s guaranteed package. Directors’ emoluments are detailed in note 31 of the annual financial statements.

Executive directors’ remuneration and non-executive directors’ fees can be further referenced and compared in note 31 on page 96 of this integrated annual report. Share-based payments relating to directors are referenced in note 25 on page 88 of the integrated annual report (2017).

Succession planning

The remuneration and nominations committee reviews the group’s succession plan and communicates any areas of concern to the board. The group presently has succession planning for all senior executive positions. The development of the plan is ongoing and is formally reviewed at least annually.

Non-executive directors’ remuneration

Non-executive directors’ fees consist of an annual retainer fee and a meeting fee per meeting attended. It is proposed that the non-executive directors be paid as follows:


Non-executive directors receive no benefits from the company for their services as directors other than their fees.

Committee evaluation

The company secretary conducted a self-evaluation of the committee’s performance, mix of skills and individual contributions of members, and its achievements in terms of its mandate from the board. The results were reviewed by the committee, which was satisfied with the overall assessment and execution of its responsibilities.


 
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