2024

INTEGRATED REPORT

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Remuneration Committee report

SECTION A

BACKGROUND STATEMENT FROM THE CHAIRMAN OF THE REMUNERATION COMMITTEE

Dear Shareholders

On behalf of the board, I am pleased to present our Remuneration Committee report for the financial period ended 30 June 2024. The report details the focus areas for the 2024 financial period and enhancements to our Remuneration policy. It further details the remuneration outcomes for the period and planned focus areas for the 2025 financial period.

Introduction

The Group's Remuneration policy and reporting continues to evolve as legislation and the employment market evolve. Striving to create an inclusive and transformed environment by attracting, engaging, developing and retaining strong and talented employees to support long-term growth is key to the continued success of our business. The Group's employee value proposition supports this objective through a holistic approach to reward by promoting fair and responsible remuneration practices and enhanced employee wellbeing through our employee-centred wellness, development, diversity and inclusion initiatives.

The Group strives to maintain a balance between the different components of its Remuneration policy, including the level and challenge of stretching targets and remuneration disclosure, while ensuring that high performing individuals continue to be motivated to perform and achieve the Group's market-leading metrics.

In addition to satisfying best practice governance criteria, our board considers it essential to align our Remuneration policy and practices with our Business Philosophy and Group strategy.

PERFORMANCE AND REMUNERATION OUTCOMES

This has been a particularly challenging year for the retail sector, with multiple factors adversely impacting the performance of the Group. In South Africa, the ongoing weak consumer spending environment, congestion at South African ports, global shipping disruption, and climate impact resulting in the late onset of winter in South Africa all impacted inventory levels, and had a moderating influence on sales growth. In the UK, Office delivered a solid performance proving its resilience despite the pressure on household spending in that market. Office has sustained its recent growth momentum and continues to benefit from its unique market positioning, strong brand partnerships and established online presence, as well as the investment in its new store development and remodelling programme.

The Remuneration Committee (the committee) aims to ensure that incentive targets are consistent with the successful execution of our Business Philosophy and Group strategy. Over the reporting period, and based on feedback from shareholders as well as changing legislation, the committee reviewed the Group's Remuneration policy and practices to ensure they align with our objectives while meeting the expectations of our shareholders and other key stakeholders. This process included extensive engagement with relevant stakeholders, as well as international advisers, to form an understanding of their views and what they believe are important components of this policy. The main issues reviewed and addressed in the current period were:

  • the introduction of minimum shareholding requirements for executive directors;
  • ensuring targets are aligned with our business strategy and shareholder interests;
  • introducing ESG as a separate measurable component of our strategic objectives, while ensuring a broader stakeholder focus;
  • disclosing details of strategic targets for the 2025 short-term incentive (STI), which incorporates specific ESG targets;
  • disclosing details of the separate strategic and ESG targets for long-term incentive (LTI) awards made in September 2024 and measured at the end of the 2027 financial period; and
  • reviewing our fair pay policy to ensure it is aligned with the Group's reward philosophy, market best practice and that it serves all stakeholder interests.

Business performance

Group retail sales increased by 3.6% to R21.4 billion with Truworths Africa sales decreasing by 3.2% and Office increasing by 10.8% (in Sterling). Group gross margin fell within our target range but decreased marginally from 52.5% to 52.3%, while cash generated from operations increased to R4.7 billion, almost R900 million more than the prior period.

Our success in delivering on our Vision for our shareholders is evident from the growth in the Group's share price over time, as reflected in the table below, which shows the strength and consistency of the Group's long-term share price performance. This not only demonstrates the value created by the Group for its shareholders, but it also reflects investor sentiment in relation to the Group and therefore the shareholders' satisfaction with management's execution of the Group's strategic initiatives.

Share price appreciation (CAGR) Truworths
International
JSE Top 40 JSE ALSI
Since June 1998 (JSE listing) 13% 10% 10%
Since June 2009 (Global financial crisis) 6% 9% 9%
Since June 2020 (COVID-19) 28% 9% 10%

The Group's dividend yield has performed equally well, as reflected in the table below. Shareholders who invested in the Group in June 2020 have achieved a 35% compound annual total shareholder return (TSR), (the sum of the dividends and appreciation in share price) as measured on 30 June 2024, and 15% and 10% since listing and over the last 15 years, respectively.

Truworths International Total
shareholder
return
(CAGR)
Dividend
yield
(average)
Since June 1998 (JSE listing) 15% 5%
Since June 2009 (Global financial crisis) 10% 6%
Since June 2020 (COVID-19) 35% 9%

The graph below depicts how the value of R1 invested in the Group in June 1998 has grown over the past 26 years, taking into account share price appreciation and dividends, and demonstrates how the Group has created long-term value for shareholders:

VALUE OF R1 INVESTED

These metrics demonstrate our commitment to and successful delivery of our Vision for our shareholders as stated in our Business Philosophy, as well as the successful execution of our business strategy over the long term.

Remuneration outcomes

The remuneration outcomes for the 2024 financial period relative to the minimum, on-target and maximum outcomes for executive directors were as follows:

MICHAEL MARK
(R’000)

Michael Mark

EMANUEL CRISTAUDO
(R’000)

Emanuel Cristaudo

SARAH PROUDFOOT
(R’000)

Sarah Proudfoot

The LTI awards made in September 2021 yielded a vesting outcome in the 2024 financial period of 131.5% (compared to a maximum potential outcome of 150%), reflecting the Group's exemplary post-COVID-19 recovery through management's consistent focus on the Group's Business Philosophy. A key matter considered by the committee was whether this outcome against targets and the share price recovery represented windfall gains. In making this assessment, the committee considered various factors, including:

  • The prevailing uncertain operating context at the time the targets were set in June 2021, taking into account the significantly impaired trading and financial position of Office, and the marginal post-COVID recovery achieved in Truworths up to that point.
  • The headwinds experienced by the Group since June 2021, particularly in South Africa, including civil unrest, floods, port congestion, international shipping disruption, severe levels of electricity load shedding, and a generally poor and unconducive macro environment.
  • The Group's compound annual TSR performance and compound headline earnings per share (HEPS) growth since June 2021 relative to inflation, as a measure of shareholder wealth created over this period, and management's performance in a challenging macro environment. As the start of this three-year period was arguably a low base following the COVID-19 pandemic, the committee also considered the Group's five-year compound TSR and HEPS performance since June 2019.
TSR (CAGR) HEPS
growth
(CAGR)
Inflation
(pa)
TSR out-
performance
vs inflation
(pa)
HEPS
growth
out-
performance
vs inflation
(pa)
Since June 2021 24.8%  15.7%  6.0%  18.8 ppts  9.7 ppts 
Since June 2019 10.5%  7.1%  5.0%  5.5 ppts  2.1 ppts 

Accordingly, the committee concluded that the LTI outcome was not a windfall on targets but the result of the executive team's relentless efforts to implement strategies and manage costs that would deliver significant shareholder value over time.

In the context of the operating environment prevailing at the end of the reporting period, consumer disposable income remains under pressure due to the cost-of-living pressures in both our main trading environments. However, we are cautiously optimistic about South Africa (SA) and the United Kingdom's (UK) medium-term outlook as reflected in current market sentiment. We continue to grow our customer base, and the appeal of our quality, aspirational merchandise and our customer account offering, remains strong. The Group's balance sheet is healthy, and the businesses generate robust cash flows.

We remain focused on rewarding executives and employees in a responsible, fair and sustainable manner to ensure the retention of key executives and employees to achieve our objectives, which include implementing our succession plans and our ongoing focus on transformation. We continue to monitor both the internal and external landscape, taking cognisance of all stakeholders, to ensure our Remuneration policy remains relevant and fulfils its purpose in the short, medium and long term.

SHAREHOLDER ENGAGEMENT AND VOTING

Shareholder engagement

The 2023 Remuneration policy and Implementation report were proposed to shareholders for non-binding advisory votes at the company's annual general meeting (AGM) on 9 November 2023. Of the votes cast, 70.71% were in favour of the Group's Remuneration policy (increased from 69.95% in the prior period) and 66.94% voted in favour of the Implementation report (decreased from 69.96% in the prior period).

2023 AGM RESULTS 2022 AGM RESULTS
Votes for
%
Votes
against
%
Total shares
voted as a
% of total
issued
shares
Votes for
%
Votes
against
%
Total shares
voted as a
% of total
issued
shares
Remuneration policy 70.71 29.29 80.52 69.95 30.05 81.23
Remuneration implementation report 66.94 33.06 80.53 69.96 30.04 81.23

Ahead of the AGM, Institutional Shareholder Services Inc. (ISS), a global provider of independent and objective shareholder meeting research and proxy voting recommendations, issued an ISS Research Report on the Group on 6 November 2023 entitled 'ISS Proxy Analysis & Benchmark Policy Voting Recommendations'. In relation to the resolutions pertaining to the Group's 2023 Remuneration policy and Implementation report, in the Key Takeaways the Research Report stated: 'No material issues are raised with the Remuneration policy and the Implementation report; thus, shareholder support is considered warranted for both resolutions'.

Regarding resolution 8.1 dealing with the Group's Remuneration policy, the Research Report recommended: 'A vote FOR this item is warranted: On balance, the Company's Remuneration policy raises no major concerns'.

Regarding resolution 8.2 dealing with the Group's remuneration Implementation report, the Research Report recommended: 'A vote FOR this item is warranted: In the absence of material concerns and recognising the Company's response to last year's shareholder dissent, support for the Remuneration Implementation report is considered warranted at this time'.

In making these recommendations the Research Report raised a number of points that were noted and taken into consideration by the committee and, where thought appropriate, suitably addressed when formulating the Group's 2024 Remuneration policy and implementing it.

Ahead of the 2023 AGM, in order to engage with the largest shareholder, who is also the major dissenting shareholder, the committee held a meeting with its executives on 23 August 2023. This was followed up by a meeting between executive management and the largest shareholder on 25 October 2023.

Notwithstanding these productive engagements, the Group's largest shareholder advised the company on 13 November 2023, subsequent to the 2023 AGM, of its reasons for voting against the Remuneration policy and Implementation report. At the date of the AGM, this shareholder directly held approximately 19.31% of the company's shares in issue. If the dissenting votes of this shareholder are excluded, then the remaining shareholders voted 96% and 91%, respectively, in favour of the Remuneration policy and the Implementation report. Similarly, at the 2022 AGM, if the dissenting votes of the same largest shareholder are excluded, the remaining shareholders voted in excess of 90% in favour of the Remuneration policy and Implementation report.

