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REMUNERATION REPORT |
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| The Sun International remuneration strategy ensures the creation of an appropriate competitive
base to attract and retain employees of the right calibre and skills, rewarding employees fairly
and equitably, and motivating them to achieve the highest levels of performance in alignment
with Sun International’s strategic objectives. |
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| The board and remuneration and nomination committee present
their remuneration report setting out information applicable to
executive remuneration, directors’ fees, pension and other
benefits, short, medium and long term bonus incentive
remuneration and share incentive plans. The information
provided in this report has been approved by the board on the
recommendation of the committee. |
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| REMUNERATION AND NOMINATION
COMMITTEE |
| Composition: Messrs DA Hawton (chairman), PL Campher,
MP Egan, IN Matthews and MV Moosa. |
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Mr Moosa was appointed a member of the committee on
1 March 2008. Mr L Boyd served on the committee unti
28 March 2008. All members of the committee, with the
exception of Mr MV Moosa, are independent non-executive
directors. For as long as the committee also performs a
nomination function, the board chairman is required to be
appointed chairman of the committee.
The remuneration and nomination committee reviews the design
and structure of executive director and senior executive salary
packages and policies, bonus incentive schemes and share
incentive programmes to ensure they motivate sustained high
performance throughout the group and retain the key executives
within the group. The committee also reviews the composition of
the board and makes recommendations to the board on its
composition, the appointment of executive and non-executive
directors, the re-election of retiring directors and the composition
of the board committees, in terms of the pre-requisites set out in
the board charter.
The mandate of the remuneration and nomination committee
requires the committee, inter alia, to: |
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ensure that competitive reward strategies and programmes
are in place to facilitate the recruitment, motivation and
retention of high performance executive directors and senior
executives in support of realising corporate objectives and in
safeguarding shareholder interests; |
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develop and implement a philosophy on remuneration and
disclosure to enable a reasonable assessment of reward
practices and governance processes to be made by stakeholders; |
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recommend the level of non-executive directors’ and board
committee fees to the board having received the proposals/
recommendations of the executive directors, for consideration
and approval by shareholders; |
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regularly review the composition of the board and committees
of the board, including the annual appointment of the
audit committee and if necessary make recommendations to
the board on its composition, the appointment of new
executive and non-executive directors, the size, diversity and
demographics of the board, including the recommendation
for the re-election of retiring directors; |
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ensure consideration is given to succession planning in the
group; |
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appraise the performance of the chief executive annually
as a pre-requisite for the review and determination of his
remuneration, and his direct reports, subject to consideration
of the short and longer term components of their
remuneration and individual contributions and performance; |
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review the performance of the board chairman and to report
on the review to the board; |
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review compulsory group employee benefits and costs
relevant thereto, and ensure the proper administration of the
company’s share incentive plans; and |
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review the levels of authority of the chief executive. |
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The chief executive and director of human resources attend all
meetings of the committee by invitation, unless deemed
inappropriate by the committee.
No executive director or senior executive is present at meetings
of the remuneration and nomination committee when his/her
own remuneration is discussed or considered. The chairman of
the remuneration and nomination committee, or in his absence
another member of the committee, is required to attend the
annual general meeting to answer questions on the subject
of remuneration.
The committee has adopted written terms of reference approved
by the board and has satisfied its responsibilities in compliance
therewith in all material respects during the financial year. The
terms of reference were reviewed and amended by the board
during the year.
The remuneration and nomination committee is required to
meet formally at least twice a year. Three remuneration and
nomination committee meetings were held during the 2008
financial year and a further one since then and to the date of
this report. Details of attendance by each member are as follows: |
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27 Aug
2007 |
28 Feb
2008 |
28 May
2008 |
26 Aug
2008 |
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| DA Hawton |
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| L Boyd* |
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X |
n/a |
n/a |
| PL Campher |
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X |
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| MP Egan |
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| IN Matthews |
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| MV Moosa** |
n/a |
n/a |
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X
n/a
*
** |
present
apologies
not applicable
deceased 28 March 2008
appointed to the remuneration and nomination committee on
1 March 2008 |
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| REMUNERATION PHILOSOPHY |
The Sun International remuneration strategy ensures the creation
of an appropriate competitive base to attract and retain
employees of the right calibre and skills, rewarding employees
fairly and equitably, and motivating them to achieve the highest
levels of performance in alignment with Sun International’s
strategic objectives. It is Sun International’s philosophy to adopt best practice and
ensure that overall remuneration takes account of current trends
whilst at all times complying with prevailing legislation.
