{"id":4807,"date":"2024-06-13T19:59:28","date_gmt":"2024-06-13T17:59:28","guid":{"rendered":"https:\/\/famousbrands.co.za\/iar2024\/?page_id=4807"},"modified":"2024-06-18T14:24:50","modified_gmt":"2024-06-18T12:24:50","slug":"background-statement","status":"publish","type":"page","link":"https:\/\/famousbrands.co.za\/iar2024\/rewarding-value-creation\/background-statement\/","title":{"rendered":"Background statement"},"content":{"rendered":"<div class=\"intro\">\n<p>It is the view of the Remuneration Committee that the <strong>Remuneration Policy has achieved its stated objective<\/strong> of<br \/>\n\t\tdriving performance while ensuring retention.<\/p>\n<\/div>\n<p>We value the opportunity to listen to shareholders to better align their preferences and perspectives with those of<br \/>\n\tour\u00a0executives for the long-term benefit of the Group. Our stakeholders\u2019 views were a major consideration in\u00a0our<br \/>\n\tdecision making for 2024, including a complete rethink of our LTI scheme.<\/p>\n<div class=\"row\">\n<div class=\"col-md-7\">\n<div class=\"boxed mh\">\n<h4>External considerations<\/h4>\n<ul>\n<li>Shareholder views and recommendations.<\/li>\n<li>Economic trends and competitive pressure.<\/li>\n<li>The labour market and pay gap between executive management and other employees. <\/li>\n<li>South Africa\u2019s skills shortages which are exacerbated by emigration.<\/li>\n<li>CPI and the rising cost of living.<\/li>\n<li>Requests from bargaining unit representatives.<\/li>\n<li>Market benchmarks for employees are premised on comparable job grades and selecting the appropriate<br \/>\n\t\t\t\t\tpeer group benchmarks with similar attributes, including complexity, industry, size, and geographic<br \/>\n\t\t\t\t\tspread.<\/li>\n<li>The potential maximum total remuneration that each executive could earn, benchmarked against the<br \/>\n\t\t\t\t\tmarket at the 50th percentile.<\/li>\n<\/ul><\/div>\n<\/p><\/div>\n<div class=\"col-md-5\">\n<div class=\"boxed mh\">\n<h4>Internal considerations <\/h4>\n<ul>\n<li>Cash flow management and cost leadership remain important in ensuring our continued financial<br \/>\n\t\t\t\t\trecovery.<\/li>\n<li>Alignment between roles, including between the CEO and Group Financial Director roles and\u00a0between<br \/>\n\t\t\t\t\texecutive roles across SA, AME, and\u00a0the UK.<\/li>\n<li>Implementing the legal requirements regarding equal pay for equal value of work.<\/li>\n<li>Executive recruitment and succession planning considerations.<\/li>\n<\/ul><\/div>\n<\/p><\/div>\n<div class=\"clearfix\"><\/div>\n<\/div>\n<h2>Shareholders\u2019 view on our remuneration<\/h2>\n<p>Two of our remuneration-related resolutions did not receive strong shareholder support at our 2022 AGM. In<br \/>\n\tour\u00a02024\u00a0financial year, the Committee engaged extensively with various shareholders regarding the underlying<br \/>\n\treasons\u00a0for dissenting votes. These concerns were successfully addressed, and the votes at our 2023 AGM showed<br \/>\n\ta\u00a0marked improvement. <\/p>\n<div class=\"ri\">\n<img decoding=\"async\" src=\"https:\/\/famousbrands.co.za\/iar2024\/images\/p163-1.png\" alt=\"\">\n<\/div>\n<p>We continue to address shareholder feedback on our remuneration decisions.<\/p>\n<table class=\"nb\" width=\"100%\">\n<tr>\n<td class=\"np\" width=\"50%\">\n<h5 class=\"purplebg-heading\">Shareholder feedback<\/h5>\n<\/td>\n<td class=\"np\" width=\"50%\">\n<h5 class=\"purplebg-heading\">Committee feedback and actions taken <\/h5>\n<\/td>\n<\/tr>\n<\/table>\n<h6 class=\"maroonbg-heading\">TSR peer group<\/h6>\n<table class=\"nb no-border\">\n<tr>\n<td width=\"50%\">Shareholders requested disclosure of the comparator peer group for the TSR measure.<\/td>\n<td width=\"50%\">We believe that our peer group for this measure is\u00a0appropriate and has been selected with the guidance of<br \/>\n\t\t\tremuneration consultants. We shared this\u00a0with shareholders via email, and it is available <a href=\"https:\/\/famousbrands.co.za\/iar2024\/rewarding-value-creation\/remuneration-policy\/#Incentive_Performance\" class=\"link\" rel=\"noopener\">here<\/a>.<\/td>\n<\/tr>\n<\/table>\n<h6 class=\"maroonbg-heading\">Free cash flow as a Long-Term Share Plan measure<\/h6>\n<hr class=\"orange-line\">\n<table class=\"nb no-border\">\n<tr>\n<td width=\"50%\">Some shareholders requested that free cash flow be\u00a0considered for inclusion as a Long-Term Share<br \/>\n\t\t\tPlan\u00a0metric.<\/td>\n<td width=\"50%\">The Committee considered free cash flow as a metric and concluded that it was not an appropriate metric<br \/>\n\t\t\tgiven that the Group has a good cash generation track record.