Dissenting shareholders' views are welcomed and they were invited, via an announcement on SENS on 10 November 2023, to engage and provide reasons for their votes against the resolutions at the 2023 AGM relating to the approval of the Group's Remuneration policy and Implementation report. A virtual meeting of dissenting shareholders was scheduled for 8 December 2023. Two shareholders, including the largest shareholder, provided feedback prior to the meeting and no shareholders attended the meeting. Furthermore, the committee engaged with a leading global corporate governance and remuneration consultancy and external consultants in order to assimilate feedback and respond positively to dissenting shareholder perspectives. Wherever considered appropriate such feedback has been incorporated into future incentive arrangements.

The Group's largest shareholder was clearly the determining factor in the unfavourable votes at the 2023 and 2022 AGMs. The shareholder sent a letter for both AGMs to the board to explain the reasons for its dissent. To the committee's disappointment, the letters in respect of the two AGMs were almost identical despite the Group's changes to its Remuneration policy and Implementation report in response to the dissenting vote at the 2022 AGM (as set out in the Shareholder concerns section that follows). Following the letter of 13 November 2023 from the largest shareholder, the committee sent a comprehensive letter to it on 12 December 2023 addressing all the issues raised. After not receiving a response to this letter, and in the interest of engaging meaningfully on the issues canvassed, on 7 May 2024, the committee issued a request to the largest shareholder for a response. Notwithstanding an undertaking on 8 May 2024 to furnish same, regrettably no response has been received to date from the dissenting shareholder.

We believe these engagements are crucial to improving our shared understanding of our remuneration strategy and achieving an outcome that supports and delivers a positive and balanced outcome for all our stakeholders. The Group continues to explore methods and opportunities to engage with shareholders.

Shareholder concerns

While no shareholders attended the engagement meeting scheduled for 8 December 2023, the following concerns were raised by shareholders, and the actions taken by the Group in response to these concerns are summarised below:

SHAREHOLDER CONCERNS AND COMMENTS GROUP RESPONSE

STI targets for the 2024 financial period should be disclosed.

In addition, STI and LTI strategic target details should be disclosed.

Owing to the short term and therefore commercially and price sensitive nature of the STI targets, the target ranges are, and will continue to be published retrospectively, although the Group has enhanced its STI disclosures from the 2023 financial period. The committee believes this approach is prudent in safeguarding the Group's short-term financial projections. STI targets are set and approved by the committee prior to the start of the financial year. For the 2025 financial period, STI targets for return on assets and return on equity have been set higher than the upper range of the Group's medium-term targets. In response to the shareholder concern regarding the disclosure of STI strategic targets, the committee has resolved to disclose the strategic target elements and weightings for the ensuing year's STI, and will do so going forward.

Financial LTI targets are published in advance as these are considered to be less commercially sensitive as they are aligned with the Group's published medium-term targets. These targets are set and approved by the committee before awards are made. In response to the shareholder concern regarding the disclosure of LTI strategic target details, the committee has resolved to disclose the strategic and ESG target elements and their respective weightings for the LTI awards to be made in the ensuing year.

Additionally, the committee has resolved to reduce the STI strategic target weighting from 30% to 25% (which includes ESG targets). For LTI awards, strategic and ESG targets have been separated and assigned weightings of 15% and 10% respectively, with a combined total of 25% compared to 30% in prior periods.

Lack of disclosure on sustainability and ESG targets.

The LTI indicators and targets are not sufficiently stretching and should be more closely aligned with shareholder interests, although it is acknowledged that the Group continues to make strides in incorporating multiple financial indicators.

The Group has outperformed the market with compound annual share price growth of 13% pa since the company's JSE listing in 1998 (JSE ALSI and JSE Top 40 at 10% pa), and 28% pa since June 2020 (JSE ALSI 10% pa and JSE Top 40 9% pa), delivering a superior long-term dividend yield (5% average since listing and 9% average since June 2020) and compound annual TSR (15% pa since listing and 35% pa since June 2020). The Group sets medium-term targets for key operating and productivity metrics and, over time, the performance against these targets has improved and is currently the highest or equal to the highest compared to our selected local and international benchmarks. Refer to best-in-class operating and productivity metrics in Section C of this report. We believe this shows an outstanding commitment and contribution ethic in our Group.

The committee believes that stretch targets should be sufficiently challenging yet achievable in times of significant outperformance. As LTI targets are determined more than three years in advance of performance measurement, it is difficult to set these, especially in a volatile operating environment. Considering that the targets for the 2023 and 2024 financial periods were set during the COVID-19 pandemic, it is appropriate to consider the generally negative sentiment and perspective of the future that prevailed at that point in time.

In addition, the committee has introduced minimum shareholding requirements for executive directors with effect from 1 July 2024 to further align their interests with those of shareholders.

The committee is grateful for the feedback received from shareholders and noted that the development of the Group's Remuneration policy and its implementation is one of continuous improvement. The Group considered and attempted to balance the diverse views of shareholders regarding executive remuneration, while at the same time keeping management motivated, focused and retained. The table below sets out the high level remuneration-related actions that the committee has taken over the past three years to further align the Group's policy with shareholder expectations:

SHORT-TERM INCENTIVES LONG-TERM INCENTIVES ADDITIONAL MEASURES
  • Amended HEPS target to be inflation-linked.
  • Amended targets to include ROA, ROE and gross margin.
  • Enhanced the measurement and disclosure details of strategic targets.
  • Reduced strategic target weighting, and introduced ESG targets within the strategic targets.
  • Resolved to publish details of strategic targets, which include ESG targets, in advance for the ensuing year.
  • Enhanced the measurement and disclosure details of strategic targets.
  • Amended HEPS target to be inflation-linked.
  • LTI policy was amended to ensure all awards made to executive directors have performance conditions.
  • LTI targets were re-evaluated and expanded to include an additional target of ROIC exceeding WACC.
  • Rebalanced target weightings in response to shareholder feedback.
  • Reduced strategic target weighting and separated ESG targets from strategic targets.
  • Resolved to publish details of the separate strategic and ESG targets in advance for awards to be made in the ensuing year.
  • Introduced malus and clawback provisions in respect of STIs and LTIs.
  • Introduced minimum shareholding requirements for executive directors.

The Remuneration policy and the Implementation report for the 2024 financial period will be proposed to shareholders for separate non-binding advisory votes at the AGM on 7 November 2024. The committee believes that the improvements in the reporting disclosure as well as aligning targets more closely with shareholder expectations should contribute to improved shareholder support.

LEGISLATIVE CHANGES

The committee ensures that the Group takes cognisance of evolving legislation through continuous research and monitoring.

During the period, the following remuneration-related legislative changes were made:

  • In South Africa, amendments were made to the National Minimum Wage Act, No 9 of 2018, and the national minimum wage increased from R25.42 to R27.58 per hour with effect from 1 March 2024.
  • Amendments were made to the Sectoral Determination 9 wage rates, issued in terms of the Labour Relations Act in South Africa, which rates were implemented on 1 March 2024.
  • In the UK, amendments were made to the National Living Wage and National Minimum Wage which were effective on 1 April 2024.
  • In Ireland, amendments were made to the National Minimum Wage which were effective on 1 January 2024.

In addition, the Companies Amendment Act was signed into law and promulgated on 26 July 2024. Although no effective date has been gazetted and the legislation is not yet binding on the Remuneration policy and Implementation report vote for the 2024 financial period, the committee has given consideration to the amended reporting requirements, and will review the fair pay policy and additional requirements with regard to wage gap disclosures in the 2025 financial period. The committee will also monitor how remuneration reporting practices will evolve in light of the disclosure requirements in the Companies Amendment Act.

REMUNERATION COMMITTEE COMPOSITION

Following feedback received from a global corporate governance consultancy regarding the perceived independence of the board chairman and committee members, the Nomination Committee appointed Wayne Muller as an additional member to the committee, effective 1 September 2023, pursuant to the process of succession of committee members over time. The Group will continue the process of refreshing the non-executive component of the board in a systematic manner that will enable it to have continuity in terms of the important and ongoing contribution from long-standing directors, while newly appointed non-executive directors grow their knowledge of the Group and begin to influence board deliberations in a substantive manner.

FOCUS AREAS FOR 2024

The committee addressed the following key issues during the period:

  • Conducted a detailed review of the Group's fair pay policy and pay equity to ensure the principles and application of 'equal pay for work of equal value' are maintained across all levels within the Group and align with the Group's reward philosophy, and how the application of such principles address fair and responsible remuneration for executive management in the context of overall employee remuneration.
  • Reviewed market practice and the changing landscape with regard to minimum shareholding requirements and introduced minimum shareholding requirements for the executive directors to be attained over a phase-in period.
  • Conducted a detailed analysis of the Group's current Remuneration policy to ensure the Remuneration policy and disclosure practices were in line with market practice and good governance. This included an analysis of the STI and LTI metrics, targets, weightings and measurement, including a regression analysis to confirm how stretching or robust the LTI targets are when compared to the peer group.
  • Comprehensively reviewed the Group's reporting on remuneration to better communicate and enhance disclosure of its remuneration policies and practices to stakeholders.
  • Reviewed the benefits offered by the Group across all levels of employees and approved enhancements thereto, including enhancements to the parental leave policy, as well as the continuation of wellness days to include additional focus on mental health.
  • Reviewed and approved the remuneration of executives, including annual increases, STI payments, LTI awards and LTI vesting outcomes.
  • Reviewed the outcome of LTI awards based on the 2024 financial period results to ensure the vesting outcome is justified having regard for the Group's performance since the date of these awards, taking into account the value created for shareholders, as well as the operating context over the vesting period.
  • Approved the STI targets for the 2025 financial period.
  • Based on a benchmarking exercise by executive management, reviewed and recommended for approval by shareholders the non-executive directors' remuneration for the 2025 calendar year.
  • Reviewed and approved the issue of share-based LTI awards in terms of the 2012 share plan.
  • Approved the release of dividends to LTI share scheme participants holding restricted and performance shares. Dividends for performance shares are subject to clawback provisions, in terms of which 100% vesting occurs if performance targets are met or exceeded. If the targets are not met, dividends received on the deficit in performance are required to be repaid.
  • Confirmed that all LTI allocations and payments were made in accordance with the rules of the LTI schemes.
  • Agreed and recommended for approval by the board the performance targets for the relevant LTI share schemes in respect of awards made during the reporting period.
  • Increased the HEPS stretch target for future STI and LTI awards based on shareholder engagement feedback.
  • Considered and resolved to separate strategic and ESG targets, and introduced a cash realisation metric relating to the Group's ability to collect trade receivables effectively and manage the Group's working capital needs for future LTI awards.

