Governance

• Governance overview
• The Board
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• Remuneration
• Accountability & control
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• Frequently Asked Questions

Remuneration

Massmart strives for remuneration policies that enable it to recruit, retain and motivate the executive talent needed to achieve superior performance. The Remuneration and Nominations Committee, with periodic advice from external executive remuneration consultants, ensures the provision of executive remuneration packages that are competitive with reference to other major South African retail companies, as well as other companies similar to Massmart in their size, spread and complexity.

Remuneration policy

The policy strives for fixed remuneration at the median to upper quartile of comparable positions, but places particular emphasis on generous annual incentives for high performance for both executive directors and executive management. It codifies a range of performance incentives linked to annual headline earnings per share growth targets for the Group in excess of average CPIX plus 10%, or profit before tax targets for each Division, as appropriate.

With effect from 2006, an element of the annual incentive bonus was linked to non-financial performance, specifically the achievement of transformation targets approved by the Remuneration and Nominations Committee. This incentive will amount to between one and three months' salary in addition to the bonuses linked to growth in headline earnings per share or profit before tax. The Remuneration and Nominations Committee also has the discretion to reward superior individual performance.

Long-term equity incentive plans ensure the alignment of executive reward with shareholders' interests, in particular the sustained creation of shareholder value. New issues of annual allocations of shares or options are only allowed when Massmart's growth in headline earnings per share in the prior year exceeds average CPIX plus 5%. The amount allocated is based upon a factor of the executive's total prior year remuneration including incentive bonus.

The Committee believes that participants in the employee share scheme should, on average, hold unvested shares or options representing value equivalent to approximately three times their annual remuneration.

Only members of the Executive Committee can elect to receive scheme shares, whilst all other participants receive options.