This report primarily covers remuneration of the company’s executive and non-executive directors, and senior management (including prescribed officers and members of the executive committee).
The remuneration policy, approved by shareholders in a non-binding advisory vote at the AGM on 9 February 2015, is set out below. The policy is reviewed annually by the remuneration committee to ensure it reflects best practice, remains competitive and that reward is aligned with the company’s growth and financial performance for the year under review. Details of the committee’s membership, responsibility and number of meetings held during the year are set out on page 70.
The Tiger Brands remuneration policy aims to ensure that the group attracts and retains key and critical talent required to deliver the group’s business goals and results.
The policy, in conjunction with the remuneration philosophy and strategy, is predicated on the following key principles:
The Tiger Brands group remuneration and reward system comprises the following elements:
In determining the appropriate level of total remuneration package, the following is considered:
The group’s short-term incentive scheme is designed to drive improved results annually. It is governed by scheme rules that are reviewed and approved by the remuneration committee annually.
The long-term incentive scheme is designed to retain employees in the medium to long term, to focus their attention on longer-term strategic imperatives and ensure sustained growth of the organisation. This scheme is governed by rules that are reviewed and updated by the remuneration committee as required, to align with best practice.
The remuneration committee takes an active role in reviewing the remuneration philosophy, policy, strategy and practices to ensure alignment to best practice and the strategic imperatives of the group. The desired outcome of the policy is to attract and retain the right talent for the group and align short-term and long-term incentive schemes with shareholder interests.
This policy may be varied at the discretion of the executive committee (for guaranteed remuneration) or the remuneration committee (for incentive schemes) at any time. This may include adding or deleting benefits. The policy applies to all employees and supersedes policies in place at the time of their appointment.
The policy is to be read in conjunction with the company’s letter of appointment, disciplinary code, Code of Ethics, applicable employment legislation, as well as the company’s short-term and long-term incentive scheme rules.
Total remuneration packages for executive directors and senior management are subject to annual review and independently benchmarked against external market data, considering the size of the company, its market sector and business complexity. Individual performance, as reflected by formal performance ratings, value-add to the business and organisation as a whole, and overall responsibility are also considered. For consistently high performers, the group’s intention is to set guaranteed (non-variable) pay at above- median levels of remuneration as reflected by an appropriate external executive remuneration survey.
Details of remuneration payable to executive directors, prescribed officers and members of the executive committee for the 2014 and 2015 financial years are set out in note 4.2 of the annual financial statements.
In addition, executive directors and senior management participate in a short-term incentive bonus plan and the Tiger Brands 2013 Share Plan (and previously the Tiger Brands phantom cash-settled option scheme). One executive director and four members of the executive committee also participate in one or both of the company’s black manager empowerment schemes.
Executive directors and senior management participate in an annual incentive bonus plan, based on achieving short-termperformance targets. These targets comprise a financial component and a number of strategic components.
In September 2014, the remuneration committee appointed PricewaterhouseCoopers to conduct a holistic review of the company’s short-term incentive scheme to ensure that this was in line with best practice and that its construction had the correct balance between personal and business performance.
Following the review, and in line with local and global best practice, we now calculate the structure of theshort-term incentive plan on a multiplier basis:
Short-term incentive = total remuneration package (TRP) x on-target % x business multiplier x personal multiplier
The business multiplier will range from 0% for unacceptable business performance to 100% for meeting suitably challenging performance targets to a maximum of 150% for meeting stretch targets. The personal multiplier, which will also range from 0% to 150%, will reflect the performance of individuals against a set of measures and targets aligned with their portfolio and responsibilities. The business multiplier will have a weighting of 70% based on group HEPS performance, and 30% based on strategic measures (previously 80% and 20% respectively).
In 2015, the short-term incentive scheme for members of the Tiger Brands executive committee (including the chief executive officer) reflected an unchanged on-target level of 50% of TRP, with a maximum incentive of 112,5% of TRP for meeting stretch business and personal performance levels.
Measures and targets are set and reviewed annually by the remuneration committee.
For 2015, the strategic element of the bonus had a number of components, focused on specific areas (weightings in brackets):
Incentive bonuses payable to executive directors for 2015 are set out in the table of directors’ emoluments under note 4.2 of the annual financial statements. Incentive bonuses payable to prescribed officers are reflected in a separate table below directors’ emoluments. Incentive bonuses payable to members of the executive committee, excluding executive directors and prescribed officers, are aggregated under note 4.2 of the annual financial statements.
The strategic measures for 2016 will focus on the Africa turnaround strategy, specific initiatives to drive operational excellence, product innovation, the further recovery of Tiger Brands’ market shares, new cost-reduction initiatives, talent management and succession planning.
This share plan was implemented in February 2013. It is in line with global best practice and emerging South African practice, as it recognises the required attributes of shareholder alignment, retention of key talent andlong-term sustained performance.
Its purpose is to attract, retain, motivate and reward executives and managers who are able to influence the performance of Tiger Brands and its subsidiaries on a basis that aligns their interests with those of the company’s shareholders.