FUTURE FOCUS AREAS

  • Review the fair pay policy and introduce the amended remuneration reporting requirements in alignment with the Companies Amendment Act when it comes into force.
  • Review remuneration policies to clarify directors' contractual rights in terms of pay multiples, and STI and LTI treatment, should there be a change in control of the Group or severance agreements reached.
  • Review the composition of the existing peer group to ensure it remains relevant.
  • Continue to monitor and address pay equity to ensure the principles and application of 'equal pay for work of equal value' as well as fair and responsible remuneration across the dimensions of race, gender and skill level are maintained across all levels within the Group, and in line with the Group's reward philosophy.
  • Continue to focus on setting remuneration targets which drive shareholder wealth creation and earnings growth for all performing employees at all levels, and offering benefits that enhance the quality of living standards of all employees.
  • Continue to monitor the reward structures and retention mechanisms for scarce and critical skills based on market data while considering evolving trends, one of which is the emigration of young, skilled employees.
  • Continue to focus on the phased succession plan for top management and senior executives and ensure it is supported by appropriate remuneration best practice and aligned with the Group's transformation strategy, as well as the retention of key individuals.

EXTERNAL ADVISERS

During the reporting period, the committee engaged the consultancy services of PricewaterhouseCoopers Inc. (PwC), a leading global corporate governance and remuneration consultancy. PwC, familiar with the practices and policies of proxy advisory services, was engaged to conduct a review of the Group's remuneration framework, with a particular focus on voting policies and global best practice for remuneration reporting. The committee is satisfied with the independence and objectivity of the consultants.

Additionally, the Group subscribes to REMeasure and REMChannel, both provided by Old Mutual, which are utilised for benchmarking and remuneration market data in South Africa, and Willis Towers Watson for remuneration market data in the UK.

POLICY STATEMENT

This report of the committee provides an overview of Group-wide remuneration policies with an emphasis on the remuneration structure for the Truworths International executive and non-executive directors. There were no policy exceptions during the period, and the committee is satisfied that the Remuneration policy summarised in this report achieved its stated objectives during the period, and is expected to do so again in the 2025 financial period.

I trust that this Remuneration report enables shareholders to make an informed vote. I look forward to your support of the Group's remuneration proposals at our AGM in November 2024.

Hans Hawinkels

Chairman

Remuneration Committee

SECTION B

REMUNERATION POLICY

APPROVAL OF REMUNERATION POLICY AND IMPLEMENTATION REPORT

In terms of the King IV principles and the JSE Listings Requirements, the Group's forward-looking Remuneration policy and the Implementation report in respect of its current policy as set out in Sections B and C are required to be approved by separate non-binding advisory votes at the AGM of shareholders scheduled for 7 November 2024.

Should 25% or more votes be cast against either or both of the non-binding advisory resolutions, the company undertakes to engage with shareholders to ascertain the reasons for the dissenting votes. Details of the engagement process, if applicable, will be published on SENS after the AGM.

The steps taken to address legitimate and reasonable concerns (if any) of shareholders will be disclosed in the following year's Remuneration Committee report.

Once the Companies Amendment Act, 2024 of South Africa comes into force, the approval requirements for the Remuneration policy and Remuneration report, the resolutions for which will be subject to binding votes requiring majorities of more than 50% in favour, will be applied accordingly.

BUSINESS PHILOSOPHY AND STRATEGY

Our Vision for shareholders states: 'We are long-term investors in Truworths International because we trust in management's capacity to execute innovative strategies which deliver significant value over time'. This aptly describes our commitment to our shareholders. We are not short-term focused. We focus on the long term and strive to deliver sustainable value over time.

Our Values shape our business culture which guides the behaviour of employees. These Values are entrenched in the business and in how we operate, behave, recruit, and in the employee performance evaluation process.

Our strategic objectives are aimed at adherence to and fulfilment of the objectives of our Business Philosophy, as defined by our Purpose statement and our Vision for stakeholders. We strive to achieve these strategic objectives through the successful execution of various plans and actions. The extent to which these plans and actions have been successful is measured by comparing the stakeholder Vision to reality, which allows us to identify areas where improvements need to be made.

Our STI and LTI programmes are aligned with our business strategy, with measurement benchmarks and strategic objectives focused on management's ability to fulfil our Purpose and live by our Values, thereby aligning ourselves with the Vision for our stakeholders.

REMUNERATION PHILOSOPHY AND PRINCIPLES

The remuneration philosophy is closely aligned with the Group's Business Philosophy and is aimed at driving a high-performance culture that delivers the Group's long-term strategic objectives, as well as sustainable shareholder and broader stakeholder returns within the Group's risk appetite. The Business Philosophy directs our consistent focus on the long term, through good and bad times.

The reward philosophy ensures that the Group's reward approach is fair, sustainable, equitable and aligned with global remuneration best practice, and that rewards are applied across all employee levels in a responsible and transparent manner.

Remuneration practices are closely linked to the achievement of performance objectives of the Group, principal subsidiary companies, teams and individuals. The composition of total remuneration is based on the employee's role and level in the Group and there is a strong and sustainable link between performance and contribution over time, and the rewards received by an employee.

The Group's reward policy is designed to achieve the following objectives:

  • Internal equity, which ensures employees are rewarded appropriately in relation to peers and in line with contribution over time, as well as ensuring an adherence with the principle of 'equal pay for work of equal value'.
  • External equity to ensure employees are rewarded competitively in relation to the employment market.
  • Fair and responsible reward management, which ensures that:
    • There is equal opportunity across the Group for growth and development of high-performing individuals who are aligned with the Group's Business Philosophy.
    • Performance measurement practices are regularly and consistently applied.
    • Remuneration and benefits at all levels are equitable and applied consistently.
    • Employees across all levels of the Group are rewarded fairly and appropriately based on their performance and their contribution.
    • Reward practices promote an ethical culture and responsible corporate citizenship.
  • A balanced and appropriate mix of short and long-term incentives.
  • Alignment of risk and reward, with remuneration practices and schemes designed to encourage superior medium to long-term performance relative to competitors, while operating within prudent risk parameters to ensure sustainability.

REMUNERATION GOVERNANCE

The committee has oversight of the Group's remuneration practices and policies. The committee is responsible for reviewing, recommending and approving the remuneration of executive and non-executive directors of the company, and directors, divisional directors and key executives of principal subsidiaries (collectively referred to as executives). The committee periodically reviews the Group's remuneration strategy to ensure it supports the business and human resource strategies, remains aligned with the objective to enhance shareholder value, and is focused on achieving the following objectives:

  • Attracting, engaging, motivating, rewarding and retaining a team of high-performing executives, as well as ensuring these principles are applied and maintained across all employee levels of the Group.
  • Ensuring that the CEO and other executives continue to fulfil the principles of the Business Philosophy and deliver the business strategy, thereby pursuing the long-term sustainable growth and success of the Group.
  • Demonstrating a clear relationship between short and longer-term performance and remuneration.
  • Ensuring an appropriate balance between guaranteed and variable remuneration, taking into account both the short and long-term objectives of the Group.
  • Differentiating pay between higher and average performers over time through effective performance management and assessment.

The Chairman of the committee reports to the board on all aspects of the committee's work as a standing agenda item at each board meeting. This feedback covers all aspects of remuneration strategy and policy, how the policy objectives are being achieved and the implementation thereof over the annual cycle.

FAIR AND RESPONSIBLE REMUNERATION

Fair and responsible reward management ensures that there is equal opportunity across the Group for the growth and development of high-performing individuals who contribute consistently and sustainably over time and are aligned with the Group's Business Philosophy.

Fair and responsible reward continues to be a key focus area, including raising the living standards of employees. In the reporting period, we have continued to focus on ensuring that pay aligns with the role, length of service, contribution, experience and performance levels for all employees across the Group. Both minimum wage and race and gender pay gap analyses utilising REMChannel data analytics are conducted annually, and adjustments are made accordingly.

The committee is cognisant of the disparity in levels of executive guaranteed remuneration relative to lower-paid employees within the retail industry. Therefore due consideration is given to ensuring an appropriate salary increase range is approved to ensure this disparity is addressed over time. It is anticipated that, in general, executive salary increases will be lower than those across the broader workforce, unless additional responsibility is given to executives or unusual circumstances exist, with due consideration to reducing the earnings gap over time and the impact of variable compensation opportunities.

Truworths' minimum starting cash salary is 7.8% above the South African national minimum wage, and store employees earn at least 30.2% more than the South African national minimum wage. In addition, all semi-skilled level employees that have at least two years' service receive additional benefits, which include healthcare, an annual bonus, retirement contribution, funeral benefits and access to an employee assistance programme offering medical, financial and legal support.

The committee is cognisant of the high unemployment levels within South Africa and therefore endeavours to maintain a balance between reducing the earnings gap over time and creating employment opportunities, in particular at the more junior levels.

PAY FOR PERFORMANCE

The executive directors' remuneration is determined according to the nature and responsibilities of the executive's role in relation to market benchmarks, and the performance of the individual in relation to Group and individual performance targets. Rewarding executives through guaranteed and performance-related remuneration is aimed at achieving the following:

  • alignment of executive and shareholder interests;
  • promotion of a culture of executive share ownership;
  • promotion of excellence in individual executive performance; and
  • retention of high-performing executives.

The below graphics depict the pay outcomes under the different performance scenarios for the executive directors.

PAY FOR PERFORMANCE – CEO
%

Pay outcomes - CEO

PAY FOR PERFORMANCE – EXECUTIVE DIRECTORS
%

Pay outcomes - Non Executives

ELEMENTS OF REMUNERATION

The total remuneration mix is determined as follows:

GUARANTEED REMUNERATION VARIABLE AND PERFORMANCE-RELATED REMUNERATION
ANNUAL GUARANTEED REMUNERATION SHORT-TERM PERFORMANCE LONG-TERM PERFORMANCE

Total guaranteed package, which can include the following benefits:

  • Cash salary
  • Travel allowance
  • Retirement benefits
  • Healthcare benefits
  • Group life and disability insurance benefits

Short-term cash-based incentive scheme

 
  • Restricted share plan
  • Share appreciation rights
  • Performance share plan
  • Performance appreciation rights
  • Total guaranteed package is based on performance, contribution, experience and market value relative to responsibilities within the Group.
  • Benefits are compulsory but offer flexibility in option choices.

Incentives are based on Group, subsidiary company and individual performance criteria, and are only paid if the Group achieves its threshold performance levels. Short-term incentives are paid to all qualifying employees across the Group.

Long-term share-based incentives are aimed at rewarding the performance of senior employees as well as encouraging sustainable shareholder wealth creation.

