Remuneration committee report
Pick n Pay Stores Limited
Ex gratia payments made to directors
Outgoing CEO Nick Badminton resigned effective 2 February 2012. Nick was integral to the development of the strategy currently being implemented in the Group and as such the Board requested that he sign a restraint of trade agreement, effectively prohibiting him from joining any other South African retailer for a period of two years. Based on the nature and terms of this agreement, the remuneration committee recommended a restraint of trade payment of R10.1 million as compensation for the two-year period.
Prescribed officersThe Board is wholly responsible for the formulation, development and effective implementation of Group strategy. In turn the Board designates operational strategy implementation and general executive management of the business to its executive directors mentioned above. As such, in terms of the Companies Act, the executive directors of the Board are identified as our prescribed officers, and their remuneration is detailed above.
Top three earnersIn accordance with King III, we disclose below the top three earners of the Group, excluding executive directors, identified by the total remuneration awarded.
 |
2012 |
Remune- |
Retire- |
Per- |
Fringe |
Cash |
Expense |
 |
 |
|
|
|
|
|
|
|
|
Executive 1 |
1 899.0 |
347.9 |
1 540.0 |
260.9 |
4 047.8 |
1 206.4 |
||
Executive 2 |
2 460.9 |
429.4 |
220.2 |
177.6 |
3 288.1 |
628.7 |
||
 |
Executive 3 |
2 604.0 |
67.7 |
382.0 |
70.0 |
3 123.7 |
— |
 |
|
|
|
|
|
|
|
|
|
2011 |
||||||||
Executive 1 |
3 919.7 |
352.8 |
295.1 |
1 362.0** |
5 929.6 |
70.8 |
||
Executive 2 |
1 770.0 |
300.1 |
1 400.0 |
372.7 |
3 842.8 |
1 709.5 |
||
|
Executive 3 |
2 301.0 |
417.8 |
204.0 |
121.1 |
3 043.9 |
751.7 |
|
| * | The performance bonus relates to the amount provided in the current financial year |
| ** | Payment for retention of services |
Key management personnel
The Board together with the Group Executive committee forms the key management personnel who have authority and responsibility for planning, directing and controlling activities of the Group. The total remuneration for the key management personnel is tabled below.
|
|
Directors’ |
Remune- |
Retire- |
Per- |
Fringe |
Total |
Share- |
|
|
|
|
|
|
|
|
|
|
|
2012 |
5 972.0 |
27 306.8 |
3 893.8 |
1 972.3 |
13 015.4** |
52 160.3 |
18 580.4 |
||
|
2011 |
6 077.0 |
26 182.3 |
4 097.7 |
1 481.0 |
5 218.7*** |
43 056.7 |
18 738.9 |
|
| * | The performance bonus relates to the amount provided in the current financial year |
| ** | Includes a restraint of trade payment of R10.1 million paid to Nick Badminton |
| *** | Includes a R1.5 million retirement gratuity and a payment of R1.4 million for retention of services |
No key management personnel had a material interest in any contract with any Group company during the year.
Non-executive directors’ feesIn respect of non-executive directors, the remuneration committee proposes fees to be paid for the membership of Board and Board committees. Such fees are market related, commensurate with the time required to undertake their duties and must be approved by the Board and shareholders. Approved fees are set for the year and are not subject to attendance at each meeting as generally attendance at Board meetings is very good. Such remuneration is not linked to the performance of the Group or its share performance. Specifically, non-executive directors do not receive performance related bonuses and are not granted share options. The fees for 2012 were approved by shareholders in the AGM held on 10 June 2011 and the proposed fees for 2013 will be submitted to shareholders for approval in the AGM to be held on 15 June 2012.
Fees for the current year and proposed for next year are as follows:
|
|
Proposed |
2012 |
|
|
|
|
|
|
Chairman of the Board |
3 450 000 |
3 000 000 |
||
Lead non-executive director |
100 000 |
95 000 |
||
Member of the Board |
300 000 |
280 000 |
||
Chairman of the audit committee |
250 000 |
235 000 |
||
Member of the audit committee |
100 000 |
95 000 |
||
Chairman of the remuneration committee |
130 000 |
120 000 |
||
Member of the remuneration committee |
65 000 |
60 000 |
||
Member of the nominations committee |
60 000 |
53 000 |
||
Member of the social and ethics committee |
65 000 |
13 250* |
||
Chairman of the corporate finance committee |
150 000 |
50 000** |
||
|
Member of the corporate finance committee |
100 000 |
50 000** |
|
| * | The social and ethics committee was formed in the latter part of the year, with its mandate including four meetings a year, at a proposed annual fee for members of R53 000 in 2012. The fee presented of R13 250 is in respect of the inaugural meeting held in February 2012, which will be proposed at the annual general meeting for shareholder approval at the same time as the 2013 fee. For further information on this committee please refer to here of the corporate governance report |
| ** | The corporate finance committee was formed in the latter part of the year, with a mandate to hold ad hoc meetings as required, at a proposed annual fee of R100 000 for its Chairman and members in 2012. The fees are in respect of work performed during the year, which will be proposed at the annual general meeting for shareholder approval at the same time as the 2013 fee. For further information on this committee please refer to here of the corporate governance report. |
Risk management and remuneration practices
The remuneration committee ensures that corporate governance aspects and legal requirements are met when existing remuneration policies are reviewed and new remuneration plans and policies are put in place. In doing so the committee ensures that shareholder interests are protected and reward systems and remuneration policies are aligned to the Group’s risk profile.
 |
Hugh Herman
Chairman: Remuneration committee
10 May 2012
