The Remuneration and Nomination Committee (“Remco”) is a formally constituted Committee of the Board focused primarily on determining the Group’s remuneration policy and advising the Board on Director nominations and appointments.

This report accordingly provides an overview of the structure of the Committee and its functions, as well as the governing principles of GPI’s remuneration policy, with particular reference to the remuneration of Executive and Non-executive Directors.

Structure

During 2014 the Committee’s composition was restructured and its Charter updated to ensure compliance with the JSE Listings Requirements and alignment with King III.

The Committee’s membership comprises of non-executive directors, the majority of whom are independent. The company’s Lead Independent Director is the Chairperson in keeping with the mandatory requirements of the JSE Listings Requirements as they relate to companies with executive chairpersons. For the year under review, the members of the Committee were:

  • Dr NV Maharaj (Chairperson)
  • A Bedford (until his resignation on 1 February 2015)
  • N Mlambo
  • CM Priem
  • A Abercrombie (from 1 March 2015)

The following are the Committee’s terms of reference:

  • To determine and recommend to the Board remuneration policies for Non-executive Directors and senior executives;
  • To assist the Board in determining the remuneration of Non-executive Directors for their services as members of the Board and Board committees;
  • To determine standards of employment practice aimed at promoting GPI’s BEST TEAM strategy;
  • To evaluate the performance of Executive Directors in light of the criteria or metrics approved by the Board and recommend, for Board approval, rewards to be paid;
  • To consider management’s proposals for annual salary increases and adjustments across the Group and make recommendations to the Board;
  • To approve changes to the benchmarking methodology used for setting base salaries and incentive targets for employees in the Group;
  • To ensure that the annual remuneration report, including the remuneration policy, included in the Company’s Integrated Annual Report, provides the necessary level of disclosure in respect of the principles recommended in King III or provides an explanation in respect of any principles not applied;
  • To assist the Board with the identification and nomination of suitable candidates for appointment to the Board; and
  • To annually review the “independence” of Non-executive Directors, taking into account the applicable governance requirement.

The Committee is authorised to investigate any activity within the scope of its mandate and may call upon management to provide it with information. It also has the right to obtain, at the Company’s cost, independent outside professional advice to assist with the execution of its duties, subject to Board approval; and has full access to the Company’s records, facilities and any other resources necessary to discharge its duties and responsibilities.

Remuneration philosophy/approach

As an investment holding company, GPI’s key resource is human capital as the people within the organisation design and implement the strategy of the Company. As a result GPI’s remuneration philosophy is aimed at attracting, retaining and rewarding talented people. The key elements of this philosophy are:

  • To maintain a wage gap that is in line or better than the market average;
  • To benchmark all guaranteed salaries to market averages by making use of local salary surveys;
  • To reward employees for performance by weighting their total remuneration package towards performance based remuneration; and
  • To align the key decision-makers with the shareholders and to prevent short-term performance at the expense of long-term profitability, by way of long-term incentives which vest between three and five years.

Executive director remuneration

In order to achieve the principles of the remuneration philosophy, a revised remuneration policy was approved by the Board during the current year, for implementation with effect from 1 July 2015. The policy deals with the total remuneration of all employees within the Company and will be used as a benchmark against which GPI will measure the remuneration polices of all its investments.

A consistent remuneration structure has been applied to all Executive Directors as follows:

  • 25% allocated to guaranteed pay;
  • 25% allocated as a maximum short-term incentive; and
  • 50% allocated as a maximum long-term incentive.

Guaranteed pay

The guaranteed pay for Executive Directors is benchmarked against the 25th percentile of the local salary survey which is the lower end of the scale and is aimed at achieving a higher weighting towards performance-based remuneration.

Short-term incentives

A maximum of 100% of the Executive Directors’ guaranteed pay may be allocated as short-term incentives. The award is based on achievement of pre-determined key performance indicators and is weighted 60% towards the company’s performance and 40% toward the individual’s performance. Short-term incentives are cash awards.

Long-term incentives

A maximum of 200% of the Executive Directors’ guaranteed pay may be allocated as long-term incentives on an annual basis. The award is based on the achievement of the same key performance indicators as the short-term incentives and using the same weightings. The Board will at their discretion determine the form of the long-term awards but will have a strong preference towards share options. In determining the form of the long-term award the Board will consider the Executive Directors’ total exposure to GPI shares, their length of service and their specific performance during the year. No long term incentives were awarded to Executive Directors during the year.

Non-executive director remuneration

Non-executive Directors’ remuneration is fee-based and is not linked to the performance of the Group. The fees are benchmarked against fees paid to the Non-executive Directors by a JSE-listed peer group, similar small-cap Companies by market capitalisation and the PwC Non-executive Directors’ Remuneration Trends Report dated January 2015. Non-executive Directors’ remuneration compares favourably with the market. Fees for 2016 have been proposed in the AGM notice. The Non-executive Directors do not participate in the Group share scheme.

nv_maharaj_sig

NV Maharaj

Chairperson of the Remuneration and Nomination Committee