Executive remuneration benchmarking

The Group utilises external professional service providers, external market surveys and best practice for continued remuneration benchmarking and job evaluation purposes. Remuneration is further benchmarked against other JSE-listed retailers and comparable JSE-listed companies. All data is appropriately aged, and weighted averages, medians and ranges are applied to establish the most appropriate remuneration levels. The Group aims to maintain average guaranteed remuneration at the median market level.

The current JSE-listed retail peers utilised as comparators are:

  • Clicks Group
  • TFG
  • Woolworths Holdings
  • Mr Price Group
  • Pepkor Holdings
  • Pick n Pay Stores
  • Shoprite Holdings
  • The Spar Group
  • Cashbuild
  • Dis-Chem Pharmacies
  • Italtile
  • Lewis Group

The selection methodology takes account of both size and performance metrics, which include the number of employees, turnover, total assets and earnings before interest paid and tax (EBIT). This methodology supports an objective determination of the comparator group that eliminates bias and promotes the selection of a comparator group that is not disproportionately weak or strong.

Guaranteed remuneration

Guaranteed remuneration is determined in relation to employment market norms. It includes cash salary, healthcare benefits, retirement benefits, travel allowance, and group life and disability insurance benefits.

To ensure consistency in the evaluation and sizing of the employment role, the Group conducts job profiling and evaluation to ensure the correct match to comparable roles and benchmarking of guaranteed remuneration levels. This is achieved by utilising REMeasure, REMChannel and the Willis Towers Watson databases.

A combination of performance and market remuneration positioning is utilised to adjust guaranteed remuneration levels periodically, as part of an assessment of the Remuneration policy. Adjustments to guaranteed remuneration outside of the annual review process are made on an exceptional basis and only linked to changes in responsibility level.

All South African store employees' compensation complies with Sectoral Determination 9 in terms of the Labour Relations Act or statutory requirements, and the minimum rates of pay, as determined for the retail industry in the applicable country, are either met or exceeded by the Group.

Guaranteed remuneration is periodically reviewed. When agreeing annual salary review levels, consideration is given to expected market movements in terms of salary reviews, Group performance, retail market data, internal comparatives, individual contribution and performance, the pay gaps that may exist at varying grade levels, as well as the prevailing inflation levels within the economy. Annual salary reviews are merit-based and a range of increases is approved based on the employee's level of seniority, the market positioning of the relevant role, as well as the individual's contribution and performance rating for the prior period.

Variable remuneration

The performance of executive directors is reviewed annually by the committee against predetermined financial and non-financial targets to ensure alignment with shareholder interests. Performance targets are set with the objective of being challenging, yet realistic within the context of the economic realities of the countries in which the Group operates and the stage in the business lifecycle.

The committee has discretion regarding incentive payments to mitigate unintended consequences, such as windfall gains that may arise from a purely formulaic approach. Any discretion by the committee will be appropriately disclosed and justified in the relevant Remuneration report for the year under which such discretion was exercised. Discretion will not be used to compensate for unfavourable outcomes.

Short-term incentives

The STI scheme aims to drive short-term performance through appropriate incentivisation in a measurable and sustainable way, thereby rewarding and retaining key talent.

The Group follows a hybrid approach with regard to structuring the STI, which is a combination of both top-down and bottom-up considerations. The top-down approach ensures STIs are linked to the key annual performance metrics of the business, which determines the incentive pool size, while the bottom-up approach, together with individual performance and contribution levels, determine the individual's relative share of the pool. The incentive pool is self-funded through the achievement of financial targets and is based on a percentage, limited to a maximum of 4% of profit before tax (excluding accounting impairments and reversals thereof).

Incentives are based on Group, company and individual performance levels and no short-term incentive is paid to executive directors if the Group's threshold performance measures for the period are not achieved.

All qualifying employees across the Group participate in the STI scheme.

The Group's 2025 STI targets, ie adjusted HEPS growth above inflation, ROA, ROE, gross profit margin and strategic targets (which include ESG targets), as well as threshold, target and stretch levels are determined by the committee prior to the commencement of the financial period.

All financial targets are set and measured on an 'adjusted' basis to ensure they exclude the impact of significant accounting or other anomalies (such as accounting impairments and reversals) that could unduly benefit or penalise STI participants. As such, the 2025 target for HEPS growth is based on the 2024 financial year HEPS (which excludes accounting impairments and reversals by definition), adjusted to exclude the impact of the accounting consolidation of the Group's charitable trusts in the Group's annual financial statements in that year. This is consistent with how the target for HEPS growth was determined in relation to the 2024 financial year STI.

STI financial target ranges are published retrospectively due to their commercially sensitive nature. The detail of strategic targets, which include specific ESG targets, have been disclosed prospectively (see alongside) for the first time this year. The detailed performance achieved against targets for the 2024 financial period can be referred to in the Implementation report that follows.

2025 STI targets Weightings  
%  
Below
threshold
%
Threshold
%
Target
%
Stretch
%
Adjusted HEPS growth > inflation~ 15   50 100 150
Adjusted ROA 20   50 100 150
Adjusted ROE 20   50 100 150
Gross margin % 20* 50 100 150
Strategic targets (including ESG^ targets) 25* 50 100 150
~ Inflation refers to the average of the South African consumer price index (CPI, as published by Statistics South Africa) and the UK harmonised index of consumer prices (HICP, as published by the UK Office for National Statistics), weighted based on Truworths' and Office's relative contribution to Group profit before finance costs and tax.
* The weighting of strategic targets was reduced, and gross margin was increased after consultation with various stakeholders, who felt margin protection was key to the performance of the Group, with generally high inventory levels and promotional activity across the retail sector in the current constrained macro environment.
^ ESG targets comprise 10 percentage points of the total strategic target weighting of 25 percentage points.
Note: HEPS performance and ROE are used for both STI and LTI awards due to their significance in assessing the performance of the Group and their importance to stakeholders (specifically shareholders); they are also supplemented with other relevant financial targets that do not overlap.

Strategic targets, which include ESG targets, and their respective weightings for the 2025 STI are as follows:

  Strategic theme Description Weighting
(%)
 
 

ESG

  • Continue to make steady and measurable progress to reduce carbon emissions.
  • Obtain Edge Advanced Certification for the new Truworths DC.
  • Continue the positive trend of improving the B-BBEE score.
  • Maintain our 'Excellent' rating in the Ernst & Young Excellence in Integrated Reporting Awards.

10

 
 

Human capital

  • Conduct employee surveys to assess and implement initiatives to ensure employees from all backgrounds feel that we are living our Value 'Embrace the Power of Inclusive Teams'.
  • Drive appropriate and long term senior succession planning.

20

 
 

Aspirational fashion

  • Develop new capsule ranges of differentiated fashion product that utilise the strength of our general brand portfolio to entice new, young aspirational fashion consumers.
  • Add new most wanted third-party brands in Office and grow own-branded MTO fashion footwear.

15

 
 

Group synergies

  • Harness Group synergies and the sharing of common platforms, systems and capabilities between Truworths and Office to leverage the intellectual capital in the Group.
  • Capitalise on the investment made in our new Truworths DC to drive efficiencies.

20

 
 

Financial

  • Drive key financial metric improvement to ensure all financial targets are attained.

20

 
 

Capital allocation

  • Optimise the Group's capital structure to enable us to execute innovative strategies aimed at creating significant value for investors over time.

15

 
100  

Individual performance is measured with reference to a scorecard of metrics to encourage each participant to focus on both the financial and non-financial performance targets that are directly aligned with the participant's responsibilities.

The quantum of the STI earning potential is based on the guaranteed remuneration of the relevant employee, multiplied by a market-related on-target percentage based on the Paterson grade of the role.

The committee must be satisfied that such payments are fair and reasonable. All executive directors' STI payments are approved by the committee. The achievement of targets is reviewed by the committee before any STI payments are made to executive directors. STIs are paid in cash at the end of September and are subject to employees' tax deductions.

The table below indicates the threshold, on-target and stretch STI payments as a percentage of guaranteed remuneration. These may be further adjusted based on the individual performance score achieved, and STIs are capped at 150% of annual guaranteed remuneration.

Earning potential (as a percentage of annual guaranteed remuneration) for STI purposes Below
threshold
performance
%
Threshold
performance
%
On-target
performance
%
Stretch
performance
%
STI
cap
%
CEO 50 100 150 150
Executive directors 40 80 130 150

Long-term incentives (LTI)

LTI schemes are aimed at aligning executive remuneration with shareholder interests by rewarding executives for the creation of shareholder value over the medium to longer term. The LTI schemes are reviewed regularly to ensure alignment with relevant legislation, other governing rules and standards, appropriate market benchmarks and best practice.

The Group operates four share-based LTI plans in terms of the 2012 share plan:

  • Restricted share plan (not awarded to executive directors)
  • Share appreciation rights plan (not awarded to executive directors)
  • Performance share plan
  • Performance appreciation rights plan

The following core principles apply to the Group's share-based plans:

  • The maximum aggregate allocation in terms of all the plans is limited to 5% of the company's issued shares as at June 2012 (being the year when the plan was approved by shareholders at the company's AGM) over the life of the plans in terms of the policy, being 23 090 501 shares.
  • Annual allocations are capped at 1.25% of issued shares as at June 2012 in any one year, but committee guidelines are to limit annual allocations to below 1% in any one year.
  • The maximum aggregate allocation for any one employee across all plans is limited to 1% of issued shares as at June 2012 over the life of the plans in terms of the policy, being 4 618 100 shares.
  • Annual awards are allocated based on the face value of the awards granted. The maximum annual allocations are limited to 150% of annual guaranteed remuneration for the CEO and 130% of annual guaranteed remuneration for other executive directors.
  • The restricted share plan and share appreciation rights plan have no performance conditions and are utilised to support the reward of performing senior key employees. Executive directors do not participate in the restricted share plan or share appreciation rights plan.
  • The performance share plan and performance appreciation rights plan have multiple performance targets and are utilised to support and reward good long-term decision making and both financial and non-financial performance. Threshold, target and stretch performance measures are applied to all long-term incentive targets.
  • All annual awards made to executive directors are linked to performance conditions and have a vesting period of no less than three years. Performance against targets are measured at the end of year three.
  • Awards can be made across all plans and can vest over a period of up to six years.
  • Where awards lapse, there is no replacement compensation.
  • No long-term incentive allocation is guaranteed.
  • All unvested shares, as well as unexercised options and vested and unvested rights, are forfeited upon an employee's dismissal in terms of the scheme rules.
  • All unvested shares and vested and unvested rights are forfeited upon an employee's resignation in terms of the plan rules.
  • The committee bi-annually approves the release of dividends to holders of both restricted and performance shares. Dividends paid on performance shares held, where performance against targets has not yet been assessed, are clawed back from participants should performance targets not be met and, therefore, 100% vesting not be achieved. At the date the dividend is declared, the executive accepts the dividend and can agree to simultaneously lend it on interest-free basis to the Group, until the performance measurement period has elapsed, at which time the Group pays back to the executive the amount of the loan due to them after appropriate deduction for non-achievement of performance targets. If the cash dividend is accepted at the payment date, the executive agrees that the shares be pledged to the Group, until the measurement period has elapsed, at which point the executive is required to make an appropriate repayment of the dividend for non-achievement of performance targets. In the event of termination of the executive's employment prior to the end of the performance measurement period, the dividend paid to the executive must be refunded in full.
  • The committee regularly monitors the overall actual and forecast impact and costs of these plans on Group earnings.

