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Remuneration Report

Having regard to the principles of King IV and specifically the practices relating to fair, responsible and transparent remuneration, as well as the JSE Listings Requirements, this report is presented in two parts. Part 1 which contains the Remuneration Policy and provides context on the decisions and considerations taken during the reporting year and Part 2 which reports on the implementation of the Remuneration Policy during the current financial year and forward looking statement.

Our philosophy

EOH's primary remuneration philosophy is to employ and reward high-calibre and high-performing employees who subscribe to the values and culture of EOH. We recognise that people are integral to the achievement of corporate objectives and that they should be remunerated accordingly for their contribution and the value that they deliver. Executive remuneration must be fair and responsible in the context of overall remuneration in the Group.

The following contributing factors were considered when designing the remuneration model:

Remuneration is set at levels that are competitive and appropriate within the specific markets and industries in which the Group operates.

Part 1: Remuneration Policy

Key principles

Executive reward is by its nature individualistic and performance based. Accordingly, there is a guaranteed component of an executive's remuneration with a variable component specific to each individual's performance.

Types of remuneration models implemented

The remuneration types are based on the remuneration model below:


fixed package
  • Fixed
  • Guaranteed level of earnings per day period
  • Set around the median of the specific role and responsibilities
based incentives
  • Variable
  • Payable annually for linked achievements per set period (aligned to the financial year)
  • Key performance indicators (‘KPIs’) aligned to strategic and personal performance
based incentives
  • Variable
  • Payable for sustained corporate performance
  • KPIs aligned to strategic and business performance

The details of each of the elements of the remuneration types are summarised below:

Type   Description   Components   Purpose   Eligibility   Authority  
Guaranteed fixed package  
  • Fixed
  • Structured total cost to Company (benchmarked against independent data)
  • Basic salary
  • Qualified allowances
  • Retirement-related contributions
  • Medical aid-related contributions
  • Insurance and risk-related contributions
  • Leave enhancement (MEIBC employees only)
  • Reflects the scope of the role
  • Based on the level of responsibility required and skills and/or experience
  • All management and staff
  • CEO where appropriate
  • EXCO
  • Line of Business CEO
  • Variable
  • Performance-based criteria
  • Commission
  • KPIs
  • Per agreement
  • Agreed KPIs
  • Management and key individuals
  • CEO (if executive director)
  • EXCO (where appropriate)
  • Line of Business CEO
Short-term based incentives  
  • Linked to agreed KPIs delivered annually measured against objectives and targets
  • Bonus schemes
  • Rewards personal performance
  • Management and key individuals
  • CEO (if executive director)
  • EXCO (where appropriate)
  • Line of Business CEO
  • Discretionary bonus payments
  • Rewards individuals for specific performance which impacts Group performance
  • Management and key individuals
  • CEO (if executive director)
  • EXCO (where appropriate)
  • Line of Business CEO
Long-term based incentives  
  • Share option retention schemes
  The Mthombo trust  
  • Employment equity retention mechanism to promote B-BBEE for top performing individuals
  • Qualifying previously disadvantaged employees and key employees
  • Approved by CEO
  • Ratified by trustees

The EOH share trust

  • Retention mechanism for top performing individuals
  • Executives
  • Senior management
  • Key employees
  • Approved by CEO/Remco
  • Ratified by trustees

Share Ownership Plan ('SOP')

  • Attraction and retention mechanism for top performing individuals
  • Executives
  • Senior management
  • Key employees
  • Approved by CEO/Remco
  • Endorsed by Remco

Current retention schemes (FY19)

The Group currently has three share schemes, the EOH share trust, the Mthombo trust and the EOH SOP.

The EOH share trust
The Mthombo trust
The SOP was used as follows:
Non-executive director remuneration

Part 2: Implementation of Remuneration Policy

Remuneration implementation report

The purpose of the implementation report is to show how the Remuneration Policy has been applied during the year under review.

The EOH remuneration model structures remuneration in a fair and responsible manner between executives and employees. It is furthermore cognisant of the responsibility, accountability, competencies, institutional IP, performance and scarcity of skills.

The Remuneration Policy has been implemented across the Group at all levels. Excellent performance was rewarded, which ensured the retention of key talent and high performers. Conversely, poor performance was managed appropriately.

At the AGM held on 20 February 2019, EOH's Remuneration Policy and the implementation report were voted against by more than 25% of shareholders. The results of the voting were as follows:

Other than shareholder engagement at the AGM, no further shareholder concerns were received by the Remco subsequent to the meeting notwithstanding an invitation by EOH to those shareholders who voted against the aforementioned resolutions, to engage with EOH in writing.

Remuneration reviews and increases

The salaries of employees are reviewed each year. Employees' salaries are recommended by the business unit leaders and are approved by the Line of Business CEO, with line of sight provided to the Group CEO. Various macro factors are taken into account including CPI, market and trading conditions, skills shortages in specific areas and salary surveys/benchmarks. Increases are considered based on market information, organisational performance and affordability. Changes in the scope and roles of individuals are specifically considered.

The Group CEO, Group Financial Director and Group Risk Officer are employed in terms of executive employment contracts with a notice period of six months. Other executive directors and senior management are employed in terms of standard employment contracts with a notice period of three months. All directors sign restraints of trade agreements for a minimum period of 12 months following their resignations as directors.

Bonuses are paid to certain employees based on them meeting pre-determined performance criteria.

In addition to basic remuneration, long-term incentive benefits are allocated to management and key individuals who have met their key performance criteria and whom EOH wishes to retain over the long term.

