The Group Remuneration and Nominations Committee is mandated by the Board of Directors to support and advise on the Group’s remuneration philosophy and policy, and on new appointments to the Board.
Three independent non-executive members of the Board comprise the members of the Remuneration and Nominations Committee. The Chairman of the Board does not chair the Remunerations Committee but is the Chairman of the Nominations Committee, as required by the JSE Listings Requirements, and chairs the meeting when matters requiring the attention of a nominations committee are dealt with. The Chairman of the Board ensures that Committee has access to professional advice from outside the Group where necessary.
The Group has an extremely active and efficient Group Human Resources team which looks after the issues of human resource management in terms of social transformation, moral and social responsibility. The Group has an active training programme to enhance the skills of all its employees internationally and train them in the Group’s business.
POLICY ON DIRECTORS’ REMUNERATION
The directors are appointed to the Board to bring to the Group management expertise and strategic direction and to provide the necessary skills and experience appropriate to its needs as a diversified leading global business.
In following the strategy of an international non-asset based lead logistics provider, the Group’s human capital has been identified as one of the four primary inputs into its value adding processes. Hence it is important that our reward strategies and remuneration structures are designed to attract, motivate and retain high-caliber people at all levels within the Group, whilst fostering a culture of performance.
Consideration is given to total reward and on achieving an appropriate balance between fixed and variable remuneration and short and long term incentives for all employees, depending on seniority and roles. The guaranteed remuneration component paid to directors is based on industry benchmarks and targeted just below the median of the market. The Group maintains its discretion to pay a premium to the median for the attraction and retention of the directors.
NON-EXECUTIVE DIRECTORS’ FEES
Non-executive directors do not have service contracts with the Company but instead have letters of appointment. All non-executive directors have terms of appointment of three years and one-third of the non-executive directors retire each year at the Annual General Meeting in terms of the Company’s Memorandum of Incorporation. Each retiring director who is eligible and offers himself for re-election is then subject to re-election by shareholders.
The Chairman receives an annual fee which takes into consideration his role as Chairman of the Group, his attendance at Board and Committee meetings, and the breadth of that role coupled with the associated levels of commitment and expertise.
Other non-executive directors receive fixed fees for service on the Board and Board committees on the basis of meetings attended and chairmanship of Board committees. Non-executive directors do not receive short-term incentives nor do they participate in any long-term incentive schemes. The fees paid to non-executive directors are reviewed and approved annually by Shareholder at the Groups annual General Meeting held in July of each year.
EXECUTIVE DIRECTORS’ SERVICE CONTRACTS AND REMUNERATION
Each executive director is bound by a formal contract of employment. These contracts are formulated in a manner which is consistent with industry norms and legislative requirements. The contracts are for variable terms subject to notice periods ranging between 30 to 60 days and all contracts carry post-employment restraints for a period of two years, providing protection to the Group’s client base, employees and confidential information.
The Committee aims to align the directors’ total remuneration with stakeholders’ interests by ensuring that a significant portion of their package is variable in nature. Executive directors qualify for an annual incentive bonus calculated and paid in May of each year following the finalisation of the Group’s annual results for the previous financial period. The payment of this incentive bonus is subject to the achievement of certain performance targets that are directly linked to:
- the overall Group performance for the financial year;
- the performance of the specific division for which the director is responsible; and
- the individual director’s personal performance against role specific KPIs and the extent that the director lives the Group’s cultures and values.
Executive directors’ fixed remuneration components, which are quantified on a total cost to company basis (“TCC”), are reviewed annually in March of each year by the Committee so as to ensure sustainable performance and market competitiveness. In performing this review the remuneration packages are:
- compared to current remuneration surveys and levels within other comparable South African companies; and
- reviewed in light of the individual director’s own personal performance, experience, responsibility and Group performance.
The philosophy behind these annual reviews is to award percentage increases that are typically linked to current and forecast inflation levels, so as to primarily compensate for loss of real disposable income.
The fixed remuneration component or TCC typically constitutes three elements:
- A fixed base salary;
- Contributions by the Company to defined contribution retirement plans on behalf of the executive directors on the basis of a percentage of pensionable salary and which includes death and disability cover; and
- Contributions to the Group’s medical healthcare scheme.
Executive directors do not receive directors’ fees for attending board and committee meetings and are not specifically remunerated in any way for their role as directors of the Company.
Santova Share Option Scheme
The Group operates two Share Option Schemes as a means of providing long term incentives and retaining senior management and executive directors. In terms of these Schemes the Group can grant share options to qualifying employees to acquire shares in the Company. The rules of the Schemes are set down in scheme documents that have been approved by the JSE and filed with the Companies and Intellectual Property Commission. The Company Secretary has been appointed the Compliance Officer for the Schemes and the Remuneration and Nominations Committee will govern the Schemes on an ongoing basis. Non-executive directors are not entitled to participate in the Schemes.