In line with the Group's value of rewarding excellence as well as maintaining a long-term perspective on both the business and employees' careers, management aims to ensure participation by all high-performing employees at senior levels as well as those key to future succession or with scarce skills in the LTI plans.

LTI targets agreed for performance shares awarded in September 2024, with the target measurement date being the 2027 financial period, are set out in the following table. All financial targets are set and measured on an 'adjusted' basis to ensure they exclude the impact of significant accounting or other anomalies (such as accounting impairments and reversals) that could unduly benefit or penalise LTI participants.

2027 LTI targets (for awards made in September 2024) Weighting
%
Threshold
50%
vesting
On-target
100%
vesting
Stretch   
150%  
vesting   
Published  
medium‑term  
targets@
Adjusted HEPS growth^ > inflation* 15 Inflation
pa
Inflation
+ 1ppt pa
Inflation   
+ 4ppts pa~
Adjusted ROE 15 22.0 24.5 27.0    22.0 - 27.0  
Cash realisation rate (three-year average)# 15 70.0 90.0 110.0   
ROIC > WACC 30 WACC +
2ppts pa
WACC +
3.5ppts pa
WACC +   
5ppts pa   
Strategic targets 15 50% 100% 150%  
ESG targets# 10 50% 100% 150%  
@ Please refer to the Chief Financial Officer's report for further information on the revised medium-term targets.
^ Adjusted HEPS growth refers to HEPS growth relative to the 2024 financial year HEPS (which excludes accounting impairments and reversals by definition), adjusted to exclude the impact of the consolidation of the Group's charitable trusts in that year.
* Inflation refers to the average of the South African consumer price index (CPI, as published by Statistics South Africa) and the UK harmonised index of consumer prices (HICP, as published by the UK Office for National Statistics), weighted based on Truworths' and Office's relative contribution to Group profit before finance costs and tax.
~ The stretch target for HEPS growth was increased further in the current period from inflation plus 2 ppts pa to inflation plus 4 ppts pa, following consultation with shareholders on the 2023 financial period Remuneration policy and Implementation report.
# After consultation with stakeholders, the committee introduced an important cash realisation metric and separated ESG targets from other strategic targets. The importance of the cash realisation metric relates to the Group's ability to collect trade receivables effectively and manage the Group's working capital needs.

Strategic targets, which include ESG targets, and their respective weightings for the LTI that vests in the 2027 financial period are as follows:

Strategic theme Description Weighting
(%)
 
Human capital
  • Build a diverse talent pool in the organisation to facilitate business objectives and senior level succession.
  • Develop training initiatives to upskill talent in critical skills areas.
  • Identify and develop top black talent and women for future succession.
  • Make measurable progress towards the achievement of our employment equity plan targets.
15  
Supply chain
  • Improve targeted fulfilment to stores through system and process developments in the DCs in SA and the UK.
  • Grow the contribution from in-house design (in SA and UK) and local manufacturing capability (in SA) to elevate the level of quick response and fast fashion.
15  
Aspirational fashion
  • Increase the volumes of foundation styles that underpin the ranges to grow sales and take advantage of the additional capability of the new Truworths DC.
  • Introduce new AI technology into the merchandise development, design and buying processes.
  • Materially expand the made-to-order (MTO) range within Office across Men's, Ladies' and Children's footwear and accessories.
20  
Omni-channel
  • Provide personalised and appropriate content, leveraging our analytics capability and AI models to raise the level of online sales in the Group, but especially in Truworths.
  • Focus on maximising profitability by optimising the fulfilment of orders to customers.
15  
Customer relationship management
  • Leverage customer and loyalty data by building new-generation world-class customer relationship management (CRM) capabilities to promote appropriate product and services in order to build brand loyalty and improve retention and recency.
15  
Retail presence
  • Expand our real estate footprint in strategic locations and where returns exceed our store viability criteria, with specific focus on the UK.
20  
100  

ESG targets and their respective weightings for the LTI vestings in the 2027 financial period are as follows:

Strategic theme Description Weighting
(%)
ESG
  • Expand the number of measures for upstream and downstream carbon dioxide (CO2) emitters to establish accountability for carbon usage.
  • Adopt the 3R principle across the Group (reduce, reuse, recycle).
  • Continue to improve our B-BBEE score in order to make progress in our Broad-Based Black Economic Empowerment credentials.
  • Maintain our 'Excellent' rating in the Ernst & Young Excellence in Integrated Reporting Awards.
10

For the 2024 financial period, no awards were made under the performance appreciation rights plan and, as such, no performance conditions were agreed for this plan. Similarly, no awards were made under the share appreciation rights plan to any employee.

Minimum shareholding requirement

A minimum shareholding requirement (MSR) was introduced from 1 July 2024 to ensure executive directors accumulate and retain a shareholding (outside and separate from shareholding through the Group's share schemes) in Truworths International, ensuring alignment with shareholder interests in the long term. The policy will apply to all executive directors, who will be required to hold shares equal in value to a specified percentage of their guaranteed annual remuneration as follows:

  • CEO - 200% of annual guaranteed remuneration.
  • Other executive directors - 150% of annual guaranteed  remuneration.

The value refers to all shares held directly or indirectly via a company, trust or other entity directly linked to the executive in relation to either vested shares retained from LTIs previously awarded via the Group's share schemes or acquired by the executive directly in the market. The shareholding must be accumulated over a period of up to five years, either from the date of introduction of the policy or the appointment date of the executive, whichever is the later. After the five-year phase-in period, executives are expected to maintain the MSR for the duration of their employment.

The committee will assess holding levels annually, and reserves the right to determine remedial steps should the targeted MSR not be met at the target date. Remedial steps can include, but are not limited to, the mandatory deferral of forthcoming annual STIs for investment in company shares and subjecting the resultant shares to a holding period, as well as subjecting any future vesting share scheme shares to a holding period, until the MSR is achieved.

Legacy share scheme

The legacy long-term incentive scheme (1998 share option scheme) remains in operation but no further awards have been made in terms of this scheme since 2012, nor are there plans to make any. No shares are currently held in terms of the scheme, and the outstanding share options issued under this scheme are currently scheduled to expire in the 2025 financial period. Loans advanced by the Group for shares held in terms of this scheme were repaid in full during the reporting period and the shares held as security for such loans were released from their pledges. Potential gains relating to restricted instruments under the 1998 share option scheme, as well as the number of instruments issued in terms of this scheme, are taken into account in the allocation of shares under the 2012 share plan.

MALUS AND CLAWBACK

The malus and clawback policy is applicable to all variable remuneration awarded to executives and senior managers. The duration of malus provisions is aligned with the duration of the relevant incentive, up to the point of settlement. The duration of clawback provisions is limited to a period of two years from settlement, and remains in force if the executive concerned leaves the company prior to its expiry. Any variable remuneration (both STI and LTI) may be reduced or recovered in whole, or in part, after the occurrence of a trigger event.

The following constitute trigger events which will result in the malus or clawback provisions being applied:

  • An intentional and material misstatement by the employee concerned of the financial results relating to the performance period or employment period in respect of an award, resulting in an adjustment in the audited accounts of a company in the Group.
  • The assessment of any performance metric or condition in respect of an award which is based on a material error, or materially inaccurate information.
  • The assessment of any performance metric or condition in respect of an award which is based on intentionally misleading information.
  • Events or behaviour of the employee or events attributable to an employee which lead to the censure of a company in the Group, and as a direct result thereof cause material and ongoing reputational damage to a company in the Group.
  • Reasonable evidence of employee action or conduct which amounts to dishonesty, fraud or gross misconduct.

EMPLOYMENT CONTRACTS

There are no contractual obligations at any employment level to pay special severance amounts or compensation on termination of employment contracts arising from failure or incapacity to perform, or from underperformance against contracted objectives.

There are no contractual obligations at any level of employment to allocate any short or long-term incentives, the only exception being the allocation of restricted shares, or performance shares in the case of an executive director, as consideration for agreeing to a restraint of trade, when employees join the Group.

No employment contract terms are affected by, or are linked in any way to, the automatic severing of such contracts as a result of a change in control of the Group. Furthermore, no payments of unvested short or long-term incentives are guaranteed on, or linked to, such a change in control, save that the rights of participants in the 2012 share plan must be accommodated by the board on a fair and reasonable basis on a change of control, and vesting of such rights will, unless the committee decides otherwise, be accelerated if such change of control leads to retrenchment within 24 months of the change in control. This policy will be reviewed in the 2025 financial period to include and clarify the treatment of STIs and LTIs in such instance of a change in control or termination of contract.

The executive directors' service agreements are subject to a six-month notice period.

NON-EXECUTIVE DIRECTORS' REMUNERATION

Non-executive directors receive fixed fees for services rendered as directors and as members of board committees. All non-executive directors receive the same base board fees, regardless of their length of service. In line with best governance and remuneration practice, non-executive directors do not participate in incentive schemes and do not receive any benefits (other than the discounts applicable to employees in respect of purchases charged to store card accounts) or performance-related remuneration from the Group. None of the non-executive directors have service contracts with the Group and no consultancy fees were paid to non-executive directors during the period.

SECTION C

IMPLEMENTATION REPORT 2024

The Group applied the Remuneration policy as set out in Section B without any deviations for the 2024 reporting period, and no payments were made as a result of termination of office or employment.

Guaranteed remuneration adjustments

The annual remuneration increase applicable from 1 March 2024 onwards recommended by the committee for non-unionised employees ranged from 3.5% to 8.5% (dependent on seniority, performance and market rate positioning) for employees performing at the Group's minimum required standard or higher. The increase ranges and average increase applied to qualifying management and non-management employees were as follows:

  • management range of 3.5% - 6.5%, with an average of 5.3%;
  • non-management range of 3.5% - 7.0%, with an average of 5.5%; and
  • bargaining unit range of 3.5% - 8.5%, with an average of 6.0%.

