Remuneration Committee

The Remuneration Committee (RemCom) consists of the following non-executive directors, the majority of whom are independent:

• HR Levin
• CH Boulle (Chairman*)
• JC Livingstone
• LW Maasdorp

* Assumed Chairmanship from HR Levin on 17 May 2012

RemCom meets as and when requried; it met four times during the year under review:

The following table indicates attendance at meetings by members:

P = Present

A = Absent

* Present by invitation

$ = See note ¹ under table of directors

The Committee determines, agrees and develops the remuneration policy for approval by the Board.  The CEO and Group HR Executive attend the meetings by invitation, but do not participate in any deliberations regarding their own remuneration.

Remuneration policy

RemCom seeks to entrench a culture of high performance by aligning the Group’s remuneration philosophy with the business objectives, values and strategy. It also ensures that remuneration practices are soundly based and governed. An essential feature of this is the independence of RemCom in determining the remuneration and bonuses of all staff, especially executive management.

Remuneration is required to be benchmarked regularly against the market and aligned to Group performance. This aims to ensure that remuneration, by its structure and level, attracts and retains outstanding individuals, recognises loyalty and dedication, and provides incentives for exceptional performance. This is achieved through a combination of guaranteed remuneration, incentive rewards of a long and short-term nature, and conditions of service.

Remuneration report

Conditions of employment, such as parent responsibility leave and academic leave, which provide for the necessary growth and development of academic staff, are reviewed annually against best practice and, where necessary, improvements to conditions of employment are implemented with due regard to the cost implications and their impact on the Group’s staff.

Guaranteed remuneration comprises a cost-to-company package, which includes benefits such as medical aid and retirement funding. Employees who are not on medical aid are offered free accident insurance, including funeral cover.

Performance remuneration in the form of incentives, bonuses and profit sharing is included in certain employment categories, the object being to recognise, reward and retain high performing employees. Depending on the seniority and responsibility of the individual concerned, the incentive opportunity ranges from 5% to 90% of the guaranteed cost-to-company remuneration package. The Group has disclosed the remuneration of the prescribed officers who are also two of the three highest paid employees who are not also directors, as this is appropriate in terms of the Group structure.

Remuneration is structured according to the following framework:

General staff

To encourage a high performance culture, each employee has agreed key performance indicators (KPIs) and, where applicable, performance objectives. This creates a direct link between performance and remuneration. Appropriate recognition is given to the qualifications of professional staff.

The remuneration of teachers and academic staff is benchmarked against state and other comparable institutions. Guidelines are then established for basic cost-to-company remuneration and, where appropriate, incentives for exceptional performance.

The remuneration of resourcing staff is based on an incentive structure linked to rigorous quality standards, with consultants and supervisors receiving a performance related package which includes a relatively high proportion of variable pay that can exceed 50% of total remuneration in the event of exceptional performance in some cases.

Senior staff and management

The remuneration structure for these employees encompasses three elements:

• a guaranteed cost-to-company package;
• annual incentive remuneration based on predetermined KPIs; and
• long-term incentive remuneration in the form of an opportunity to participate in the ADvTECH Limited Share Incentive Scheme.

Executive leadership

Executive leadership is offered a similar remuneration structure to that of senior staff and management. Annual incentive remuneration, however, is based on a combination of individual KPIs and the performance of the business unit for which the executive is responsible (which constitutes approximately two thirds of the incentive) and Group KPIs (which constitute the remainder of the incentive). The bonus earned by the executive concerned is based on the extent to which agreed targets approved by RemCom at the beginning of the financial year under review were achieved. Executives are set stretch targets at demanding levels of growth and achievement. These targets also take into account the operating environment and strategic objectives, such as transformation of the Group and staff turnover.

For the 2012 financial year, executive bonuses, which were accrued at year end and paid in March 2013 after approval of the annual financial statements, amounted to 3% (2011: 52%) of the maximum bonus opportunity.

Share incentive schemes

The broad-based share incentive scheme and merit based senior staff share award scheme have run their course and share based remuneration generally is under consideration by RemCom.

The Group has continued to offer share options to executives. In terms of the share scheme, the Board approved the award of 1 595 000 (2011: 2 496 000) share options during the year under review.

Directors

RemCom recommends the fees to be paid to non-executive directors to the Board and further guarantees that no person is involved in any decisions as to his or her own remuneration. The Board has elected not to follow the King III recommendation that non-executive remuneration should consist of a base fee and an attendance fee per meeting, and has determined that the current annual fee structure is more appropriate. Directors’ contribution to the Group does not consist only of attendance at Board meetings, and their responsibilities and liabilities continue whether or not they attend a specific meeting. Furthermore, the payment of an annual fee allows management greater freedom in relying on the directors between meetings. The fees payable to non-executive directors were approved by special resolution of the shareholders at the Annual General Meeting held in May 2012, as required by the Act.