Page 44 - Integrated Annual Report

REPORT OF THE REMUNERATION COMMITTEE (CONTINUED)
awards. A Malus and Clawback policy was approved into the remuneration framework in FY2020 for executive management.
Long-term incentive scheme:
The group operates a share option scheme, The HCI Employee Share Scheme (“the Scheme”), in terms of which shares in the group are offered on a share option basis to participants, provided they remain in the group’s employ until the options vest. Any gain realised on the exercise of these options is settled on a net equity basis, whereby the participant receives that number of shares that equates in value to the gain made on exercise date.
Options must be exercised within six months of the vesting date, where after the options lapse. Options vest over periods of three to five years. These vesting periods may be varied by the board of directors.
Share options are allocated to participants at a ten percent discount to the 20-day volume weighted average market price as at the date of grant. The number of share options granted is determined by use of a multiple of the participant’s basic salary, dividend by the discounted market price. The multiples relating to each level of management are as follows:
Such awards are made from time to time and are disclosed in detail. Refer to pages 45 to 48.
On 31 March 2021, HCI held sufficient treasury shares to settle its obligations to deliver shares to the participants in the HCI share scheme.
In the event of resignation or dismissal for just cause all unexercised share options will be forfeited
Subject to the discretion of the board, in the event of death, disability, retrenchment or retirement (or early retirement) unvested share options may become exercisable prior to the option expiry date.
In the event of a change of control of the company, unvested share options may become exercisable immediately or the subject share changed to another entity, subject to the discretion of the board.
Other payments:
HCI does not subscribe to retention and sign-on payments or termination payments and restraint of trade payments.
Non-executive directors:
Non-executive directors receive fees for their services as directors and for serving on board committees. These fees reward the directors fairly for the time, service and expertise that they provide to HCI.
Non-executive directors earn a basic fee which is in line with companies of a similar size. These fees escalate annually in line with inflation and are benchmarked, every 3 years, against the 50% median of the market for comparable companies utilising independent salary surveys. HCI did not utilise an independent remuneration consultant but made use of the PWC REM channel national survey in 2019.
Directors earn up to a maximum of 50% of their board fees by serving on the committees responsible to the board of directors. Non-executive directors do not receive short-term incentives and do not participate in any long-term incentive schemes.
Directors’ emoluments and other relevant remuneration information are disclosed on pages 49 and 50 of the remuneration report.
KEY DECISIONS TAKEN:
HCI has a diversified portfolio of investments across many industries including media, transport, industrial and manufacturing, properties, mining and leisure industries.
The most significant impact on the investments and the HCI share price during FY2021 was the global outbreak of the COVID-19 pandemic resulting in the State of Disaster announcement by the South African government and the subsequent lockdown regulations which currently remain in place. This has affected all the HCI investments especially in leisure industries which include gaming and hotels.
All these conditions were outside the control of management; the share price collapsed to R17 in March 2020 but has since regained traction and has increased to a high of R72 per share. The decline resulted in the total diminution of the long-term incentives offered to the participants.
Management had been awarded a 5% annual increase and a 100% bonus at the remuneration meeting held in March 2020; but due to the onset of COVID-19, management voluntarily agreed to abandon both the annual increase and the bonus. Non-management employees were not granted cost of living related salary adjustments, normally effected in April.
Except for the employees at the lowest salary scale all employees were able to work remotely. The company continued to pay full salaries to all employees including those at the lowest positions who would have been the hardest hit financially. All employees that were
Position
Multiple of basic salary
Chief executive officer
6
Financial director
5
Senior management
4-5
Other management
2-3
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INTEGRATED ANNUAL REPORT 2021
HOSKEN CONSOLIDATED INVESTMENTS LIMITED