Historically, salary increases for South African Commercial, Catering and Allied Workers Union (SACCAWU) members in the bargaining unit (permanent employees, excluding managers and flexi-timers) were determined following a process of collective bargaining between the trade union and the principal South African operating subsidiary. Since SACCAWU failed to meet the required membership threshold in the bargaining unit, the normal company salary review process was extended to this group of employees.

The annual guaranteed remuneration of the executive directors is determined by the committee, after reviewing benchmarks based on the Group's peer group of listed retail companies in South Africa. Guaranteed annual remuneration of executive directors for the reporting period was as follows:

Executive directors' guaranteed remuneration 2024
R'000
2023
R'000
Change
%
Michael Mark 11 321 10 860 4.2
Emanuel Cristaudo~ 5 758 5 217 10.4
Sarah Proudfoot~ 5 758 5 217 10.4
~ Emanuel Cristaudo and Sarah Proudfoot were appointed as Group Joint Deputy CEOs in October 2022 as part of the Group's succession planning. Their roles were benchmarked at the time of appointment and accordingly adjusted over a two-year period with a 12.8% increase awarded in the 2023 period and a 10.4% increase awarded in the 2024 period, in order to adjust their guaranteed remuneration to the appropriate benchmarked remuneration for this role in line with their increased responsibilities. Increases normalised to 5.75% effective from 1 March 2024.

 

PERFORMANCE AND IMPACT ON INCENTIVES

The Group's STI and LTI schemes have driven sustained financial performance in the long term, notwithstanding the macroeconomic and other challenges the Group had to contend with over the last five years. The graphs below show how since the 2019 financial period end the Group has grown the sale of merchandise and profit before finance costs and tax (on an adjusted basis), as well as headline earnings per share and annual dividends per share while maintaining a consistent dividend cover ratio.

Sale of merchandise
Sale of merchandise

* Adjusted profit before finance costs and tax excludes the impact of intangible asset impairments (2019 and 2020) and impairment reversals (2024), the settlement of the indirect tax matter (2023), as well as the impact of the consolidation of the Group's charitable trusts (2024).

BEST-IN-CLASS OPERATING AND PRODUCTIVITY METRICS

2024
Pro forma
Medium-term
targets
(published
in FY23)
Local   
benchmark@
International  
benchmark^
Gross margin (%) 52.3 49 – 53 43.7    51.6  
Operating margin (%) 22.0 18 – 23 12.8    11.9  
Return on equity (%) 36 31 – 36 18    20  
Return on assets (%) 24 22 – 27 15    12  
Inventory turn (times) 4.3 3.5 – 4.5 2.8    3.5  
Asset turnover (times) 1.1 0.9 – 1.3 1.1    1.1  
@ The local benchmarks are based on the average ratios for comparable JSE-listed apparel retailers, being Mr Price Group (year ended 30 March 2024) and TFG (year ended 31 March 2024).
^ The global benchmarks are based on the average ratios for listed global fashion retailers (with a 70% weighting), being H&M (year ended 30 November 2023), Inditex (owner of the Zara fashion chain) (year ended 31 January 2024) and Lojas Renner (year ended 31 December 2023) and listed sportswear retailers (with a 30% weighting), being Frasers Group PLC (year ended 28 April 2024) and JD Sports Fashion PLC (year ended 3 February 2024).

2024 SHORT-TERM INCENTIVE OUTCOMES

The table below depicts the historical STI payments of all employees as a percentage of profit before tax (excluding accounting impairments):

2024  
52 weeks  
2023  
52 weeks  
2022  
52 weeks  
Adjusted profit before tax (refer footnotes below) (Rm) 3 892* 4 058^ 3 943#
Growth in adjusted profit before tax (%) (4)  1   34  
STI paid (Rm) 84   105   119  
Executive directors achieved STI Yes   Yes   Yes  
STI paid as a percentage of adjusted profit before tax (%) 2.3   2.6   3.0  
* 2024 profit before tax (excluding accounting impairments and reversals), adjusted to exclude the impact of the consolidation of the Group's charitable trusts.
^ 2023 pro forma profit before tax (excluding accounting impairments), ie excluding the impact of the indirect tax matter, and compared to the corresponding 52-week prior period.
# 2022 pro forma 52-week results (weeks 1 - 52), ie the results for the 53-week period excluding the impact of the 53rd week.

The STI targets in respect of the 2024 reporting period, viz adjusted Group HEPS growth, adjusted ROA, adjusted ROE, gross margin and the successful implementation of strategic projects defined for the period, were determined by the committee at the start of the period. HEPS growth, ROA and ROE were adjusted to exclude the impact of accounting impairments, impairment reversals and the impact (gain) arising from the consolidation of the Group's charitable trusts for the first time in the 2024 financial period, and measures HEPS growth relative to the pro forma 52-week prior period.

The performance achieved and outcome against the 2024 STI targets were as follows:

2024 STI targets~ Weighting Threshold
0%
Target 
100% 
Stretch 
150% 
Achieved
2024
Weighted
outcome
Adjusted HEPS growth^ 15% Inflation* pa
4.8%
Inflation*
+ 1 ppt pa 
5.8% 
Inflation*
+ 4 ppts pa 
8.8% 
784.8 cps 
(4.1%)
0.0%
Adjusted ROA 20% 23.5% 25.5%  27.5%  25.3% 18.4%
Adjusted ROE 20% 35.0% 37.0%  39.0%  36.1% 11.1%
Gross margin 15% 51.0% 52.5%  54.0%  52.3% 12.7%
Strategic targets (detail set out in the table that follows) 30% 50.0% 100.0%  150.0%  106.3% 31.9%
Total 100% 74.1%
~ The STI financial targets are reviewed annually, and if necessary, revised to account for changes in the Group's balance sheet and capital structure. Accordingly, the 2024 STI targets for ROA and ROE have been adjusted to account for the growing cash balance in Office, which the board has decided to retain for strategic purposes, as well as the normalisation of equity following the significant share buy-backs between January 2020 and June 2022.
^ Adjusted HEPS growth, which excludes accounting impairments and impairment reversals by definition, and the impact of the consolidation of the Group's charitable trusts in the current financial period was measured against 2023 pro forma HEPS, which excludes the impact of the indirect tax matter.
* Inflation refers to the average of the South African consumer price index (CPI, as published by Statistics South Africa) and the UK harmonised index of consumer prices (HICP, as published by the UK Office for National Statistics), weighted based on Truworths' and Office's relative contribution to Group profit before finance costs and tax.

The performance achieved and outcome against the 2024 STI strategic targets, which outcome is included in the overall STI outcome of 74.1% for the period as disclosed in the previous table, were as follows:

2024 STI targets Rating
%
Weighting
%
Weighted
outcome
%

Modify the Business Philosophy to promote the inclusion of individuals from diverse backgrounds, to create a culture of teamwork across the business with a greater emphasis on being contribution focused, and to ensure continued development takes place to progress succession and the attainment of business goals.

Values modified to embrace the power of diverse and inclusive teams with an emphasis on individual and team contribution. Rollout to the business completed in both Truworths and Office. Performance measurement systems updated to accommodate these enhancements and our staff recognition programme, which is aimed at rewarding high achievers, was adapted and rolled out across the Group, including in Office for the first time. 13 038 staff members were trained across the Group during the financial period, compared to 12 588 in the previous reporting period.

125

25

31.3

Continue to look for opportunities to grow and enhance the retail business in both operating environments, including investing in our organisation for long term growth to ensure the attainment of our published financial targets.

Truworths

  • Significant progress made in growing and enhancing our internal design capability through the consolidation of the recently acquired Bonwit and Barrie Cline design centres and the implementation of world-class technology in this area, thereby creating a combined ladieswear division for local design and manufacture. This will assist with quick response of local product to meet demand.
  • Significant investment in our new distribution centre with completion of the 52 000m2 building in December 2023 and the bulk of the materials handling equipment and technology installed by period-end, on plan and within budget.
  • Truworths Re-imagined store concept created and rolled out to several malls with an encouraging uplift in sales, as well as the development of new formats for Identity, Truworths Kids Emporium and Context.

Office

  • Truworths' tried and tested retail methodologies implemented in Office with a meaningful increase in inventory turn and enhanced inventory management.
  • New store concept introduced and significant investment in new and refurbished stores in key locations over the financial period, with all new and renovated stores performing better than their viability projections.
  • DC in Kilmarnock was optimised to reduce cost and improve productivity.

Group

All published medium-term financial targets were met.

100

20

20.0

Evaluate external investment opportunities, guided by our Business Philosophy, and in line with our investment criteria.

Several acquisition opportunities were considered over the period, with active participation by the Group in a number of acquisition processes, both in South Africa and in the United Kingdom. Alignment with the Business Philosophy was carefully considered as was the dilution of resources that would be required to integrate these businesses, the funding required and the potential long-term strategic and synergistic benefits. The Group continues to seek opportunities in this regard.

100

15

15.0

Taking into account changes in the legislative landscape and the requirements of our stakeholders, ensure we continue to maintain the highest levels of governance in the Group.

  • As a result of legislative changes during the financial period, Truworths is classified as an Accountable Institution in terms of the Financial Intelligence Centre (FIC) Act, and therefore had to ensure FICA compliance in accordance with the FIC Act by the end of the financial period. This was completed successfully.
  • The Group appointed a new external auditor pursuant to mandatory audit firm rotation, and received an unqualified audit for the 2024 period.
  • Stakeholder engagement required a number of changes to the Remuneration policy as outlined in this report.
  • The Group was ranked in the top 10 of the EY Excellence in Integrated Reporting Awards for the 17th consecutive year, the only company on the JSE to have achieved this accolade.

100

20

20.0

ESG

  • Continued traction on alignment with UN SDGs as outlined in the Creating value through sustainability report.
  • Improvement in our B-BBEE score and level, from a level 5 to a level 4.
  • Adopted the JSE Sustainability Disclosure Guidance as outlined in the reporting frameworks and compliance section of the Introducing our 2024 Integrated Report.
  • Office ESG strategy developed and in-house ESG governance structures were implemented. Office strategy is now aligned with that of Truworths.