Under the 2013 Share Plan, executives and selected managers of the company and its subsidiaries will annually be offered a weighted combination of:
The correlation between share price and company financial performance is often influenced by exogenous factors that can override executive performance. The 2013 Share Plan focuses executive attention and reward on performance by combining a growth-oriented element (share appreciation right) with two full-value elements, one rewarding future company performance (performance share) and the other rewarding actual individual performance and retaining key talent (restricted share).
The share appreciation right element is similar in architecture to Tiger Brands’ 2006 cash-settled phantom share option scheme. Under the latter scheme, annual allocations were based on a set multiple of guaranteed package to define a face value. The number of phantom share options was then derived by dividing the face value amount by the prevailing share (strike) price. This methodology has been retained in allocating share appreciation rights under the 2013 Share Plan, but with a reduced set multiple to accommodate the parallel offer of the two other elements, both forms of full-value shares.
When a participant exercises a phantom share option or share appreciation right, the value that accrues is the positive gain (appreciation) of the underlying share price above the strike price. Full-value shares differ as there is no strike price; the full value of the share accrues to a participant on vesting. As such, full-valueshares rely less on share price growth, and are less sensitive to the volatility of share prices, timing of offers and external factors that can drive share prices.
Performance shares closely align the interests of shareholders and executives by rewarding superior shareholder and financial performance in future. Performance shares will be awarded mainly to senior executives who can influence and impact long-term strategic performance.
Restricted shares provide for share-based retention of senior managers who, through their annual performance, have demonstrated their value to the company. Restricted shares will primarily be granted to high-performing senior managers to assist in their retention. The restricted share element of the plan will also offer the opportunity for executives to electively waive a portion (25%, 33% or 50%) of their annual cash incentive bonus, and to use the elective deferred portion to invest in Tiger Brands shares, matched by the company with additional shares.
Offers will be governed by our reward philosophy and strategy, in which a target reward is set for defined categories of executives and senior management. Target reward is defined as the present value of the future reward outcome of an allocation, given the targeted future performance of the company and of its share price.
The combined, weighted implementation of these elements of the 2013 Share Plan will allow Tiger Brands to remain competitive in annual and share-based incentives, and ensure executives share a significant level of personal risk with the company’s shareholders.
Annual allocations of share appreciation rights will be made to executives and selected managers. They can be settled in equal thirds on the third, fourth and fifth anniversaries of the date of allocation, but need not be exercised until the sixth anniversary, when they must be exercised or they will lapse.
On settlement, the value accruing to participants will be the appreciation of Tiger Brands’ share price. Settlement may be in cash (as with the 2006 Phantom Cash-settled Option Scheme) or in shares, which may be issued and allotted, or acquired and transferred to participants. The company intends to settle these in shares.
These share appreciation rights will be subject to performance vesting criteria, with the number of share appreciation rights vesting relative to the full number allocated being proportionately reduced if company financial performance targets are not met. The performance criteria in the following table were adopted for the 2006 Phantom Cash-settled Option Scheme for the vesting of 50% of any allocation, and will now continue to be applied to 100% of any allocation of share appreciation rights.
Sliding scale for applying performance vesting conditions (based on a targeted increase of 3% per annum real growth rate in HEPS over three, four and five-year periods)
| Threshold levels for real HEPS growth | % of allocation to vest | |
|---|---|---|
| > 0% and < 0,5% | 5 | |
| ≥ 0,5% and < 1,0% | 10 | |
| ≥ 1,0% and < 1,5% | 16 | |
| ≥ 1,5% and < 2,0% | 27 | |
| ≥ 2,0% and < 2,5% | 44 | |
| ≥ 2,5% and < 3,0% | 75 | |
| ≥ 3,0% | 100 |
Share appreciation rights will be allocated at a reduced level compared to allocations made under the phantom cash option scheme, with the balance of the allocation comprising a weighted combination of the other two elements detailed below.
Annual conditional awards of performance shares will be made to executives and senior managers. These will vest on the third anniversary of their award, if the company has met specified performance criteria over that period. Essentially, the value per share that vests is the full value of the share (no strike price), but the number of shares that will vest depends on the company’s performance over the intervening three-yearperiod against set targets.
The board will determine the performance criteria for each award. For awards made in 2013, 2014 and 2015, it was agreed that vesting would be determined by the company’s comparative total shareholder return (TSR) relative to the constituent members of the FINDI 30 index.
The vesting of these performance shares will thus be based on the relationships summarised below. If Tiger Brands’ TSR over the three-year period places it in:
No retesting against the performance criteria will be allowed. Any performance shares that do not vest at the end of the three-year period will be forfeited. It is envisaged that the award of performance shares will feature at all executive and senior management levels, but feature more strongly the higher the participant’s grade in the organisation.
