Remuneration report

Dear shareholders

I am pleased to report that the Human Capital team at Blue Label and Blue Label Remuneration Committee continued to place an emphasis on good corporate governance practices, focusing on the principles of "pay for performance"' and "fair and responsible remuneration".

Our Remuneration Policy, which incorporated some minor amendments in 2022 with the aim to create further alignment with best corporate governance practices, together with the Implementation Report, were put to a shareholder vote at the previous AGM on 24 November 2022 and were endorsed with a majority vote of 97.6%, and 98.74% respectively.

It is also vital that our Remuneration Policy achieves our goals of attracting and retaining top talent. Accordingly, the Committee is constantly evaluating how the policy should be adapted and changed to ensure that Blue Label achieves this goal while remaining aligned with market/best practice.

In the current challenging economic environment and considering the substantial risk posed by the South African energy crisis (with reference to the impact of frequent stages of load shedding), the Committee needed to evaluate whether the stretching Long-Term Incentive (LTI) performance targets, tied to awards set to vest in August 2024 and August 2025, remain equitable and reasonable. This evaluation was crucial for appropriately incentivising and retaining key and critical talent, namely, executive and senior management.

Furthermore, for the reporting year, the Committee also had to evaluate the significance of the impact of load shedding and the recapitalisation of Cell C on the measurement of normalised EBITDA and core HEPS.

To enable the Committee to accurately evaluate the impact of both the recapitalisation event and, more specifically, the severity of the impact of load shedding on Blue Label's variable pay performance results, the Committee requested that management conduct a comprehensive "recapitalisation impact analysis". This analysis considered the accounting technical (IFRS) nuances introduced by the successful completion of the Cell C recapitalisation event. Additionally, the Committee asked for a "sales and earnings impact analysis" that accounts for the measurable decline in Blue Label's "sales run rate" when overlaid with the load shedding schedules.

Additionally, as in the previous year, the Committee evaluated the impact on EBITDA as a consequence of Blue Label's learnership programme, which negatively impacts thereon. The benefit thereof is realised through income tax savings resulting from the section 12H allowances claimed for these learnerships.

After careful consideration of the above analysis, the Committee agreed that the measurement of normalised EBITDA and core HEPS in Blue Label's FY23 short-term incentive performance scorecard should be adjusted to consider both the IFRS impact of the Cell C recapitalisation event, the quantifiable impact of load shedding and the learnership programmes.

In addition, the Committee further agreed that based on the severity of the impact of load shedding on the current year's core HEPS results (and the uncertainty of the impact going forward), and the unfavourable economic outlook, the LTI performance targets linked to awards that are scheduled to vest in August 2024 and August 2025 should be downward adjusted, albeit that on-target and stretch performance should still outperform CPI and WACC from a core HEPS and ROCE perspective respectively.

The Committee is comfortable that the above adjusted LTI targets remain market aligned and sustains shareholder value, while ensuring that Blue Label's management remain motivated to drive stretching but achievable performance over the next 12 to 24 months. The performance targets for the 2020 LTI award, which vested in August 2023, remained unchanged as the majority of this award's three-year performance period was not impacted by load shedding.

Section 1 provides an overview of how the Remuneration Committee has championed our alignment to King IV's Code on Corporate Governance, our areas of focus in achievement of our policy objectives, our efforts to build a culture through values and our purpose and alignment with performance and rewards. We also address diversity and inclusion, gender and race remuneration parity and setting new ESG goals.

Section 2 summarises our forward-looking remuneration philosophy and policy, together with an overview of our total rewards strategy. Following engagement with PwC and Remchannel as our remuneration consultants, the most significant change for the year ahead relates to the target setting approach for our short-term incentive (STI) and long-term incentive plans (LTI), with summary details of the proposed changes outlined below:

• STI scorecard

Core HEPS and normalised EBITDA on-target performance will be linked to FY24 business plan with threshold and stretch performance set at 20% under and over performance of the FY24 Business Plan respectively.