100

20

20.0

Total 100 106.3

As 2024 STI targets were achieved by the Group at above threshold level, a resultant incentive pool of R84 million was agreed, being 2.3% of adjusted profit before tax (2023: R105 million being 2.6% of adjusted profit before tax), and incentives were approved for payment to all qualifying employees. Executive directors' STIs were agreed as follows:

Executive director On-target STI
% of annual
guaranteed
remuneration
Overall
achievement
after Group and
personal
performance
modifiers as
% of guaranteed
remuneration
STI 2024
awarded
R'000
STI 2023
awarded
R'000
Michael Mark 100 68.5 7 758 13 250
Emanuel Cristaudo 80 61.7 3 552 5 951
Sarah Proudfoot 80 61.7 3 552 5 951

The graph below shows over the last 10 financial periods the CEO's guaranteed annual remuneration and STI, and highlights the strong correlation between his STI and the annual change in the Group's adjusted profit before finance costs and tax. It is to be noted that the CEO did not receive any STI payments in the 2015, 2017, 2018, 2019 or 2020 financial periods.

CEO STI

LONG-TERM INCENTIVES WITH A PERFORMANCE PERIOD ENDED DURING THE 2024 FINANCIAL PERIOD

Group financial performance conditions and targets for LTI purposes are determined by the committee. Measuring performance over a longer period ensures a focus on longer-term sustainable growth in shareholder value.

Actual performance against targets was assessed for the performance period ended during the year under review and applied to performance shares allocated in September 2021 and resulted in a total vesting level of 131.5%, reflecting the Group's exemplary post‑COVID‑19 recovery through management's consistent focus on its Business Philosophy and strategy.

A key matter considered by the committee was whether this outcome against targets and the share price recovery represented windfall gains. In making this assessment, the committee considered various factors, including:

  • The prevailing uncertain operating context at the time the targets were set in June 2021, taking into account the significantly impaired trading and financial position of Office and the marginal post-COVID recovery achieved in Truworths up to that point.
  • The headwinds experienced by the Group since June 2021, in particular in South Africa, including civil unrest, floods, port congestion, international shipping disruption, severe levels of electricity load shedding and a generally poor and unconducive macro environment.
  • The Group's compound annual TSR performance and compound HEPS growth since June 2021 relative to inflation, as a measure of shareholder wealth created over this period, and management's performance in a challenging macro environment. As the start of this three-year period was arguably a low base following the COVID-19 pandemic, the committee also considered the Group's five-year compound TSR and HEPS performance since June 2019.
TSR (CAGR) HEPS 
growth 
(CAGR)
Inflation 
(pa)
TSR out- 
performance 
vs 
inflation 
(pa)
HEPS 
growth out- 
performance 
vs 
inflation 
(pa)
Since June 2021 24.8% 15.7% 6.0% 18.8 ppts  9.7 ppts 
Since June 2019 10.5% 7.1% 5.0% 5.5 ppts  2.1 ppts 

The committee concluded that the LTI outcome was not a windfall on targets, but the result of the executive team's relentless efforts to implement strategies that would deliver significant shareholder value over time.

The following table depicts the historical vesting level of LTIs based on performance outcomes against LTI targets:

2024 2023 2022 2021 2020 2019 2018
September
2021
award
September
2020
and
March 2021
awards
September
2019
and
March 2020 awards
March 2018,
September
2018
and
March 2019/
June 2019
awards
August 2017
award
November
2016
award
March 2016
award
        90.0%      
        113.2%      
Vesting level of LTI 131.5% 137.3% 139.8% 114.9% 37.5% 0.0% 52.3%

Details of performance against targets and outcomes for awards made during the 2021 financial period, with a performance period at the end of the 2024 financial period as well as vesting achieved, are as follows:

2024 LTI targets September 2021 LTI award Weighting   Threshold  
50%
Target  
100%
Stretch  
150%
Achieved   Weighted  
outcome  
Published  
medium‑term  
Group targets  
at time of  
award  
HEPS 20% 546.7   563.0   579.6   784.8   30.0%
ROA 15% 20.0% 22.5% 25.0% 25.3% 22.5% 20% - 25%
ROE 15% 27.0% 29.5% 32.0% 36.1% 22.5% 27% - 32%
Gross margin 20% 51.0% 52.0% 53.0% 52.3% 22.7% 49% - 53%
Strategic targets (detail set out in the table that follows) 30% 50.0% 100.0% 150.0% 112.5% 33.8%
Total 100% 131.5%

In the case of HEPS, compound annual growth exceeded compound annual inflation by 9.6 percentage points per annum, over the performance period, and in the case of both ROA and ROE the achieved outcome exceeded the upper range of the medium-term targets published at the time of the award, with gross margin achieving close to the upper end of the medium-term target ranges disclosed.

Performance achieved against the 2024 LTI strategic targets for the above award was as follows:

Strategic target   Rating description Rating
%
  Weighting
%
  Weighted
result
%
 
Ensure we have a comprehensive online capability in both operating environments that adequately caters for the needs of our digital consumers and has the ability to grow without constraint.   Enhancements made to the Truworths and Office websites with a comprehensive merchandise offering mirroring the store environment, and the YDE website was migrated to the Truworths platform, all with good results. Significant work has been done to grow sales through added functionality, targeted communication campaigns, from the use of advanced analytics and subsequent strategies, and through the growth of customers and services on the platform. The CAGR of online sales for Truworths was 39% over the three years. In Office the CAGR of online sales was 4% over the same period, coming off a high base during COVID where online sales contribution were at record-high levels. Over the past two years Office online sales CAGR was 17%. 125   10   12.5  
Modernise the systems environment to facilitate business growth and future requirements and consider the implementation of shared platforms between Truworths and Office.  
  • Online operating platforms were upgraded to newer cloud-based versions which facilitate the scaling up, or down, of computer power as required. Good progress made on modernisation and shared platforms. Oracle HR implemented across the business along with other technologies such as shared financial systems, customer service solutions and e-commerce CRM.
  • In Truworths, the rollout of a new POS solution is on track and cloud-based solutions have been implemented in the credit risk and analytics division. A new wide-area network was installed with added reliability and speed.
  • Office commenced with the migration of their old technology merchandise management system, completed the enhancements for their DC and rolled out a new network.
125   10   12.5  
Improve and upgrade our distribution capabilities with solutions that will facilitate growth over the next 10 years.  
  • Contract negotiations were concluded for the land purchase and construction of a new 52 000m2 Truworths DC which will allow us to consolidate our existing four DCs, with the added benefit of increased replenishment lines across required merchandise categories. With a significant investment of around R1 billion, the building has been constructed on time and within budget and the materials handling equipment and technology fit out is nearing completion within project timelines. Testing will commence at the beginning of the new financial year, and the DC will be fully operational by end March 2025.
  • Office consolidated their two DCs, and enhancements were made to future proof the facility, bringing about cost savings which assisted in gross margin growth and improvements in productivity.
125   15   18.75  
Improve our ability to respond quickly to changing market merchandise trends and to turn on (or off) rapidly based on performance and demand.  
  • Following the acquisition of Barrie Cline, the Group acquired a second Cape Town-based design centre, Bonwit, to establish a powerful local design capability working closely with the fashion studio and the Truworths buyers. A factory in Darling was also acquired and significant work was done, and financial and other resources applied, in securing strategic CMTs to ensure consistent supply of locally manufactured product.
  • New offshore supply routes were implemented, and additional partners and countries of origin were sourced to improve both the timelines and product categories for the delivery of imported goods. Buying processes were changed to take advantage of these opportunities.
100   20   20  
Implement modern, best-of-breed merchandise solutions and systems for Office.  
  • Good progress has been made to change merchandise management processes and methodologies and to enhance systems capabilities to improve key metrics, some of which have already improved with consequential benefit to the business.
  • A large-scale project was initiated and is underway to replace the merchandise management ERP system, due for completion in the 2026 financial year.
100   10   10  
Optimise our footprint in both operating territories with new concepts, in the most-in-demand locations and ensure performance exceeds hurdle rates.  
  • During the period under review, several new concepts were launched in Truworths, including the new Truworths Kids Emporium, the Identity Megastore, (including ID Kids), Context, and the Truworths Re-imagined store of the future.
  • Office closed most of its non-profitable stores during this period, renegotiated many store leases on favourable terms and rolled out an enhanced concept to new and refurbished Office and Offspring stores.
125   15   18.75  
Expand market share in key categories.  
  • Truworths continued to address opportunities in areas they are under-represented and continued to enhance and grow the two new concepts, Fuel and Sync, in a controlled manner.
  • In Office, a number of additional brands were added to the brand offering, and several aligned merchandise categories were added.
100   20   20  
Total   100   112.5  

LONG-TERM INCENTIVES AWARDED DURING THE 2024 FINANCIAL PERIOD

During the 2023 financial period, the committee agreed, and recommended for approval by the board, the performance targets for the relevant share plans in relation to awards made during the 2024 financial period.

These targets were set, taking into account the macroeconomic environments in which the operating segments of the Group operate. They are aimed at rewarding management for achieving strategic imperatives aligned with the Business Philosophy and strategy that are: growing sales, containing the cost base, making well-reasoned and profitable capital expenditure decisions, maintaining a healthy and efficient balance sheet structure, and achieving the deliverables on the non-financial performance measures embodied in the strategic projects.

The performance measures and targets for these awards made to executive directors were disclosed in the policy section of the Remuneration report in the Integrated Report 2023.

Executive director share plan allocations during the 2024 financial period:

  2024 2023
Executive director Number
of shares
and type
'000
Face value
of shares
allocated
R'000
Face value
as % of
annual
guaranteed
remuneration
Number
of shares
and type
'000
Face value
of shares
allocated
R'000
Face value
as % of
annual
guaranteed
remuneration
Performance share plan (PSPs) (with performance targets)*
Michael Mark 203 PSPs 14 988 132 263 PSPs 15 300 141
Emanuel Cristaudo 81 PSPs 6 010 104 103 PSPs 5 980 115
Sarah Proudfoot 81 PSPs 6 010 104 104 PSPs 6 015 115
* The long-term incentive policy was amended in 2022 and therefore no non-performance restricted shares were awarded to any executive director during the reporting period.
Note 1: The awards have a vesting period of between three and five years.
Note 2: The vesting periods for executive directors' shares awarded in September 2023 are as follows:
 
  • Michael Mark: three years, with 100% vesting in year three
  • Emanuel Cristaudo: four years with 40% vesting in year three and 60% vesting in year four
  • Sarah Proudfoot: five years with 30% each vesting in years three and four, and 40% vesting in year five
Note 3: The performance measurement takes place at the end of financial year three, being June 2026.
Note 4: No shares vest if performance falls below the 50% vesting target, while performance above the maximum 150% vesting target does not increase the vesting percentage above 150%.
Note 5: Face value of shares allocated (or face value of awards) means the Rand value awarded to a participant. The number of shares awarded is determined by dividing the face value of the awards by the volume-weighted average market price of the company's shares over the five-business day period preceding the date of the award.

