Board committees

The board has established two formal committees to assist in discharging its duties and responsibilities, namely the audit/risk committee and the remuneration committee.

Audit/risk committee
Members:
CP Davies
SLL Peteni (resigned 7 May 2009)
NY September (appointed as chairman 21 October 2009)
GR Sibiya (appointed 26 August 2009)

The audit/risk committee comprises three independent non-executive directors.

The committee meets periodically throughout the year to review the financial statements, the scope of internal and external audit functions, risk management and the effectiveness of management information, internal controls and corporate governance procedures. It reports to the board on its findings. Details of attendance at meetings are shown below.

The committee is also responsible for reviewing the group’s accounting policies and statutory compliance and recommending changes, where appropriate.

The committee also sets the principles for recommending the use of the external auditors for non-audit services.

For the annual reporting process, the committee is responsible for considering the appointment of the external auditor and the review of the nature and scope of the external audit.

The audit/risk committee considered the competence, skills and experience of the financial director in terms of section 3.84(h) of the JSE Listings Requirements on appointment and is satisfied that Donny Gouveia meets all the requirements to fulfil the role of financial director of Basil Read.

The board is satisfied that the audit/risk committee has fulfilled its responsibilities under its terms of reference.

Refer to the audit/risk committee’s report for the year ended 31 December 2009.

Remuneration committee
Members:
CP Davies (chairman)
AT Tlelai
OJP Giot
BM Johnson
LB Dyosi

The remuneration committee, which comprises three non-executive directors, one of whom is independent, and two members of management, meets periodically throughout the year. Details of attendance are shown below.

The committee’s objectives are to assist the board in determining conditions of employment and to review and approve remuneration policies and practices for executive directors and senior management. The committee is also responsible for establishing the policy for, and operation of, the group’s share incentive scheme. The committee is satisfied that executive directors are remunerated in line with their responsibilities and performance, and in line with the market.

Remuneration philosophy

Basil Read’s philosophy is to encourage sustainable long-term performance. The purpose of remuneration is to attract, retain, motivate and reward staff to achieve the group’s objectives. Remuneration is reviewed at appropriate intervals to motivate staff to perform to a required standard and to retain their services by offering and maintaining at least market-related remuneration in line with their performance and outputs for particular jobs.

Remuneration increases are granted for all staff annually in March, considering individual performance and output and appropriate market increases.

Non-executive directors

The committee considers and recommends fees for non-executive directors after taking into account duties performed and market trends. Non-executive directors receive a fixed remuneration for their services based on their participation in board meetings and other committees. Non-executive directors do not receive incentive bonus payments nor do they participate in the group’s share incentive scheme. Details of fees earned by non-executive directors in the year under review are provided here.

Executive directors

The objective of the remuneration policy is to attract and retain high-calibre directors and executive management, while balancing the group’s primary objective of sustainable growth. Remuneration structures are designed to create an environment that motivates and supports high levels of individual and team performance.

The annual performance bonus, coupled with the share incentive scheme, is structured to encourage sustainable, enhanced earnings growth and aid in aligning long-term director remuneration directly to growth in shareholder wealth.

The annual performance bonus plan offers incentives to executives and management, based on group performance levels. A bonus pool is created only if certain criteria or financial standards are met, and its size is a function of productivity and improved performance in real terms. Executive directors and management are allocated bonuses from the organisational pool based on:

• divisional performance
• individual performance.

Details of the remuneration of executive directors appear here.

Share incentive scheme

The share incentive scheme for employees and directors was launched in 1998 to reward participants for the group’s performance and to support retention strategies.

In April 2009, 1 678 000 options were awarded to all levels of employees. The number of options awarded to each employee was based on certain qualifying criteria. In terms of the award, 50% of options vest one year after the award date, 25% two years after the award date and the remaining 25% three years after the award date.

Details of options awarded to executive directors during the 2009 financial year appear here.