CORPORATE GOVERNANCE

Remuneration Report

The group’s policy is to align the remuneration structure of the executive directors and staff with the interests of shareholders, and consequently a portion of their packages is performance-related. Share options and incentives are based on the performance of the individual as well as the performance of the group as a whole, aligned to specific business objectives and bottom-line absolute profits. The principle adhered to is that bonuses are self-funded out of profits in excess of targets.

We provide competitive market-related and benchmarked base salaries. The executive directors have standard employment contracts with their duration not exceeding two years.

Remuneration for executive staff members comprises:

Base salaries

These are determined after a thorough benchmarking exercise within the retail and related sectors and are subject to annual review plus linked to performance. All divisions have established performance management systems in order that individual contribution can be measured and rewarded accordingly. External remuneration consultants assist with market surveys and benchmarks and internal parity is monitored by the Human Resources division.

Short-term incentives

These take the form of an annual bonus. Targets are set for each division at levels exceeding predetermined budgets in order that payments made are effectively self-funding. The level of the bonus is dependent on the performance of the individual, the trading division and the group as a whole. Service division bonuses are related to the group’s performance. The levels of bonuses are capped.

Long-term incentives

The share appreciation rights scheme, which came into effect during the 2009 financial year, aligns reward with the long-term interests of shareholders. Allocations are considered annually and are based on the recipient’s level of responsibility, package and individual performance. Participants are allocated rights based on the appreciation in value of Foschini’s shares over a three-year period. Exercise of the rights is subject to the achievement of financial performance criteria by the group.

Other benefits

The remuneration committee reviews additional benefits annually against market benchmarks and makes proposals to the board. These benefits include pension and medical aid fund contributions, car allowances and other health services.

Service contracts

Certain key executives have formal service contracts to ensure stability and continuity in management teams, and these include restraint of trade stipulations.

Remuneration of non-executive directors and the Chairman are reviewed annually by the remuneration committee for proposal to the board. Non-executive directors are paid a basic fee, with additional fees payable for their level of responsibility and committee membership. They do not participate in any of the group incentive plans or share schemes. They are paid for their expenditure in attending meetings in Cape Town. External consultants assist in providing market information relating to remuneration for non-executive directors.