Total share plan allocations to all participants (including executive directors) in the 2024 financial period:

Plan Number of
participants
Face value
of awards
R'000
Restricted share plan (with no performance targets) 350 67 441
Performance share plan (with performance targets) 40 52 495

Aggregate share instruments awarded to employees and executives, including the above share plan allocations in the 2024 financial period, (ie total share scheme utilisation), constitute 9 424 000 shares, being 2.04% (2023: 2.9%) of total issued shares at June 2012, which is below the plan's aggregate allocation of 5%. The annual allocation as detailed above is 0.35% of issued shares at June 2012 which is below the committee guideline of 1% in any one year (1.25% in terms of the policy).

The maximum aggregate allocation for any one participant is 0.48% (2023: 0.70%) of shares in issue at June 2012 (1.0% in terms of the policy).

MINIMUM SHAREHOLDING BY EXECUTIVE DIRECTORS

The committee approved the introduction of an MSR for executive directors, effective 1 July 2024 to ensure executive directors accumulate a minimum shareholding in Truworths International (excluding shares held pursuant to a Group share scheme), ensuring alignment with shareholder interests in the long term. The shareholding must be accumulated over a period of up to five years, either from the date of introduction of the policy or the appointment date of the executive, whichever is the later. The current shareholdings of the executive directors are set out in the table below:

Name Position Shareholding
'000
Shareholding 
value*
R'000 
Ratio to  
annual  
guaranteed  
remuneration  
%  
Michael Mark CEO 1 161 108 298  957  
Sarah Proudfoot Joint Deputy CEO 146 13 619  237  
Emanuel Cristaudo Joint Deputy CEO/CFO 21 1 959  34^
* Determined with reference to the period-end share price.
^ Emanuel Cristaudo was appointed as executive director on 1 July 2021 and is in the process of accumulating shares in the company.
Minimum shareholding

EXECUTIVE DIRECTORS' REMUNERATION

Please refer to the Group Audited Annual Financial Statements 2024 on the company's website for further details relating to executive directors' remuneration and share-based awards. The total annual guaranteed remuneration, benefits and short-term cash incentives in the single-figure remuneration table below have been extracted from note 29.1 of the Group Audited Annual Financial Statements 2024, while the values of qualifying dividends and long-term incentives have been calculated in terms of the requirements of King IV. All loans pursuant to the 1998 Share Scheme were settled during the period.

The fair value of long-term incentive awards is included in the single figure remuneration in the period when performance against targets is measured, notwithstanding that vesting of the award (and therefore the accrual of the benefit to the participant) occurs in future years.

The standard single-figure remuneration disclosure has been supplemented with a breakdown of remuneration received and remuneration receivable (representing the fair value of long-term incentives) to provide improved disclosure of long‑term incentive awards. An important reason for the separation is that the vesting of long-term incentives take place over time (ie tranche vesting) as opposed to once-off 'cliff vesting' at the end of the performance measurement period. The committee is of the view that this aligns the participants with shareholder interests as they remain invested in the performance of the business after the performance measurement period. It is important to note that the fair value of long-term incentives is calculated with reference to the five-day volume-weighted average market price immediately preceding the end of the financial year, and therefore is not a reflection of the value that may be earned at the date of future vesting and could be subject to forfeiture in certain circumstances.

  Single-figure remuneration   Single-figure remuneration comprising:
Director Months
paid
Total annual
guaranteed
remuneration
R'000
Benefits*
R'000 
Benefit of
interest-free
loans pursuant
to 1998 share
scheme
R'000
Short-term
cash
incentive
R'000
Long-term  
incentive^
R'000  
Qualifying  
dividends#
R'000  
Total
single-figure
remuneration
R'000
Single-figure 
remuneration - 
received 
(excluding LTIs)
R'000 
Single-figure   
remuneration   
– receivable (LTIs only)  
including   
vesting dates^
R'000   
2024
Michael Mark 12 11 321 62  1 073 7 758 27 762   7 510   55 486 27 724  September 2024: 27 762   
Emanuel Cristaudo 12 5 758 3 552 6 696   1 207   17 218 10 522  September 2024: 5 558   
                    September 2025: 1 138   
Sarah Proudfoot 12 5 758 20  159 3 552 12 084   3 269   24 842 12 758  September 2024: 3 625   
September 2025: 3 625   
September 2026: 4 834   
2023
Michael Mark 12 10 860 100  3 334 13 250 32 150   10 715   70 409 38 259  September 2023: 12 860   
September 2024: 19 290   
Emanuel Cristaudo 12 5 217 –   5 951 –   794   11 962 11 962  –   
Sarah Proudfoot 12 5 217 59  175 5 951 13 176   2 466   27 044 13 868  September 2023: 3 953   
September 2024: 3 953   
September 2025: 5 270   
* Benefits comprise subsistence allowances for local and overseas travel, long-service awards and fringe benefits on life insurance premiums paid.
# Portion of the dividends received relate to performance shares which have not yet vested and for which performance has still to be measured against agreed targets. Security, in the form of a pledge of the shares in question, for the possibility that a portion of such dividends may have to be repaid if such targets are not achieved, has been provided by the directors to the company.
^ The long-term incentive value is calculated as the sum of:
 
  • Performance share plan: for all awards where performance against the company performance targets (CPTs) was measured in the financial period, the five-day volume weighted average price (VWAP) of the company's shares at period-end multiplied by the CPT vesting percentage and the number of awards.

Total equity-based awards and cash flow

The table below shows the details of equity-based award movements and cash flows during the 2024 financial period. Details of the offer and vesting dates of the instruments are included in the Group Annual Financial Statements 2024.

Director Award type Opening
balance
3 July
2023
'000
Granted
'000
Lapsed/forfeited
due to
performance
conditions not
achieved or
resignations
'000
Additional
shares awarded
due to
performance
conditions
achieved
'000
Vested/
exercised/
sold
'000
Closing
balance
30 June
2024
'000
Cash
flow on
settlement
R'000
Estimated
closing
fair value
30 June
2024
R'000
2024
Michael Mark 2 911 203 157 (2 230) 1 041 102 367* 97 065
Options 450 (450)
Shares 1 550 (1 550)  
Restricted shares with performance conditions 911 203 157 (230) 1 041 97 065
Emanuel Cristaudo 186 81 (9) 258 701 24 035
Restricted shares without performance conditions 28 (9) 19 1 712
Restricted shares with performance conditions 158 81 239 22 323
Sarah Proudfoot 568 81 64 (243) 470 14 367 43 064
Options 13 13 420
Shares 81 (81)
Restricted shares with performance conditions 447 81 64 (135) 457 42 644
Appreciation rights without performance conditions 15 (15)
Appreciation rights with performance conditions 12 (12)
* Includes transactions relating to shares that were held in terms of the 1998 share scheme, awarded between 2 April 2008 and 19 February 2010, and were undertaken to settle the loan repayable and tax due by the CEO to enable him to retain the balance of such shares.
Director Award type Opening 
balance 
4 July 
2022 
'000 
Granted
'000
Lapsed/forfeited
due to
performance
conditions not
achieved or
resignations
'000
Additional
shares awarded
due to
performance
conditions
achieved
'000
Vested/
exercised/
sold
'000
Closing
balance
2 July
2023
'000
Cash
flow on
settlement
R'000
Estimated
closing
fair value
2 July 2023
R'000
2023
Michael Mark 2 755  263 (107) 2 911 10 715 101 405
Options 450  450 5 319
Shares 1 550  1 550 44 476
Restricted shares with performance conditions 755  263 (107) 911 51 610
Emanuel Cristaudo 92  103 (9) 186 794 10 501
Restricted shares without performance conditions 37  (9) 28 1 558
Restricted shares with performance conditions 55  103 158 8 943
Sarah Proudfoot 525  104 29 (90) 568 2 466 27 652
Options 13  13 71
Shares 81  81 25 290
Restricted shares with performance conditions 404  104 29 (90) 447 2 291
Appreciation rights without performance conditions 15  15
Appreciation rights with performance conditions 12  12

Other than the executive and non-executive directors, the company does not have any prescribed officers as defined in the Companies Act (No. 71 of 2008, as amended) of South Africa.

Notes:
  • The fair value of restricted shares and performance shares is based on the relevant year end company share price.
  • The fair value of appreciation rights is based on the binomial actuarial option pricing model at the relevant year end.
  • All options granted under the legacy 1998 share option scheme have vested. The fair value of such options is based on the difference between the year-end share price and the option strike price. All loans pursuant to the 1998 Share Scheme have been settled during the period.
  • The cash flow on settlement includes share gains made during the period.

Non-executive directors' remuneration

The total fees paid to non-executive directors in respect of the 2024 and 2023 financial periods are detailed below.

Total remuneration
(excluding VAT)
Months
Paid
2024
R'000
2023
R'000
Hilton Saven 12 2 009 1 862
Hans Hawinkels 12 870 702
Rob Dow 12 647 610
Dawn Earp 12 755 583
Maya Makanjee* 6 204 510
Tshidi Mokgabudi 12 628 583
Thabo Mosololi 12 605 550
Daphne Motsepe~ 12 448
Wayne Muller~ 12 598
Roddy Sparks 12 948 898
Tony Taylor 12 647 610
Total 8 359 7 073
* Retired with effect from 9 November 2023.
~ Appointed with effect from 1 August 2023, but full fees paid due to timing of board and committee meetings.

The proposed fees for non-executive directors for the 2025 calendar year were benchmarked against fees payable by the peer group companies. As disclosed last year, this has been part of a process of aligning our non-executive directors' fees to our targeted median positioning against peer companies. Our fee adjustments for certain roles are therefore higher, however the resulting fees are not out of line with the peer group.

Proposed fees
(excluding VAT)
for 12 months
to December
2025
R'000
2024
fees
R'000
change
%
Non-executive Chairman 1 675 1 530 9.5
Lead Independent Director 765 700 9.3
Non-executive Director 490 460 6.5
Audit Committee Chairman 415 380 9.2
Audit Committee member 205 190 7.9
Remuneration Committee Chairman 230 210 9.5
Remuneration Committee member 110 103 6.8
Risk Committee member (non-executive only) 140 130 7.7
Nomination Committee Chairman* 200 200
Nomination Committee member 105 100 5.0
Social and Ethics Committee Chairman 180 165 9.1
Social and Ethics Committee member (non-executive only) 100 95 5.3
* No fee increase was proposed for the Nomination Committee Chairman as the prior year increase was phased in over a two-year period.

2024

INTEGRATED REPORT