Annually, executives, senior managers and key talent will receive a grant of restricted shares. The value of restricted shares granted will be linked to the annual cash bonus scheme, in one or a combination of:
As individuals are effectively opting to put an element of a cash bonus that would otherwise accrue to them at risk, the bonus deferral sub-element of the 2013 Share Plan may be termed a “co-investment plan”. All restricted shares will vest after three years and are not subject to any further performance conditions. The restricted share element provides for share-based retention of executives who, through their annual performance, have demonstrated their value and commitment to the company.
The Tiger Brands Phantom Cash-settled Option Scheme was adopted on 23 February 2006. In terms of this scheme, cash options have been granted annually to executive directors and senior managers from 2006 to the last allocation in February 2013, which was made as part of the transition to the Tiger Brands 2013 Share Plan (page 83).
If an individual’s employment is terminated, vesting of any outstanding (unvested) share options under the Phantom Cash-settled Option Scheme depends on the reasons for termination. The termination rules are in line with the recommendations of King III after certain changes were made to the rules in late 2010.
A summary of the rules that apply to all unvested phantom cash options at 30 September 2015 is set out below.
If an individual’s employment is terminated, vesting of any outstanding (unvested) share options or full-valueshares under the 2013 Share Plan depends on the reasons for termination. The termination rules are in line with the recommendations of King III. The principles to be applied for units awarded under the 2013 Share Plan are summarised below.
The consequence of terminating employment is based on the definition of no-fault versus fault termination. The definition of ano-fault termination is the termination of employment of a participant by the company or applicable employer company by reason of:
Under these circumstances, if employment is terminated on a no-fault basis, then, depending on the nature of the unit (ie whether it is a share appreciation right, performance share or restricted share) and the reasons for termination, a participant may either retain all units or only a pro rata portion. Accelerated vesting and settlement of the retained units may apply in certain circumstances.
The definition of a fault termination is terminating the employment of a participant by reason of dismissal for misconduct or poor performance or resignation by the participant.
If employment is terminated on a fault basis, the units will be cancelled.
Details of phantom cash-settled options held by executive directors under this scheme, as at 30 September 2015, appear below:
| Name | Date of grant |
Holding
at 1 October 2014 |
Granted 2015 |
Exercised 2015 |
Forfeited 2015 |
Holding
at 30 September 2015 |
Number of options subject to retention |
Number of options subject to performance targets |
Grant price (Rand) |
Number of options vested at 30 September 2015 |
Fair
market value of vested options at 30 September 2015 (R000) |
|
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| NP Doyle | Feb 2013 | 30 000 | – | – | – | 30 000 | 15 000 | 15 000 | 299,83 | – | – | |
| Jul 2012 | 30 000 | – | – | 5 000 | 25 000 | 15 000 | 10 000 | 252,01 | 5 000 | 349 | ||
| Total | 60 000 | – | – | 5 000 | 55 000 | 30 000 | 25 000 | – | 5 000 | 349 | ||
| O Ighodaro | Feb 2013 | 3 400 | – | – | – | 3 400 | 1 701 | 1 699 | 299,83 | – | – | |
| Feb 2012 | 18 900 | – | – | 3 150 | 15 750 | 9 450 | 6 300 | 253,18 | 3 150 | 211 | ||
| Jun 2011 | 18 209 | – | – | 3 641 | 14 568 | 10 926 | 3 642 | 186,97 | 7 284 | 859 | ||
| Total | 40 509 | – | – | 6 791 | 33 718 | 22 077 | 11 641 | – | 10 434 | 1 070 | ||
| PB Matlare | Feb 2013 | 4 400 | – | – | – | 4 400 | 2 200 | 2 200 | 299,83 | – | – | |
| Feb 2012 | 32 800 | – | – | 5 467 | 27 333 | 16 401 | 10 932 | 253,18 | 5 467 | 366 | ||
| Feb 2011 | 29 417 | – | 11 766 | 5 884 | 11 767 | 5 885 | 5 882 | 189,09 | – | – | ||
| Feb 2010 | 61 000 | – | 24 400 | – | 36 600 | – | 36 600 | 172,07 | – | – | ||
