Remuneration Committee report

Chris Boulle

CHAIRMAN

Chris Boulle

Attendance and composition

Members
Invitees
Relevant skills profile of members
Chairman
  • CH Boulle (3/3)
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 Committee’s Chairman 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.

Focus areas for 2024

General
  • Reviewed and approved the Committee Charter and annual Committee work plan.
  • Reviewed and approved remuneration-related disclosures in the IAR and AFS, and the remuneration report for presentation at the AGM for purposes of passing non-binding advisory votes.
  • Noted the movements in Famous Brands B-BBEE scorecard related to employment equity.
  • Reviewed reports based on benchmarking studies to review Exco members’ remuneration relative to the market (read more).
  • Engaged with shareholders around their views on Famous Brands’ remuneration decisions.
Remuneration amendments

In a closed session with the auditors, the Committee reviewed and considered the following assessments:

  • Approved increases of 6% for administration employees and payment of their annual bonuses.
  • Noted the two-year wage agreement for BU employees with a 6.5% increase for 2023 and 7% for 2024. They also received an increase of 5% in long service awards and a 7% increase in allowances. The employer provident fund contribution increased by 1.25%.
  • Approved increases and bonuses for Exco members and the Executive long-term incentive (LTI) allocations in line with the new scheme rules i.e. SARs/retention performance share awards and restricted shares.
  • Considered and approved the deferred decision on executive directors’ short-term incentive (STI)/LTI and total company cost (TCC) increases.
  • Approved the vesting of LTI shares on 1 November 2023 and the purchase of shares by the Famous Brands Share Incentive Scheme to settle the number of shares due to participants.

Long-Term Share Plan
  • Approved the implementation policy for the Long-Term Share Plan.
  • Engaged with shareholders on the implementation of the Long-Term Share Plan.
  • Oversaw communications to relevant employees on the implications of the Long-Term Share Plan on future rewards.
Non-executive directors’ fees
  • Recommended a 6% increase in non-executive director fees for approval by shareholders at the AGM.
Executive performance and pay
  • Reviewed the performance of the CEO and Group Financial Director for 2023 and set their scorecards for 2024.
  • In consultation with Exco members, approved the 2024 scorecard. The Exco members’ scorecard applies similar principles to the CEO scorecard, with a focus on fiscal discipline and alignment with the three-year strategic objectives.
Succession and executive development
  • Reviewed the CEO, Group Financial Director and Group HR Executive succession plans.
  • Noted management’s proposed succession plan for executive and senior management roles.
  • Considered the appointment of a Group Executive: Supply Chain.
  • Oversaw the Leadership Development Programme, to develop internal candidates for the CEO role.

Shareholders engagement

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, came into effect from the 2024 financial year. Read more about the Long-Term Share Plan.

The 2023 AGM was held on Thursday 20 July 2023. Prior to the AGM, various shareholders were invited to engage with the Chairman of the Remuneration Committee and the Company Secretary on matters relating to the resolutions set out in the Notice of AGM, and especially the Remuneration Report including the Remuneration Policy and Implementation Report. We also discussed implementation of the Long-Term Share Plan.

In general, shareholders were supportive of the performance metrics for STI and the Long-Term Share Plan. The inclusion of HEPS and ROCE as Long-Term Share Plan metrics was welcomed by shareholders. However, shareholders requested free cash flow to be added as a metric and sought additional disclosure for the peer group for total shareholder return (TSR). Our response to shareholder concerns can be found in the background statement.

At the AGM, the non-binding advisory resolutions on the Remuneration Policy and Implementation report received a high level of support from our shareholders, with 87.20% and 89.08% of shareholder votes, respectively. This is a marked improvement on the votes received at our 2022 AGM and is a testament to our successful engagement with shareholders in 2023 and 2024 in response to their concerns.

Priorities for 2025

We are committed to ensuring appropriate, fair and responsible remuneration across the Group. Our focus areas for 2025 include:

  • Ensuring management is appropriately incentivised in a challenging operating environment.
  • Engaging shareholders on our approach to remuneration and key remuneration decisions.
  • Overseeing our Leadership Development Programme to develop successors for the CEO role.
  • Internal succession planning and leadership development in a market where skills are increasingly scarce.
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 Committee’s activities.

Chris Boulle
Chairman: Remuneration Committee

21June 2024