Remuneration report

Key elements of remuneration

    Short-term incentives       Long-term incentives
    Annual bonus plan      Share appreciation plan  
Purpose and link to strategy
  
 

Rewards the achievement of annual financial performance balanced with other specific strategic priorities and ensures that above-market pay cannot be achieved unless challenging performance targets are met. The non-financial element ensures that the achievement of short-term financial performance is not at the expense of future opportunities 

   

Share appreciation-based incentives are utilised to reward long-term sustainable group performance improvement, retain its senior management expertise and ensure that executives and key talent share a significant level of personal risk and reward with the company’s shareholders to align executive pay and long-term value creation for shareholders  

Application dependent on employee type
and level 
  
 

All executives and senior management and selected middle management

    Senior executives  

Tsogo Sun and ex-Gold Reef (post-merger) executives and selected managers

   

Pre-merger Gold Reef executives and selected senior managers

Operation and performance
  
  Annual cash incentive

Potential bonus earnings are reviewed periodically by the remuneration committee with minimum and maximum bonus percentages of total package set for each broadband level for the achievement of “on-target” and “stretch target” performance, based on or above the median being paid in the marketplace. Bonus awards are based on individual ratings achieved against set targets for financial performance, relative growth against the market, where relevant, and personal performance. The remuneration committee approves the scheme’s targets and hurdles annually  

   

Post-year end, from 12 August 2014, a R200 million facility will be made available to senior executives for the sole purpose of acquiring shares in the company

The board has determined the allocation of the facility as follows:
MN von Aulock   R86 million
J Booysen   R47 million
RB Huddy   R27 million
FV Dlamini   R20 million
GD Tyrrell   R20 million

The facility is interest-free and has no fixed repayment date but must be repaid if the shares are sold or if the executive leaves the employ of the company. The executives are subject to fringe benefits tax on the facility

The executives are not eligible for any new allocations under the existing share appreciation scheme until the loan is repaid in full. Allocations of appreciation units made prior to the provision of the facility will remain unaffected

Value for the executives arising from the facility will come out of the shares acquired in the market and there will not be a cash cost to the group as per the existing share appreciation scheme

  Tsogo Sun, and historically Gold Reef, have in operation phantom share schemes with cash settlement designed to align the interests of participants with those of the company’s shareholders. The essential elements of these schemes are that the plan is essentially a “phantom” version of a share scheme where each unit (whether an appreciation unit, performance unit or a bonus unit) is in effect linked to an underlying share in Tsogo Sun
         
        Appreciation units

Appreciation units allocated at market price are the only share appreciation-based reward mechanism utilised by both Tsogo Sun under the Tsogo Sun Share Appreciation Bonus Plan and Gold Reef prior to the merger. Annual allocations of appreciation units are made to executives and selected managers. They are available to be settled on the third anniversaries of their allocation, but must be exercised by the sixth anniversary, or they will lapse. Allocations made to Tsogo Sun executives and managers prior to 31 March 2008 were available for settlement over a period, being 25%, 25% and 50% on the third, fourth and fifth anniversary respectively, and must be exercised by the eighth anniversary, or they will lapse. On settlement, the value accruing to participants will be the full appreciation of Tsogo Sun’s share price over the allocation price plus dividends declared and paid post-grant date, which value will be settled in cash 

Performance units, bonus units and Gold Reef Share Scheme

The three pre-merger Gold Reef long-term incentive plans are in the process of winding down. No options have been granted to existing executive directors or key management

The final amounts due in respect of the performance units and bonus units will be settled during February 2014 and the liability as at 31 March 2014 is reflected here. Refer to note 26.2 of the annual financial statements for further information on this scheme

The final tranche of the options in terms of the Gold Reef Share Scheme vested on 31 March 2013, although not all vested options have been exercised. Refer to note 26.1 of the annual financial statements for more information on this scheme