Measuring performance

Performance criteria for senior management and executives were set for 2019. Criteria are set for short-term incentives based on Line of Business and Group performance. Profit before tax ('PBT') calculated net of 'working capital-related interest' targets are set and an achievement is calculated pro rata between 50% and 100%, thereafter, linear, and capped at 150%. Additional debtors days (including work in progress and revenue accruals) incentives are set and measured. The achievement excludes acquisitions and acquisition-related costs.

Target setting and weighting of bonuses for FY19 Percentage
of bonus
Targets are set and bonuses weighted based on certain criteria
Achievement of divisional/Group PBT after 'working capital-related interest' 70   150  
Realisation of debtors' days and cash conversion 30   150  

The newly appointed executive team, having joined at various points during the financial year were subject to the following criteria:

Stephen van Coller, having been bought out of an existing contract joined with guaranteed payment of R10 million, paid in two equal tranches in October 2018, and October 2019. Mr Van Coller was awarded 1 million share options on joining EOH.

Megan Pydigadu was awarded 62 020 shares upon joining EOH with a guaranteed FY2019 bonus of R2 million.

Fatima Newman, having been bought out of an existing contract joined with a guaranteed payment of R3 million and a guaranteed FY2019 bonus of R4 million.

From FY2020, all executive directors bonus payments will be based on individual and company performance.

Executive directors and prescribed officers' remuneration
Figures in rand thousand Remuneration##   Bonuses   Total   Share-based
Executive directors/prescribed officers
Stephen van Coller (appointed 1 September 2018) 5 026      14 000#   19 026   5 490  
Megan Pydigadu (appointed 15 January 2019) 2 201      2 000   4 201   307  
Fatima Newman (appointed 31 July 2019)* 1 334      7 000#   8 334    
Lufuno Nevhutalu* 1 994      2 000   3 994  
John King (resigned 3 October 2018) 5 849      1 785   7 634   1 272  
Zunaid Mayet (resigned 12 July 2019) 3 875      2 520   6 395   1 144  
Tebogo Maenetja (resigned 31 March 2019) 2 380      800   3 180    
# Includes previous employer buy-out of bonus contract of R10 million and R3 million in relation to Stephen van Coller and Fatima Newman respectively.
* Prescribed officers.
## Includes medical aid, death and disability insurance, unemployment insurance fund (‘UIF’) and any amounts paid on resignation.
Share-based payments
at 31 July
2018 or
date of
strike price
Forfeited Shares
during the
average strike
31 July
Executive directors
Stephen van Coller 1 000 000   21,08 1 000 000  
Currently exercisable  
Exercisable in one year  
Exercisable between two and five years 1 000 000   21,08 1 000 000  
Megan Pydigadu 62 020   32,98 62 020  
Currently exercisable  
Exercisable in one year  
Exercisable between two and five years 62 020   32,98 62 020  
Non-executive director fee adjustments

Following the extensive Group-wide strategic review initiated by EOH which necessitated numerous additional Board and committee meetings and several additional hours of time spent on EOH matters since March 2019 by non-executive directors, the non-executive director fees were reviewed by the Remco and the Board and subsequent to the financial year end being reported on amendments were proposed to shareholders. In addition, fees payable to the independent non-executive Chairperson and the lead independent non-executive director were proposed in order to ensure that these non-executive directors are remunerated appropriately for their services. A general meeting is due to be held to approve these amendments to non-executive directors' remuneration.

Details of the actual fees paid during the year are as follows:

Non-executive directors' fees
Figures in rand thousand For
services as Director
  Total   Share-based payments charge  
Non-executive directors
Xolani Mkhwanazi (appointed 5 June 2019) 134   134  
Jesmane Boggenpoel 775   775  
Ismail Mamoojee 797   797  
Moretlo Molefi 494   494  
Anushka Bogdanov (appointed 20 June 2019) 166   166  
Andrew Mthembu (appointed 20 June 2019) 131   131  
Mike Bosman (appointed 20 June 2019) 156   156  
Asher Bohbot (resigned 28 February 2019) 485   485   887  
Pumeza Bam (resigned 12 July 2019) 526   526   81  
Tshilidzi Marwala (resigned 28 February 2019) 157   157  
Rob Sporen (resigned 28 February 2019) 193   193  

Forward looking statement

The Group went through a significant business transformation process during 2018 and 2019, resulting in a new business operating model and strategy going forward. In addition, there were significant changes to the leadership of the organisation, both at Board level and the executive management level. These changes impacted the composition of the Remco during the year under review and an enhanced focus on remuneration will be prioritised during the upcoming financial year.

Against the backdrop of the organisational changes and taking into consideration the feedback received from shareholders in the previous AGM which took place on 20 February 2019, where the Remuneration Policy was voted against by more than 25% of EOH's shareholders, the Board committed to review the Remuneration Policy including employee retention schemes. EOH retained Vasdex Remuneration Specialists ('Vasdex') to review executive and senior management incentives, both short and long term and redesign the incentive schemes as necessary. Several shortcomings were identified in the existing schemes including that the focus was based purely on share price growth, which lost its relevance in terms of connection to individual performance and therefore had limited ability as a retention tool. Alongside this, the remuneration schemes were not consistently and transparently performance based.

The work undertaken by Vasdex has resulted in the formulation of a new approach to STI and LTI which will be implemented at the end of the financial year 2020 with awards under the new share plan commencing from August 2020.

A primary area of focus for the Remco for the upcoming financial year is to revise the current Remuneration Policy to ensure Group-wide fair, responsible and transparent remuneration in line with best practice.