| Total | 127 617 | – | 36 166 | 11 351 | 80 100 | 24 486 | 55 614 | – | 5 467 | 366 | ||
| CFH Vaux | Feb 2013 | 3 700 | – | – | – | 3 700 | 1 851 | 1 849 | 299,83 | – | – | |
| Feb 2012 | 20 600 | – | – | 3 433 | 17 167 | 10 300 | 6 867 | 253,18 | 3 433 | 230 | ||
| Feb 2011 | 18 417 | – | – | 3 683 | 14 734 | 11 050 | 3 684 | 189,09 | 7 366 | 893 | ||
| Feb 2010 | 45 400 | – | – | – | 45 400 | 22 701 | 22 699 | 172,07 | 22 701 | 3 022 | ||
| Total | 88 117 | – | – | 7 116 | 81 001 | 45 902 | 35 099 | – | 33 500 | 4 145 |
Details of phantom cash-settled options held by prescribed officers under Tiger Brands Phantom Cash-settled Option Scheme, as at 30 September 2015, appear below:
| Name | Date of grant |
Holding
at 1 October 2014 |
Granted 2015 |
Exercised 2015 |
Forfeited 2015 |
Holding
at 30 September 2015 |
Number of options subject to retention |
Number of options subject to performance targets |
Grant price (Rand) |
Number of options vested at 30 September 2015 |
Fair
market value of vested at options 30 September 2015 (R000) |
|
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| NG Brimacombe | Feb 2013 | 3 600 | – | – | – | 3 600 | 1 800 | 1 800 | 299,83 | – | – | |
| NG Brimacombe | Feb 2012 | 19 800 | – | – | 3 300 | 16 500 | 9 900 | 6 600 | 253,18 | 3 300 | 221 | |
| NG Brimacombe | Feb 2011 | 14 200 | – | – | 3 550 | 10 650 | 7 100 | 3 550 | 189,09 | 3 550 | 421 | |
| NG Brimacombe | Feb 2010 | 30 266 | – | – | – | 30 266 | 7 565 | 22 701 | 172,07 | 7 565 | 1 007 | |
| Total | 67 866 | – | – | 6 850 | 61 016 | 26 365 | 34 651 | Various | 14 415 | 1 649 |
Aggregated details of phantom cash options held by members of the executive committee, other than executive directors and prescribed officers above, as at 30 September 2015, appear below:
| Date of grant |
Holding
at 1 October 2014 |
Granted 2015 |
Exercised 2015 |
Forfeited 2015 |
Holding
at 30 September 2015 |
Number of options subject to retention |
Number of options subject to performance targets |
Grant price (Rand) |
Number of options vested at 30 September 2015 |
Fair
market value of vested at options 30 September 2015 (R000) |
||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total | Various | 232 184 | – | 52 306 | 22 387 | 157 491 | 78 768 | 78 723 | Various | 47 165 | 5 542 |
Details of share appreciation rights allocated to executive directors under this plan, as at 30 September 2015, are set out below:
| Name | Date of grant |
Holding
at 1 October 2014 |
Granted 2015 |
Exercised 2015 |
Forfeited 2015 |
Holding
at 30 September 2015 |
Number of options subject to per- formance targets |
Grant
price (Rand) |
Number of options vested at 30 September 2015 |
|
|---|---|---|---|---|---|---|---|---|---|---|
| NP Doyle | Feb 2015 | – | 11 540 | – | – | 11 540 | 11 540 | 385,33 | – | |
| Feb 2014 | 12 950 | – | – | – | 12 950 | 12 950 | 254,45 | – | ||
| Note 1 | Feb 2014 | 5 250 | – | – | – | 5 250 | 5 250 | 254,45 | – | |
| Total | 18 200 | 11 540 | – | – | 29 740 | 29 740 | – | – | ||
| O Ighodaro | Feb 2015 | – | 11 800 | – | – | 11 800 | 11 800 | 385,33 | – | |
| Feb 2014 | 13 290 | – | – | – | 13 290 | 13 290 | 254,45 | – | ||
| Note 1 | Feb 2014 | 5 390 | – | – | – | 5 390 | 5 390 | 254,45 | – | |
| Sep 2013 | 21 200 | – | – | – | 21 200 | 21 200 | 298,67 | – | ||
| Feb 2013 | 9 500 | – | – | – | 9 500 | 9 500 | 299,83 | – | ||
| Total | 49 380 | 11 800 | – | – | 61 180 | 61 180 | – | – | ||
| PB Matlare | Feb 2015 | – | 17 640 | – | – | 17 640 | 17 640 | 385,33 | – | |
| Feb 2014 | 20 540 | – | – | – | 20 540 | 20 540 | 254,45 | – | ||
| Feb 2013 | 16 300 | – | – | – | 16 300 | 16 300 | 299,83 | – | ||
| Total | 36 840 | 17 640 | – | – | 54 480 | 54 480 | – | – | ||
| CFH Vaux | Feb 2015 | – | 9 060 | – | – | 9 060 | 9 060 | 385,53 | – | |
| Feb 2014 | 12 880 | – | – | – | 12 880 | 12 880 | 254,45 | – | ||
| Note 1 | Feb 2014 | 5 220 | – | – | – | 5 220 | 5 220 | 254,45 | – | |
| Feb 2013 | 10 300 | – | – | – | 10 300 | 10 300 | 299,83 | – | ||
| Total | 28 400 | 9 060 | – | – | 37 460 | 37 460 | – | – |
Note 1 – a special retention allocation of share appreciation rights was made on 28 February 2014. These are subject to normal performance and vesting conditions.