– Rationale for the change:

Following the recapitalisation of Cell C and taking cognisance of the current economic challenges brought about by the impact of load shedding, the Committee understands that operational performance over the next 12 to 24 months will have to be linked to the interim business plan with prospective disclosure of targets being regarded as commercially sensitive. However, in the spirit of transparency retrospective disclosure will be included as part of the FY24 Remuneration Implementation Report. Details pertaining to the robustness of the processes followed in developing the FY24 Business Plan have also been provided in section 2 of this Remuneration report (i.e. Remuneration Policy).

• LTI scorecard

Total share return (TSR) has been replaced with a strategy focused balanced scorecard measure which will be linked to the execution of critical strategic milestones.

Rationale for the change:

Following the recapitalisation of Cell C and the challenges of the current economic climate, the Committee deemed it important to link 20% of Blue Label's LTI performance to strategic performance delivery execution, while the remaining 80% will consist of 60% being allocated to Blue Label's core business performance outcome (equally split between core HEPS and ROCE) and 20% on ESG and individual performance (split 10% ESG and 10% individual performance).

Rationale for change

The full policy can be accessed here https://www.bluelabeltelecoms.co.za/sus-governance-framework.php. We also highlight our continued focus areas for FY24.

Finally, section 3, the Remuneration Implementation Report, provides an overview of FY23 performance and discloses performance against targets and resulting awards to Executive Directors, Prescribed Officers as well as the fees paid to Non-executive Directors.

Looking forward to FY24, we will continue to review the success of our Remuneration Policy in terms of both our and stakeholders' goals. We have to be mindful of the challenges facing our country and what role we need to play in addressing these. Together with ESG, these will be our prioritised goals for the forthcoming year.

We invite engagement with our shareholders as part of our efforts to continuously review and improve.

SJ Vilakazi

Chairman

29 September 2023

SECTION 1

Background statement regarding committee considerations and decisions

It remains the responsibility of the Remuneration Committee Chairman to give feedback to the Board after every Remuneration Committee meeting of any key decisions and relevant discussions. The Remuneration Committee is committed to applying the King IV principles regarding responsible and transparent remuneration practices, assisted by regular benchmarking exercises. As noted hereinabove, during the reporting period, PwC and Remchannel were engaged to assist with a strategic remuneration policy review. The Remuneration Committee confirmed their independence in this mandate as well as their objectivity.

The management team's focus in the past year was centred on the successful recapitalisation of Cell C and employing a stabilisation plan for the impact of the energy crisis (load shedding) on Blue Label's operations. We believe the short and long-term incentive components of our remuneration policy strongly assisted in the achievement of our goals. Rewards were well earned after a strong strategic performance and operational delivery in the year under review.

The Remuneration Committee was not required to consider any request to deviate from policy other than a "normalisation" of actual EBITDA and core HEPS assessment, which took into account the impact of the accounting treatment relating to the recapitalisation transaction of Cell C, the quantifiable impact of load shedding, and the expenses incurred on the learnership programmes.

The normalisation resulted in upward FY23 STI scorecard performance adjustments to actual EBITDA and core HEPS of R379 million and R587 million, respectively, in FY23.

In addition, the Committee also adjusted the core HEPS and ROCE on-target and stretch performance targets of the 2021 and 2022 LTI awards, which are scheduled to vest in August 2024 and August 2025 respectively, as follows:

LTI performance measure
 

On-target

Stretch

Core HEPS (compounded cumulatively over three years)

  Historically = CPI + 10% (2021)
Historically = CPI + 7.5% (2022)

New target = CPI + 2%
Historically = CPI + 15% (2021)
Historically = 125% of target (2022)

New target = CPI + 4%

ROCE (compared to WACC over the three-year period not compounded)

  Historically = WACC + 2.5% (2021)
Historically = WACC + 2.5% (2022)

New target = WACC + 1%
Historically = WACC + 5% (2021)
Historically = WACC + 5% (2022)

New target = WACC + 2%

The purpose of the adjustment mentioned above was to maintain Blue Label's management motivation to achieve stretching yet attainable performance goals over the next 12 to 24 months. Additionally, to provide further support for senior management and executive retention, it was agreed that the threshold performance for 2021 and 2022 LTI awards would be assessed solely based on the delivery of ESG and individual performance measures.