<\/td>\n<\/tr>\n<\/table>\n<h6 class=\"maroonbg-heading\">TSR calculation<\/h6>\n<hr class=\"orange-line\">\n<tableclass=\"nb no-border\">\n<tr>\n<td width=\"50%\">Some shareholders queried the cost of equity and WACC calculation and target for the LTI.<\/td>\n<td width=\"50%\">These concerns have been taken into account in the 2023 Share Plan and TSR now comprises an absolute and a relative target, which will be measured and equally weighted as follows:<\/p>\n<ul>\n<li>60th percentile of the peer group; and<\/li>\n<li> Cost of equity + 2%.<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n<\/table>\n<h6 class=\"maroonbg-heading\">TSR weighting<\/h6>\n<hr class=\"orange-line\">\n<table class=\"nb no-border\">\n<tr>\n<td width=\"50%\">Some shareholders expressed a preference to see TSR carry more weight.<\/td>\n<td width=\"50%\">The Committee considered the weighting of TSR relative to other KPIs in the LTI scorecard (refer page 174) and remain of the view that it is appropriately weighted. <\/td>\n<\/tr>\n<\/table>\n<h6 class=\"maroonbg-heading\">ROCE<\/h6>\n<hr class=\"orange-line\">\n<table class=\" nb no-border\">\n<tr>\n<td width=\"50%\">Concern was expressed about how ROCE is calculated in light of the GBK impairment. If no adjustment is made<br \/>\n\t\t\tfor the impairment (adding the impairment back to the capital base), then ROCE will be artificially<br \/>\n\t\t\toverstated.<\/td>\n<td width=\"50%\">ROCE is calculated on continuing operations, which excludes the impact of GBK.<\/td>\n<\/tr>\n<\/table>\n<h6 class=\"maroonbg-heading\">Transformation targets <\/h6>\n<hr class=\"orange-line\">\n<table class=\"nb no-border border-orange\">\n<tr>\n<td width=\"50%\">Some shareholders would like to see transformation targets be more stretched as the Group is already at<br \/>\n\t\t\ta\u00a0B-BBEE Level 2. <\/td>\n<td width=\"50%\">We remain comfortable that our targets for transformation are sufficiently stretched as these targets<br \/>\n\t\t\tincrease annually and require management focus and effort.<\/td>\n<\/tr>\n<\/table>\n<p>There were various improvements made to the Remuneration Policy and Implementation Report in 2024, as well as the Group STI and LTI Scorecards for 2024. However, should 25% or more of the shareholders vote against either the Remuneration Policy or the Implementation report at the next AGM, the Committee will notify the dissenting shareholders through a SENS announcement, which will either:<\/p>\n<ul>\n<li>Invite shareholders to engage with Famous Brands and provide the manner, date, and timing of the engagement.\n\t<\/li>\n<li>Notify shareholders of the intent to engage with them shortly (the details of which will be extended to<br \/>\n\t\tshareholders as soon as is reasonably possible).<\/li>\n<\/ul>\n<h2>Remuneration consultants<\/h2>\n<p>Where appropriate, the Committee obtains advice from independent remuneration consultants. The Committee employs the<br \/>\n\tconsultants directly, with direct engagement from the Committee to ensure independence. In 2024, the Committee<br \/>\n\tengaged Deloitte to contribute to and review the implementation policy for the Long-Term Share Incentive Plan. The<br \/>\n\tCommittee is satisfied with Deloitte\u2019s independence and objectivity as an independent consulting firm with extensive<br \/>\n\texperience in remuneration. <\/p>\n","protected":false},"excerpt":{"rendered":"<p>It is the view of the Remuneration Committee that the Remuneration Policy has achieved its stated objective of driving performance while ensuring retention. We value the opportunity to listen to shareholders to better align their preferences and perspectives with those of our\u00a0executives for the long-term benefit of the Group. Our stakeholders\u2019 views were a major&#8230;  <a href=\"https:\/\/famousbrands.co.za\/iar2024\/rewarding-value-creation\/background-statement\/\" class=\"more-link\" title=\"Read Background statement\">Read more &raquo;<\/a><\/p>\n","protected":false},"author":6,"featured_media":0,"parent":4879,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_acf_changed":false,"footnotes":"","_links_to":"","_links_to_target":""},"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Background statement - Famous Brands IAR 2024<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/famousbrands.co.za\/iar2024\/rewarding-value-creation\/background-statement\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Background statement - Famous Brands IAR 2024\" \/>\n<meta property=\"og:description\" content=\"It is the view of the Remuneration Committee that the Remuneration Policy has achieved its stated objective of driving performance while ensuring retention. 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