Details of performance shares awarded to executive directors under the Tiger Brands Limited 2013 Share Plan, as at 30 September 2015, are set out below:
| Name | Date of grant |
Holding
at 1 October 2014 |
Granted 2015 |
Settled 2015 |
Forfeited 2015 |
Holding
at 30 September 2015 |
10-day VWAP share price on grant date |
Number
of per- formance shares vested at 30 September 2015 |
|
|---|---|---|---|---|---|---|---|---|---|
| NP Doyle | Feb 2015 | – | 2 490 | – | – | 2 490 | 385,33 | – | |
| Feb 2014 | 2 790 | – | – | – | 2 790 | 254,45 | – | ||
| Total | 2 790 | 2 490 | – | – | 5 280 | – | – | ||
| O Ighodaro | Feb 2015 | – | 2 540 | – | – | 2 540 | 385,33 | – | |
| Feb 2014 | 2 860 | – | – | – | 2 860 | 254,45 | – | ||
| Feb 2013 | 2 000 | – | – | – | 2 000 | 299,83 | – | ||
| Total | 4 860 | 2 540 | – | – | 7 400 | – | – | ||
| PB Matlare | Feb 2015 | – | 4 410 | – | – | 4 410 | 385,33 | – | |
| Feb 2014 | 5 140 | – | – | – | 5 140 | 254,45 | – | ||
| Feb 2013 | 4 100 | – | – | – | 4 100 | 299,83 | – | ||
| Total | 9 240 | 4 410 | – | – | 13 650 | – | – | ||
| CFH Vaux | Feb 2015 | – | 1 950 | – | – | 1 950 | 385,35 | – | |
| Feb 2014 | 2 780 | – | – | – | 2 780 | 254,45 | – | ||
| Feb 2013 | 2 200 | – | – | – | 2 200 | 299,83 | – | ||
| Total | 4 980 | 1 950 | – | – | 6 930 | – | – |
Details of restricted shares granted to executive directors under the Tiger Brands Limited 2013 Share Plan, as at 30 September 2015, are set out below:
| Name | Date of grant |
Holding
at 1 October 2014 |
Granted 2015 |
Settled 2015 |
Forfeited 2015 |
Holding
at 30 September 2015 |
10-day
VWAP share price on grant date |
Number
of restricted shares vested at 30 September 2015 |
|
|---|---|---|---|---|---|---|---|---|---|
| NP Doyle | Feb 2015 | – | 2 320 | – | – | 2 320 | – | – | |
| Total | – | 2 320 | – | – | 2 320 | – | – | ||
| O Ighodaro | Feb 2015 | – | 2 380 | – | – | 2 380 | – | – | |
| Total | – | 2 380 | – | – | 2 380 | – | – | ||
| CFH Vaux | Feb 2015 | – | 1 850 | – | – | 1 850 | – | – | |
| Total | – | 1 850 | – | – | 1 850 | – | – |
Details of share appreciation rights allocated to prescribed officers under the Tiger Brands Limited 2013 Share Plan, as at 30 September 2015, are set out below:
| Name | Date of grant |
Holding
at 1 October 2014 |
Granted 2015 |
Exercised 2015 |
Forfeited 2015 |
Holding
at 30 September 2015 |
Number of options subject to per- formance targets |
Grant price (Rand) |
Number of options vested at 30 September 2015 |
|
|---|---|---|---|---|---|---|---|---|---|---|
| NG Brimacombe | Feb 2015 | – | 8 890 | – | – | 8 890 | 8 890 | 385,33 | – | |
| NG Brimacombe – Note 1 | Feb 2014 | 5 120 | – | – | – | 5 120 | 5 120 | 254,45 | – | |
| NG Brimacombe | Feb 2014 | 12 640 | – | – | – | 12 640 | 12 640 | 254,45 | – | |
| NG Brimacombe | Sep 2013 | 20 100 | – | – | – | 20 100 | 20 100 | 298,67 | – | |
| NG Brimacombe | Feb 2013 | 10 000 | – | – | – | 10 000 | 10 000 | 299,83 | – | |
| AG Kirk | Feb 2015 | – | 8 260 | – | – | 8 260 | 8 260 | 385,33 | – | |
| AG Kirk | Feb 2014 | 11 800 | – | – | – | 11 800 | 11 800 | 254,45 | – |
Note 1 – a special retention allocation of share appreciation rights was made on 28 February 2014. These are subject to normal performance and vesting conditions.
