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Hyprop Investments Limited
Integrated annual report 2016
84
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Considering whether the objectives of the remuneration policy
have been achieved
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Ensuring the ratio of fixed and variable pay – in cash, benefits
and shares – is aligned with the company’s strategic objectives
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Reviewing the effectiveness of recorded performance measures
that govern the vesting of incentives
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Ensuring all benefits, including retirement benefits and other
financial arrangements, are justified and correctly valued
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Considering the performance of the chief executive officer
and financial director, as directors and as executives, when
determining their remuneration
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Selecting an appropriate peer group when comparing remuneration
levels
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Regularly reviewing incentive schemes to ensure alignment with
shareholder interests and that they are administered in terms of
their rules
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Advising on the remuneration of non-executive directors.
The committee uses the services of independent advisers as required.
During the year, these advisers supplied market data and advice on
market practice and governance, and provided analyses on certain
performance measures.
Non-executive directors
Our policy is to remunerate non-executive directors competitively for
their service while understanding the required time commitment. Fees are
benchmarked against a peer group of JSE-listed companies, and there are
no contractual arrangements to compensate for loss of office.
The remuneration and nomination committee reviews these fees
annually and makes recommendations to the board which, in turn,
proposes fees for approval by shareholders at the annual general
meeting.
Remuneration for non-executive directors comprises a base fee,
predetermined annually and approved by shareholders at the annual
general meeting.
Non-executive directors do not receive STIs nor do they participate
in any LTI schemes except if they previously held executive office and
are entitled to unvested bene ts from this period. Hyprop pays no
pension contributions for non-executive directors.
Executive directors and senior executive remuneration
Our executive directors are permanent employees and their
employment agreements include a notice period, but no restraints of
trade. Hyprop aims to be an employer of choice: to attract and retain
individuals of high calibre. We offer competitive remuneration
packages and review these annually.
Our remuneration structure includes:
Basic salary
All basic salaries are market related, benchmarked against the median
industry norms and adjusted for an employee’s experience,
qualifications, responsibilities and nature of work. These are reviewed
annually.
REMUNERATION REPORT
Philosophy
As an internally managed REIT, the guiding principle for our
remuneration philosophy is to promote the achievement of the
company’s strategic objectives, encourage individual performance
and reward sustainable value creation. Given that employee skills are
vital to long-term value creation, our approach emphasises the
contribution of our employees to building long-term value through
fair and balanced remuneration.
Hyprop’s success depends on attracting talented, experienced and
motivated individuals who can execute our business strategy to
achieve our vision and mission. We use both short and long-term
incentives to support this goal.
Target-based short-term incentives (STIs) are strong drivers of
performance. A signi cant portion of senior management reward
is therefore variable, based on realistic performance targets, and
individual contributions to the growth of their division and the
wider company. We also reward employees who deliver superior
performance in line with our strategic goals. Special bonuses may be
considered as additional awards in exceptional circumstances.
Long-term incentives (LTIs) are aligned to Hyprop’s strategic objectives
and the investment interests of shareholders.
Remuneration committee
The remuneration committee meets at least twice a year and
comprises non-executive directors with a majority of independent
non-executives. The chief executive officer and other directors or
executives may attend meetings by invitation, but are excluded from
deliberations on their individual remuneration.
The committee is responsible for implementing the remuneration
policy to ensure:
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Salary structures and policies motivate superior performance,
and are linked to realistic performance objectives that support
sustainable long-term growth
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Stakeholders are able to make informed assessments of reward
practices and governance processes
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Compliance with all applicable laws and regulatory codes.
A formal charter codifies the tasks and responsibilities of the
committee. Updates to the charter to effect application of the
recommendations of the King III report, or other identified good
practice, are approved during the year. The committee is aware of the
pending implementation of King IV and will make changes or
amendments to the group remuneration report, where practical and
applicable, in light of the requirements of King IV. The committee
chairman attends the annual general meeting of the company to liaise
with shareholders on matters under the ambit of the committee.
The remuneration committee is responsible for:
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Reviewing and recommending to the board Hyprop’s remuneration
philosophy and policies for directors and staff
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Ensuring the remuneration strategy reflects the interests of
stakeholders, is comparable to the sectoral remuneration
environment, and complies with relevant principles of good
corporate governance