This report sets out the Group’s remuneration philosophy, the implementation thereof and the guidelines and assumptions used when determining senior executives’ pay packages. The report and the recommendations of the Remuneration committee have been approved by the Board and will be submitted to shareholders for consideration at the AGM. For detailed disclosure of the remuneration of directors please refer here.

Remuneration committee

The Remuneration committee, which meets at least twice a year, is chaired by an independent nonexecutive director and comprises only non-executive directors. The committee is responsible for reviewing and recommending the remuneration of executive and non-executive directors and senior management, to the Board. The Remuneration committee bases its recommendations upon the achievement of certain Key Performance Indicators (KPIs) by senior executives and prevailing market conditions.

Remuneration committee meetings attendance

Non-executive directors’ fees

In respect of non-executive directors, the Remuneration committee proposes fees to be paid for the membership of the Board and board committees. Such fees are market related, commensurate with the time required to undertake their duties and are approved by the Board and shareholders. Such remuneration is not linked to the performance of the Group or its share performance.

Fees for the current year and proposed for next year are as follows:

	Proposed 2011 R		2010   R
Chairman of the Board	3 000 000		1 500
Lead non-executive director	95 000		88 000
Member of the Board	280 000		265 000
Chairman of the Audit, Risk and Compliance committee	235 000		220 000
Member of the Audit,Risk and Compliance committee	95 000		88 000
Chairman of the Remuneration committee	120 000		110 000
Member of the Remuneration committee	60 000		55 000
Member of the Nominations committee	53 000		50 000

Remuneration philosophy

The Group’s philosophy is to remunerate its employees fairly in relation to the market and nature of services they provide. Employees may attract above market related remuneration in order to retain skills and experience. The Remuneration committee ensures that an appropriate portion of senior executives’ remuneration is performance related. The committee considers KPIs when setting executive director and senior management’s short-term incentives. In addition to cash remuneration (base pay, retirement and medical fund contributions, performance bonus, other fringe benefits), employees are afforded the opportunity to participate in Group share schemes, which align the interests of management to that of shareholders.

Base pay

The Remuneration committee reviews the salaries of executive directors and senior management annually. They reflect the relative skill, experience, contribution by and performance of the individual.

Retirement and medical

Pick n Pay contributes a total of 16.48% of salary towards retirement funding of executive directors and employees. In addition, the Company also contributes to the medical scheme.

Performance bonus

Performance bonuses awarded to management are based on the Group and individual performance in achieving KPI targets such as budgets set by the Board, growth in headline earnings per share and milestones attached to the implementation of Group strategy.

Other fringe benefits

Executive directors and management are granted the use of a company vehicle which includes service and maintenance, fuel and insurance. Vehicle bands vary according to management levels. Management have the choice of accepting a car allowance in lieu of a company car which value is determined by the vehicle band associated to their level of management.

Share option scheme

All permanent employees participate in the Group’s share option scheme. Share options are allocated for both years of service and status within the Group. It is the Group’s philosophy to recognise all employees and to reward employees with a part ownership. Status share options have vesting conditions relating to years of service and can only be exercised when the vesting conditions are met. For further information on share schemes offered by the Group please refer here.

The value of share options awarded to management is dependent on their level of seniority and the influence they may have over Group performance and strategy implementation. All options granted to executive directors and senior management are approved by the Remuneration committee and where appropriate may be linked to the attainment of certain share price growth hurdles. For further information regarding share options granted to directors refer here.