Details of performance shares awarded to prescribed officers under the Tiger Brands Limited 2013 Share Plan, as at 30 September 2015, are set out below:
| Name | Date of grant |
Holding
at 1 October 2014 |
Granted 2015 |
Settled 2015 |
Forfeited 2015 |
Holding
at 30 September 2015 |
10-day VWAP share price on grant date |
Number
of per- formance shares vested at 30 September 2015 |
|
|---|---|---|---|---|---|---|---|---|---|
| NG Brimacombe | Feb 2015 | – | 1 920 | – | – | 1 920 | 385,33 | – | |
| NG Brimacombe | Feb 2014 | 2 720 | – | – | – | 2 720 | 254,45 | – | |
| NG Brimacombe | Feb 2013 | 2 200 | – | – | – | 2 200 | 299,83 | – | |
| AG Kirk | Feb 2015 | – | 1 780 | – | – | 1 780 | 385,33 | – | |
| AG Kirk | Feb 2014 | 2 540 | – | – | – | 2 540 | 254,45 | – |
Details of restricted shares granted to prescribed officers under the Tiger Brands Limited 2013 Share Plan, as at 30 September 2015, are set out below:
| Name | Date of grant |
Holding
at 1 October 2014 |
Granted 2015 |
Settled 2015 |
Forfeited 2015 |
Holding
at 30 September 2015 |
10-day VWAP share price on grant date |
Number
of restricted shares vested at 30 September 2015 |
|
|---|---|---|---|---|---|---|---|---|---|
| NG Brimacombe | Feb 2015 | – | 1 810 | – | – | 1 810 | 385,33 | – | |
| AG Kirk | Feb 2015 | – | 1 690 | – | – | 1 690 | 385,33 | – | |
| AG Kirk | Dec 2014 | – | 7 084 | – | – | 7 084 | 382,41 | – |
Aggregated details of share appreciation rights allocated to members of the executive committee, other than executive directors and prescribed officers above, as at 30 September 2015, are set out below:
| Name | Date of grant |
Holding
at 1 October 2014 |
Granted 2015 |
Exercised 2015 |
Forfeited 2015 |
Holding
at 30 September 2015 |
Number of options subject to per- formance targets |
Grant
price (Rand) |
Number of options vested at 30 September 2015 |
|
|---|---|---|---|---|---|---|---|---|---|---|
| Total for 2015 | Feb 2015 | – | 25 860 | – | – | 25 860 | 25 860 | 385,33 | – | |
| Total for 2014 | Feb 2014 | 66 416 | – | – | 11 970 | 54 446 | 54 446 | 254,45 | – | |
| Total for 2013 | Feb 2013 | 30 036 | – | – | – | 30 036 | 30 036 | 299,83 | – |
Aggregated details of performance shares awarded to members of the executive committee, other than executive directors and prescribed officers above, at 30 September 2015, are set out below:
| Name | Date of grant |
Holding
at 1 October 2014 |
Granted 2015 |
Settled 2015 |
Forfeited 2015 |
Holding
at 30 September 2015 |
10-day VWAP share price on grant date |
Number of per- formance shares vested at 30 September 2015 |
|
|---|---|---|---|---|---|---|---|---|---|
| Total for 2015 | Feb 2015 | – | 4 710 | – | – | 4 710 | 385,33 | – | |
| Total for 2014 | Feb 2014 | 8 493 | – | 310 | 2 533 | 5 650 | 254,45 | – | |
| Total for 2013 | Feb 2013 | 5 400 | – | – | 1 000 | 4 400 | 299,83 | – |
Aggregated details of restricted shares granted to members of the executive committee, other than executive directors and prescribed officers above, as at 30 September 2015, are set out below:
| Name | Date of grant |
Holding
at 1 October 2014 |
Granted 2015 |
Settled 2015 |
Forfeited 2015 |
Holding
at 30 September 2015 |
10-day VWAP share price on grant date |
Number
of restricted shares vested at 30 September 2015 |
|
|---|---|---|---|---|---|---|---|---|---|
| Total for 2015 | Various | – | 6 324 | – | – | 6 324 | Various | – |
The Tiger Brands Black Managers Trust (BMT I) was established in 2005 as part of the company’s Phase I staff empowerment transaction implemented in October 2005. In terms of this transaction, the allocation of participation rights to black managers will entitle beneficiaries to receive the underlying Tiger shares (and shares in Adcock Ingram on aone-for-one basis) – after making the required capital contributions to BMT I – at any time after the specified lock-inperiod. For all shares allocated on or before 31 July 2010, the lock-in date was 1 January 2015.
The lock-in date for allocations made after that date varies, depending on the date of allocation.
In terms of the Phase 1 transaction, PB Matlare, the chief executive officer of the company, was allocated the rights to 13 500 Tiger shares in July 2008 at an initial notional price of R117,91 per underlying share. This notional cost will vary over time in terms of a repurchase formula and, when these participation rights are taken up, the participant will be entitled to receive 13 500 Tiger Brands shares, as well as 13 500 Adcock Ingram shares. In addition, on 31 December 2009, a top-up allocation of rights to 2 763 Tiger Brands shares (and 2 763 Adcock Ingram shares) was awarded by BMT I to PB Matlare at an initial combined notional price of R122,39 for a Tiger Brands and an Adcock share.
PB Matlare exercised his rights on the 16 263 Adcock shares allocated to him in the current financial year, resulting in a gain of R438 926.
In addition to these allocations, certain members of the executive committee have received various allocations from BMT I. These represent, in aggregate, the rights to 53 526 Tiger Brands shares (and 52 476 Adcock Ingram shares), allocated at an initial combined notional price ranging between R98,57 and R122,39 for a Tiger Brands and an Adcock Ingram share.
In the current financial year, rights to 16 263 Adcock shares were exercised, resulting in a gain of R494 102.
