Page 46 - Integrated Annual Report

REPORT OF THE REMUNERATION COMMITTEE (CONTINUED)
general meeting. In the event that either the remuneration policy or the remuneration implementation report, or both, have been voted against by 25% or more of the voting rights exercised by shareholders at the annual general meeting, the company will formally engage with such dissenting shareholders to understand the reasons for the dissenting votes, and in respect of objections which are legitimate and reasonable to consider amending the remuneration policies or governance processes.
The non-binding advisory vote on the remuneration policy and the non-binding advisory vote on the remuneration implementation report was approved by 74.49% and 76.00% respectively of the voting rights exercised at the annual general meeting held on the 15th October 2020. As more than 25% of shareholders voted against the non-binding remuneration policy, the resolution did not pass. In response to these votes the company considered the company’s remuneration arrangements in detail and engaged with shareholders in accordance with principle 14 of King IVTM. Attempts to contact dissenting shareholders were made through the nominee companies, direct contact where possible and via SENS.
The material issues raised by the shareholders were as follows:
Bonuses should be performance orientated with visible criteria, less discretionary and not formula driven:
• HCI is not an operating company and cannot set specific targets for the year. Results are not predictable as are they dependent on the operating entities. The value generated by management is only visible at year-end and is a consequence of deal-making and successful litigation.
• Management suggested that more detail on the significant matters would be included in the report as to how the discretionary bonus was calculated.
Shareholding in company:
• The inclusion of minimum shareholding requirements for executive management should be considered for inclusion in the remuneration policy in line with international practices. International practices may
require holding a minimum percentage of total guaranteed package or base salary in company shares. This practice is intended to enhance alignment of interests with other shareholders to show long-term commitment and sustainable company performance by sharing all the risks.
• Executives at HCI hold a substantial stake in the company, they have held shares in the company for a protracted period of time, and in the circumstances the committee is satisfied that it is not necessary to impose corporate requirements on senior executives to create a feeling of well-being amongst other shareholders who are likewise free to trade their shares at will. Should we find the shareholding owned by management decreases in any material way the committee will review this issue.
• The committee has further agreed that the remuneration implementation report will detail all changes of shareholding by executive management during the year. The committee welcomes any comments from shareholders in its ongoing commitment to engage with shareholders.
Long-term share scheme:
• Discussions on the long-term share scheme was of a technical nature and based on the formula used to allocate the shares.
The meeting was more informed than prior years although no consensus could be agreed between HCI and the shareholders. However, as agreed at the meeting, more detail of the remuneration policies have been included in the integrated report. No policy changes were to be implemented as these were not justifiable in the context of the HCI business model or strategic objective.
FUTURE AREAS OF FOCUS:
The remuneration committee will focus on updating its terms of reference to ensure that they are aligned with recommended corporate government practices.
CONCLUSION:
The committee is satisfied that it has carried out its responsibilities for the year in compliance with its mandate.
44
INTEGRATED ANNUAL REPORT 2021
HOSKEN CONSOLIDATED INVESTMENTS LIMITED