Sun International is committed to providing remuneration that
attracts, retains and motivates staff and assists in developing a high
performance culture and provides a measure of flexibility within
the package structure. A comprehensive Total Cost of Employment
TCOE) remuneration strategy for all permanent full-time positions
is adopted by all South African operations, and where possible and
practical from a taxation and regulatory standpoint, by the rest of
the group’s operations. All increments are based on guaranteed
package (TCOE) taking into account projected inflation, internal
equity, the external market, performance and affordability.
Remuneration levels are competitive compared to the market and
the remuneration process provides for equitable pay that is fair,
consistent and transparent, but differentiates between average
and excellent performers, thus remunerating people according to
their contribution. |
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| REMUNERATION STRUCTURE |
| Guaranteed remuneration |
Sun International’s policy is to compensate executive managers
on a guaranteed package basis between the median and upper
quartile (Q3) of the relevant remuneration market. Remuneration
scales are benchmarked and are generally structured so that
midpoints equate to the upper quartile levels.
Remuneration is quoted on an annual basis, paid monthly and
split between benefits and cash. The cash portion of the
individual’s guaranteed package will vary according to the value
of benefits utilised and deductions.
Through the remuneration and nomination committee, Sun
International reviews its remuneration strategy on a regular basis
and benchmarks itself against companies of similar size as well as
the relevant markets to ensure that the overall level of
compensation of its senior executive management is competitive
and structured to achieve the optimum balance between
guaranteed and variable remuneration (see below). |
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| Retirement funding and healthcare benefits |
Executives also participate in the membership of a company
appointed retirement fund which is compulsory for all permanent
employees. In South Africa, they participate as members of a
restricted membership in-house defined contribution provident
fund offering both retirement funding and insured benefits.
A small number of executives remain members of a closed defined
benefit pension fund.
Membership of a company appointed medical aid is compulsory
and in South Africa executives belong to a restricted membership
scheme offering a variety of plans. |
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| Variable remuneration |
In addition to paying market related guaranteed packages, the
remuneration strategy at the executive and senior management
level also comprises variable remuneration in the form of bonus
incentive schemes and share incentive plans.
The primary bonus incentive scheme comprises participation in
the executive bonus scheme (EBS), comprising ‘EVA®’ (economic
value added) and ‘EBITDA’ target components.
Additionally, and where appropriate, executives also participate
in share incentive plans in the form of share plans which are
subject to pre-determined performance criteria, as applicable. |
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| Executive Bonus Scheme |
The EBS is a target-based scheme that defines the required
performance criteria in terms of maximising long-term growth
and return on investment (EVA®) as well as short-term cash flow
(EBITDA), with amounts payable at varying levels of achievement
against criteria determined by the committee prior to the
commencement of the financial year. This scheme aligns shareholder and management objectives by providing participants
with fair and equitable short-term incentives, reinforcing and
derived from unit, divisional and group objectives, dependent on
where the participant is employed.
Participants of the EBS are primarily senior managers and
executives. Uniform parameters are used to determine eligibility
and participation levels and individual bonuses are calculated as
a percentage of guaranteed remuneration.
70% of the EBS bonus is derived from EVA performance and
30% from EBITDA achievement. The EBS also incorporates a
bonus bank mechanism as one third of bonuses in excess of
target are paid to participants and two thirds are deferred to a
bonus bank for payment up to the target percentages in years
when targets are not met. The bonus bank attracts interest and
serves as a retention mechanism as it is forfeited upon resignation
or dismissal. |
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