The Tiger Brands Black Managers Trust II (BMT II) was established as part of Tiger Brands’ Phase II empowerment transaction that was implemented in October 2009. In terms of this scheme, PB Matlare received an allocation of rights to 16 300 Tiger shares on 31 January 2010 at a notional price of R147,59 per share. The lock-in period of the BMT II scheme expires on 31 December 2017. In terms of this scheme and as a retention mechanism, PB Matlare also received an allocation of rights to 58 900 Tiger shares on 1 January 2014, at a notional price of R173,76 per share.
In addition, certain members of the executive committee have also received allocations from BMT II. These represent, in aggregate, the rights to 153 692 Tiger Brands shares, allocated at a notional price ranging between R147,59 and R181,16 per share.
In terms of the rules of the Tiger Brands Phantom Cash- settled Option Scheme, at any point, the aggregate of the number of phantom shares for all unexercised options in terms of the scheme, is limited to 10% of the total issued share capital of the company. As at 30 September 2015, the aggregate number of all outstanding options under the scheme represented 0,36% (2014: 0,97%) of the company’s total issued share capital.
The maximum aggregate number of shares that may be acquired by participants under the 2013 Share Plan and any other share plan is not to exceed 5 500 000 shares. For any one participant the maximum aggregate number is not to exceed 550 000 shares. In determining these limits, shares that have been acquired through the JSE and transferred to participants are not considered.
As at 30 September 2015, the actual number of shares that may be acquired by participants under the 2013 Share Plan is, in aggregate, 1 824 026 shares (2014: 1 486 082 shares).
During the year, the group made contributions on behalf of executive directors to an umbrella retirement scheme operated by Investment Solutions. This is a defined contribution retirement plan, with the company contributing 15,7% (2014: 15,7%) of gross pensionable remuneration for retirement funding. The cost of these contributions is a component of the directors’ total remuneration packages. The two prescribed officers are also members of this umbrella retirement scheme.
In addition, five other members of the executive committee participated in this umbrella retirement scheme. The two remaining members of the executive committee belong to the Tiger Brands Management Provident Fund, a defined contribution plan. The company contributed on average 16,5% (2014: 16,1%) of gross pensionable remuneration to the Tiger Brands Management Provident Fund for retirement funding.
Details of contributions made in the review period on behalf of executive directors, prescribed officers and other members of the executive committee appear in note 4.2 of the annual financial statements.
Executive directors, prescribed officers and other members of the executive committee enjoy various benefits, including medical aid cover, permanent health insurance, death in service and funeral cover, as well as a travel allowance where applicable.
The total values of other benefits paid for executive directors, prescribed officers and other members of the executive committee are set out in note 4.2 of the annual financial statements.
Executive directors, prescribed officers and other members of the executive committee are not employed on fixed-termcontracts and have standard employment agreements with current notice periods of either one or three months. The current retirement age is 63 although a retirement age of 65 applies to two members.
Contractual entitlements on terminating employment include, for employees who leave due to retirement or retrenchment, a pro rata short-term incentive payment, subject to the extent of achieving the relevant financial and strategic performance targets at the end of the financial year and the necessary individual performance agreement being in place for the individual concerned at the date of exit. This pro rata incentive payment is subject to the relevant employee being in service for a minimum period of three months during the financial year in question. No pro rata bonus is paid for employees who leave other than for reasons of retirement or retrenchment.
The termination rules relating to options issued under the Tiger Brands Phantom Cash-settled Option Scheme and instruments issued under the Tiger Brands Limited 2013 Share Plan are on pages 82 and 83.
Developing a formal succession plan for senior and executive management takes place annually. The plan is discussed and approved by the executive committee and submitted to the remuneration and nomination committee for discussion and final approval. The objective is to ensure that immediate succession is in place and to develop a talent pool with potential for development and future placement. This includes managers at lower levels. The succession planning process includes all the company’s international businesses.
Tiger Brands encourages members of the executive committee to consider accepting appropriate opportunities to serve as non-executive directors on the main board or board committees of external companies. Tiger Brands believes this policy encourages members of the executive to broaden their skills base and experience. A formal policy has been adopted, in terms of which an executive member is limited to one substantive outside directorship. In terms of the policy, the chairman of Tiger Brands, as chairman of the nomination committee, and the chairman of the remuneration committee are required to authorise any such appointment based on a recommendation from the chief executive officer. Directors’ fees paid to executive members by outside companies under this policy may be retained by the individual concerned. Tiger Brands currently has two members of the executive committee serving as non-executive directors on the main boards of external companies.
Non-executive directors are expected to carry out all the tasks and duties normally associated with the position of a non-executive director as defined by the Companies Act, King III and the memorandum of incorporation of the company. The board and each of its committees have a charter setting out their respective responsibilities.
Non-executive directors are expected to provide the organisation with leadership, expertise and knowledge on strategy, enterprise, innovative ideas and to contribute to its business planning.
Non-executive directors are compensated based on their overall contribution and input to the company, and not just for attendance at board and committee meetings. Consistent non-attendance at meetings, if applicable, will be appropriately handled as part of the company’s board evaluation process. On this basis, non-executive directors receive an annual fee for their services on the board and its committees, rather than a base fee and a separate meeting attendance fee as contemplated by King III.
