Remuneration Committee report

Through the Remuneration Committee, the Board ensures that the Group adopts a Remuneration Policy and practices that align with the Group’s strategy and values. We are responsive to the views of our shareholders on remuneration matters and seek to balance shareholders’ interests with those of our executives and employees.

Mandate

The purpose of the Remuneration Committee is to assist the Board in discharging its oversight responsibilities relating to all compensation matters, including reviewing all components of remuneration, proposing measures for the STI and LTI schemes, implementing all relevant employee compensation policies, ensuring alignment with market best practices and compliance with King IV.

Attendance and composition

Members Invitees Relevant skills profile of members

Chairman

  • CH Boulle (2/3*)

Members

  • SL Botha (3/3)
  • F Petersen-Cook** (3/3)
  • CEO
  • Group HR Executive
  • Company Secretary
  • Group Financial Director
Committee members are highly skilled in business and strategy, legal, risk and governance, marketing, and finance. The Chairman of the Committee has sat on remuneration committees for over 20 years and has assisted various listed and non-listed entities in implementing incentive structures in his capacity as a corporate attorney.
* Chris Boulle was appointed as a member and Chairman of the Remuneration Committee on 1 July 2022.
** Fagmeedah Petersen-Cook joined the Remuneration Committee on 1 June 2022.

Focus areas for 2023

General
  • Reviewed and approved the Committee Charter and annual Committee work plan.
  • Reviewed and approved remuneration-related disclosures in the IAR and Group AFS, and the remuneration report for presentation at the AGM for purposes of passing the non-binding advisory votes.
  • Noted the changes in the Famous Brands B-BBEE scorecard related to employment equity.
  • Oversaw the implementation of the Remuneration Policy and the project to rewrite it to improve clarity and completeness.
  • Reviewed reports based on benchmarking studies to review Exco remuneration relative to the market (read more).
  • Reviewed the Malus and Clawback policy.
  • Engaged with shareholders regarding their concerns on the previous Remuneration Policy.
Remuneration amendments
  • Conducted a detailed review of the LTI and STI for implementation in 2024.
  • Approved increases for administration employees and the payment of their annual bonuses.
  • Approved increases and bonuses for Exco members, and the Executive LTI allocations in line with scheme rules and SARs/retention share split.
  • Considered and approved the deferred decision on executive directors’ STI/LTI and TCC increases.
  • Approved the vesting of LTI shares on 1 June 2022 and the purchase of shares by the Famous Brands Share Incentive Scheme to settle the number of shares due to participants.
Proposed Long-Term Share Plan
  • Appointed Deloitte to review the LTI scheme and recommend an alternative, and reviewed and approved their proposed Long-Term Share Plan and recommended it for approval to the Board and shareholders.
  • Reviewed the rules of the new Share Plan, Implementation Policy and circular to shareholders outlining the details of the new Long-Term Share Plan.
Non-executive directors’ fees
  • Recommended a 4.5% increase in non-executive director fees for approval by shareholders at the AGM.
Executive performance
  • Reviewed the performance of the CEO and Group Financial Director for 2022 and set their scorecards for 2023.
  • Approved the 2023 scorecard for Exco in consultation with them. The Exco scorecard applies similar principles as the CEO scorecard with a focus on fiscal discipline and alignment to the three-year strategic plan. It includes HEPS and EBITDA as measurements, which informs the STI weighting.
  • The Committee approved the re-introduction of HEPS to the LTI after the AGM inputs.
Succession and executive development
  • Reviewed the CEO, Group Financial Director and Group HR Executive succession plans.
  • Reviewed and approved the proposed remuneration for the Group Financial Director-Designate.
  • Noted management’s proposed succession plan for executive and senior management roles.
  • Considered internal and external candidates for the role of the Group Executive for Manufacturing and Logistics, who left the organisation at the end of January 2023.
  • Oversaw the implementation of our Leadership Development Programme, designed for potential internal candidates for the CEO role.

Engaging our shareholders

Before our 2022 AGM, various shareholders were invited to engage with myself and the Company Secretary on matters relating to the resolutions set out in the Notice of AGM and the remuneration report, including the Remuneration Policy and implementation report. The key issues raised included:

  • Dissatisfaction with certain LTI performance measures.
  • A desire for increased disclosure of targets for executive remuneration.
  • Changes to the reporting process and timelines so that the financial performance targets should be disclosed prospectively rather than retrospectively.

At the AGM, held on 22 July 2022, the non-binding advisory resolutions on the Remuneration policy and implementation report were voted against by more than 25% of the voting rights exercised by shareholders. The resolution on the Remuneration policy received 48.93% votes in favour, while the resolution on the implementation received 50.88% votes in favour. As a result, Famous Brands initiated a process to engage with dissenting shareholders. The engagement took the form of meetings to discuss their concerns, followed by written responses. Our response to shareholder concerns can be found in the background statement of this remuneration report .

At a General Meeting held on 23 May 2023, 80.54% of the shareholder votes were in favour of adopting the Long-Term Share Plan. This plan, which offers a simplified, easy to understand remuneration structure, will come into effect from the 2024 financial year and replaces the current LTI scheme. Read more about the Long-Term Share Plan.

Focus areas for 2024

We are committed to ensuring fair and responsible remuneration across the Group. Our focus areas for 2024 include:

  • Ensuring management is appropriately incentivised in a difficult trading environment with low economic growth and high load shedding.
  • Engaging advisors and shareholders on the Long-Term Share Plan and reviewing its implementation.
  • Overseeing the two-year wage agreement process with bargaining unit employees.
  • Reviewing and improving our remuneration report disclosures.
  • Overseeing the implementation of our Leadership Development Programme.
  • Internal succession planning and leadership development will remain a focus as recruiting external candidates with experience in franchise management, manufacturing and logistics is difficult in our market.

I confirm that the Committee is satisfied that it has fulfilled its responsibilities according to its terms of reference for the financial year. I will be present at the AGM to answer any questions regarding the activities of the Committee.

Chris Boulle

Chairman: Remuneration Committee

21 June 2023