Remuneration Committee

The Remuneration Committee (RemCom) consists of the following non-executive directors:
HR Levin (Chairman)
JC Livingstone
LW Maasdorp*

* Appointed on 26 November 2010.

The RemCom was chaired by HR Levin and consists entirely of independent non-executives. The Committee determines, agrees and develops the remuneration policy for approval by the Board.

Remuneration policy

The 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, including 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 good people, recognises loyalty and dedication, and provides incentives for excellent and 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 provides for the necessary growth and development of academic staff, fall within the mandate of RemCom. These 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 100% of the guaranteed cost-to-company remuneration package. 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 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 share incentive schemes offered by the ADvTECH Limited Share Incentive Trust.

Executive leadership

Executive leadership is offered a similar remuneration structure to that of senior staff and management. Their 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 (remainder of incentive). The bonus earned by the executive concerned is based on the extent to which agreed targets were achieved and is approved by RemCom at the beginning of each year. 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 2010 financial year executive bonuses, which were accrued at year-end and paid in March 2011 after approval of the annual financial statements, amounted to 33% (2009: 34%) of the maximum bonus opportunity.

Share incentive schemes

At the end of 2007 the Board, on the recommendation of RemCom, approved the introduction of a broad-based share scheme (BBS) for an initial period of five years. Permanent staff members with more than two years’ service qualify to participate in the scheme and are awarded ADvTECH shares at no cost to the participant.

The Group also offers a merit based senior staff share award scheme to reward, retain and motivate high performing permanent senior employees. Lastly, the Group offers share options to certain executives and senior managers, the details of which are set out on page 96.

In terms of these schemes the Board approved awards of 540 000 shares and 3 000 000 share options during the year.

Directors

RemCom recommends to the Board the fees to be paid to non-executive directors and further guarantees that no person is involved in any decisions as to his or her own remuneration.

The RemCom meets on an ad hoc basis and met on numerous occasions during the 2010 financial year.