Remuneration committee report

Pick n Pay Stores Limited

 

This report sets out the Company’s remuneration philosophy, the role of the remuneration committee, the remuneration structure of the Group, the remuneration and benefits granted to key executives during the 2012 financial year and the procedures followed in ensuring that remuneration practices adhere to appropriate corporate governance principles and ensure alignment with the Group’s strategy. This 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 to be held on 15 June 2012.

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 executive remuneration is performance related. The committee considers key performance indicators (KPIs) when setting executive director and senior management’s short-term incentives. In addition to cash remuneration (base pay, retirement and medical, 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.

Further KPIs, linked to Group strategy, have been developed in respect of certain key executives and will be implemented in the 2013 financial year.

REMUNERATION COMMITTEE 

The remuneration committee, which meets at least twice a year, is chaired by an independent non-executive director and comprises mainly non-executive directors. The committee operates in terms of a Board approved charter and its key responsibilities are as follows:

REMUNERATION COMMITTEE MEETINGS ATTENDANCE 

Director 

31 March 
2011 

13 October 
2011 
 

Hugh Herman (Chairman)

P 

P 

  
 

Gareth Ackerman 

P 

P 

  

Ben van der Ross 

P 

P 

P = Present

REMUNERATION STRUCTURE 

Remuneration comprises the following elements:

Base pay

The remuneration committee reviews the salaries of executive directors and senior management annually. They reflect the relative skill, experience, contribution, and performance of the individual. Base pay is set at levels which are competitive with the rest of the market so that the Group can attract, motivate and retain the right calibre of people to achieve the Group’s strategic business objectives. Executive base pay is benchmarked to information disclosed in the remuneration reports of comparative organisations. Annual increases in the base pay are determined with reference to the scope of the employee’s role, competence and performance of the employee as well as the projected consumer price index figures.

Retirement and medical

Pick n Pay contributes a total of 17.35% of salary towards retirement funding of executive directors and employees. In addition the Company also contributes towards medical aid. For further details please refer to note 23 of the Annual Financial Statements where retirement benefits are disclosed.

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; growth in earnings before interest, tax, depreciation and amortisation 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 various management levels. Senior 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.