There are no contractual arrangements for compensation for the loss of office. Non-executive directors do not receive short-term incentives or participate in the company’s long-term incentive scheme. Annual fees payable to non-executive directors for the period that started on 1 March 2015 were approved by shareholders on 9 February 2015.
Fees payable to non-executive directors are approved by shareholders in terms of the company’s memorandum of incorporation. In terms of the memorandum of incorporation, non-executive directors who perform services outside the scope of their ordinary duties may be paid additional remuneration, with the reasonable maximum fixed by a disinterested quorum of directors.
The board recommends fees payable to non-executive directors for approval by shareholders at the annual general meeting. Proposals for fees are first prepared by the executive committee for consideration by the remuneration and nomination committees, after which a final recommendation is made to the board for its consideration prior to being presented to shareholders for approval.
Consideration is given to the increasing levels of responsibility being placed on directors, as well as to market benchmarks for similar sized companies and projected inflation over the relevant period.
The table below sets out the current and prior annual fees:
| 1 March – 29 February 2016 | 1 March – 28 February 2015 | |||
|---|---|---|---|---|
| Base fee (Rand) | 344 063 | 323 064 | ||
| Committee chair | ||||
| Audit committee | 261 487 | 245 528 | ||
| Remuneration committee | 194 995 | 183 094 | ||
| Risk and sustainability committee | 178 920 | 168 000 | ||
| Social, ethics and transformation committee | 148 635 | 139 564 | ||
| Committee membership | ||||
| Audit committee | 134 249 | 126 055 | ||
| Remuneration committee | 97 052 | 91 128 | ||
| Risk and sustainability committee | 82 910 | 77 850 | ||
| Social, ethics and transformation committee | 74 317 | 69 781 | ||
| Chairman’s remuneration | 1 597 825 | 1 500 305 | ||
| Deputy chairman’s remuneration | 825 750 | 775 352 |
The chairman and deputy chairman do not receive any additional remuneration for participating in committees of the board.
In addition to these fees, non-executive directors are currently paid R18 100 per special meeting of the board and R3 600 per hour for any additional work undertaken, provided that payment for such additional work is approved by the remuneration and nomination committees and the chief executive officer.
With effect from July 2015, members of the nominations committee (other than the chairman of the committee) receive a fee of R3 600 per meeting of the committee.
Fees paid to individual non-executive directors for the year ended 30 September 2015 are disclosed in the table of directors’ emoluments under note 4.2 of the annual financial statements.
The board, based on the recommendation of the remuneration committee, has determined that shareholders be requested to approve that various fees payable tonon-executive directors be increased from 1 March 2016. Shareholder approval will also be sought to increase fees paid for attendance at special board meetings and additional work undertaken by non-executive directors.
Details of proposed increases appear in the notice of annual general meeting of shareholders to be held on 16 February 2016. Resolutions to be voted on by shareholders relating to directors’ remuneration increases are special resolutions number 2, 3 and 4.
It is company practice to conduct an external benchmarking exercise on fees payable to non-executive directors every two years. A market review of non-executive directors’ remuneration was undertaken in 2015 and forms the basis of the proposed increases, effective from 1 March 2016. The current fees have accordingly been adjusted bymarket-related increases of between 5,0% and 9,0% for the year beginning 1 March 2016, subject to shareholder approval. In the case of the remuneration committee, no increases are proposed, either to the chairman of the committee or the individual committee members, as the current fees paid are in line with the market.
In compliance with various regulatory frameworks (including the JSE Listings Requirements, Companies Act and King III), in 2014 the Tiger Brands board and its committees participated in an external evaluation exercise conducted by an independent service provider. A comprehensive evaluation process gives the board of directors the opportunity to enhance performance and to better meet the needs of the company and its stakeholders through:
The evaluation is intended to contribute to ensuring that the board of directors is strong, balanced and independent.
The 2014 evaluation process concluded that the board was a high-performing body, although some areas were identified where improvements to its effectiveness could be made, including:
Progress was made in 2015 in addressing these areas. Board training was conducted in November 2014, with the next board training session planned for February 2016. Board site and trade visits took place in Nigeria and, in addition, newnon-executive directors visited certain South African manufacturing operations. A trade visit programme designed and led by the customer executive, gives new directors further insight on the customer and consumer aspects of the business.
During the year, Michael Ajukwu and Yunus Suleman were appointed to the board. Both directors, in addition to Mark Bowman, have significant experience in African developing markets.
In terms of company policy, an internal board evaluation exercise is conducted every alternate year. The internal assessment this year was completed in October 2015.
This year’s evaluation was based on three themes, namely board structure, effectiveness and processes.
On board structure, there were no matters which the board thought needed significant improvement, but the following observations were made:
On board effectiveness, the feedback was that management could be more effective in the execution of strategy tracking, while on board processes, the board considered that tighter succession planning was required.