|More information on the committee can be found here.|
|Non-executive directors receive fees in the top quartile for their role as directors and for their roles on Board Committees. Non-executive directors’ fees paid in the current ﬁnancial year are detailed below:|
|Chairman of the Board||R675,000|
|For the additional meetings and responsibilities arising from the Corporate Laws Amendment Act relative to subsidiaries.|
|There will be no change to these fees for the 2010 ﬁnancial year.|
|The fees paid to the trustees of the Massmart Holdings Limited Employee Share Trust are R40,000 each and R50,000 for the chairman.|
During the 2009 financial year the Remuneration and Nominations Committee comprised Messrs Kuseni Dlamini (Chairman), Chris Seabrooke, Mark Lamberti, Nigel Matthews and Ms Dawn Mokhobo. With the exception of Mark Lamberti, all committee members are independent non-executive directors. The CEO attends all committee meetings by invitation but is not present when his own remuneration is discussed.
Massmart, through the Remuneration and Nominations Committee, implements remuneration policies that enable it to recruit, retain and motivate the executive talent needed to achieve superior performance. The 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.
Our executive remuneration policy has three components, being:
The Committee considers and recommends to the trustees of the Massmart Holdings Limited Employee Share Trust any proposed shares or options that are granted in terms of the Share Trust rules. Annually the Committee reviews the Groups employee benefit funds, specifically the in-house medical scheme and the provident and pension funds, considering their performance, financial stability and the general principles governing the benefit levels being applied.
The Massmart remuneration policy strives for fixed remuneration at the median to upper quartile of comparable positions. Every two years the Committee receives a report prepared by independent remuneration consultants on the recent trends in, and the current levels of, short-and long-term executive remuneration in South Africa. In May 2009 the Committee received such a report prepared by 21st Century Business & Pay Solutions, an independent remuneration consultancy. As a result of this report, the remuneration of several executives and certain senior managers was adjusted.
As regards short-term or performance incentives, Massmart places particular emphasis on generous annual incentives for high performance for both executive directors and executive management. This policy, communicated to and understood by the Groups executives, codifies a range of performance incentives linked to annual headline earnings per share growth for the Group in excess of average CPI (as reported by StatsSA) plus 5%, or profit before tax for each Division, as appropriate. Executives can earn an increasing multiple of their monthly basic salary depending upon the earnings growth exceeding CPI plus 5% or higher % increments. With effect from 2006, an element of the annual incentive bonus was linked to non-financial performance, specifically the achievement of BEE transformation targets approved by the Remuneration and Nominations Committee. This incentive can amount to an additional one to three months salary. The 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 Massmarts growth in headline earnings per share in the prior year exceeds average CPI plus 5%. The amount allocated is based upon a factor of the executives 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.
With effect from July 2002, only members of the Executive Committee can elect to receive scheme shares, whilst all other participants receive options.
The comments on the next page provide further background and context to the figures disclosed in this note, Directors’ emoluments, and Interests of directors in the Company’s Share Scheme. These notes can also be found in the Group financial statements, note 36 and note 37.
Grant received a 12.7% increase to his salary and allowances for the 2009 financial year, from R2.55 million to R2.88 million. Grant did not receive any bonus in terms of the Groups Short-term Executive Incentive Scheme which rewards executives based on growth in headline earnings per share (HEPS), but did receive a three-month ad hoc bonus for his performance as CEO and another three-month bonus for the improvement in the Groups externally rated BEE score. These bonuses totalled R1.36 million. Grants total cash remuneration for the year of R4.86 million is 36.7% lower than that for 2008.
In terms of the rules of the Massmart Holdings Employee Share Trust, shares and options issued after 2002 must be exercised within six years of issue. During the 2009 financial year, Grant was therefore compelled to convert and sell 55,219 Massmart shares and options which he had held for more than five years. With the cash proceeds from the realised gain of R2.95 million, and after paying tax thereon, he purchased 33,210 Massmart shares.
Through the Share Scheme, Grant has 1,562,298 Massmart shares and options. The average length of time that he has held these shares and options is 3.5 years and the average strike price is R50.02 per share. A family trust of which Grant is a beneficiary also owns 445,010 Massmart shares directly.
Guy received a 10.0% increase to his salary and allowances for the 2009 financial year, from R2.04 million to R2.24 million. Guy did not receive any bonus in terms of the Groups Short-term Executive Incentive Scheme which rewards executives based on growth in HEPS, but did receive a three-month ad hoc bonus for his performance as CFO and another three-month bonus for the improvement in the Groups externally rated BEE score. These bonuses totalled R1.12 million. Guys total cash remuneration for the year of R4.11 million is 22.9% lower than that for 2008.
Guy did not sell any Massmart shares or options during the 2009 financial year.
Through the Share Scheme, Guy still has 1,032,898 Massmart shares and options. The average length of time that he has held these shares and options is 3.7 years and the average strike price is R48.75 per share. Guy also owns 22,000 Massmart shares directly.
Shareholders at the November 2008 annual general meeting approved the sale of Massmart treasury shares to the Groups five black non-executive directors. Accordingly, on 19 December 2008, each director purchased 20,000 Massmart shares for a nominal value of 1 cent each. The market price of the Massmart shares at the time of the transaction was R83.63 and so each director received deferred value of approximately R1.7 million.
The salient points relating to these shares were covered in detail in the resolutions for the November 2008 annual general meeting. Points to note here are that the shares attract ordinary dividends and have voting rights, and that they may only be sold in two 50% tranches in each of November 2011 and November 2013.
|Number of||Gain on|
|Relevant date||price (R)||price (R)||options||(R000s)||Expiry date|
|Details of directors' shares and share options per director:|
|Balance at the beginning of the previous year||1,846,138|
|New shares/options granted||26 May 2008||85,248||25 May 2014|
|Balance at the beginning of the year||1,931,386|
|Shares traded*||13 November 2000||12.25||(400,000)|
|Options exercised||27 May 2003||18.98||72.42||(55,219)||2,951|
|New shares/options granted||27 May 2009||77.56||86,131||26 May 2015|
|Balance at the end of the year||1,562,298|
|Comprising:||27 August 2001||10.95||150,000||26 August 2011|
|26 May 2004||29.87||35,919||25 May 2010|
|1 April 2005||41.91||400,000||31 March 2011|
|23 May 2006||54.13||750,000||22 May 2012|
|24 May 2007||94.25||55,000||23 May 2013|
|26 May 2008||72.86||85,248||25 May 2014|
|27 May 2009||77.56||86,131||25 May 2014|
|* These shares were transferred to the Pattison Family Trust|
|Balance at the beginning of the previous year||752,413|
|Options exercised||29 February 2008||17.43||72.26||(50,000)||2,742|
|New shares/options granted||1 April 2008||66.91||40,641||31 March 2014|
|26 May 2008||72.86||74,643||25 May 2014|
|Balance at the beginning of the year||817,697|
|New shares/options granted||27 May 2009||77.56||215,201||26 May 2015|
|Balance at the end of the year||1,032,898|
|Comprising:||10 March 2000||14.61||8,643||9 March 2010|
|13 November 2000||12.25||100,000||12 November 2010|
|27 August 2001||10.95||150,000||26 August 2011|
|26 May 2004||29.87||43,881||25 May 2010|
|1 April 2005||41.91||200,000||31 March 2011|
|23 May 2006||54.13||150,000||22 May 2012|
|24 May 2007||94.25||49,889||23 May 2013|
|1 April 2008||66.91||40,641||1 April 2014|
|26 May 2008||72.86||74,643||25 May 2014|
|27 May 2009||77.56||215,201||26 May 2015|