Achievement of policy objectives

The Remuneration Committee believes that the Blue Label remuneration philosophy and policy remain fit for purpose and achieve the high-level objectives of attraction, retention, and performance motivation of our employees. We took the same approach as last year by taking into consideration the challenges in the country and allowing the Remuneration Committee to have flexibility in the determination of performance metrics and other elements that would typically be addressed yearly, rather than codified into a policy without change.

This has the added benefit of ensuring that metrics and targets associated with remuneration remain relevant through changing business environments.

The Remuneration Committee prioritised and achieved the following objectives during FY23:

  • Monitored the success of the Remuneration Policy in attracting and retaining critical skills and talent.
  • Supported the transformation agenda and eliminated any unfair bias or practices.
  • Ensured alignment of metrics to value-creating behaviour that enhances shareholder returns and rewards performance accordingly.
  • Reviewed and approved Executive Director and senior management succession plans.
  • Reviewed the ESG scorecard for "fit-for-purpose".
  • Continued reviewing potential talent with new skills and capabilities that will complement our non-executive Board, with a focus on succession for Non-executive Directors who have served on the Board for more than nine years and specifically attracting black female talent onto our Board of Directors.
  • Continued efforts to improve the environment, health and safety for all employees.
  • Driving a mindset of "performance with purpose" which includes being responsive to the needs of the communities we serve.
  • Provided quality education, decent work and growth and development opportunities, creating sustainable communities with socio-economic plans that reduce inequalities and poverty.

Culture, reward, and performance

An inclusive leadership culture shifts the impact on the employer-employee relationship. We believe the right culture is a huge factor in driving long-term employee engagement, organisational performance, brand loyalty and customer satisfaction. The talent pool we are targeting are attracted to organisations with robust environmental and social commitments. We have worked on a range of initiatives in our social responsibility projects together with our employees.

We continued to build on our strategy of driving employee centricity through inclusive leadership. Our people are core to our business, and we continue to put our employees at the centre of what we do through leader-led engagement initiatives.

We are acutely focused on the retention of key talent which becomes increasingly challenging in the ever-evolving landscape of employee and employer expectations. Our research from the Gartner International HC trends, which informs our HC strategy, echoes the following key messages:

  • Person-first experience: 82% of employees say it's essential for their organisation to see them as a person, not just an employee.
  • Shared-purpose: 53% of employees want their organisations to take action on issues they care about.
  • Flexibility: 52% of employees say flexible work policies will affect the decision to stay at their organisations.

FY24 pay review

Paying for performance remained at the core of Blue Label's and the Remuneration Committee's philosophy.

For employees, management and executives, an increase in fixed pay of up to 7% was approved, based on an individual performance rating. These decisions were aligned to the reported inflation rate.

Changes to remuneration policy for FY24

The remuneration policy for FY24 remains largely aligned with the current year's remuneration policy with the most significant changes for the year ahead relating to the target setting approach for our short-term incentive and long-term incentive plans and the introduction of a strategy focused balanced scorecard as part of the 2024 LTI award, replacing TSR that was used in prior year allocations. The details of the changes and the supporting rationale has been outlined in the Chairman's note above.

GENERAL REMUNERATION POLICY UPDATES ANTICIPATED

As noted herein above, as at the time of this publication, Blue Label continues to engage its remuneration consultants (i.e. Remchannel) in the review of its remuneration policy and overall variable remuneration practices.

As part of this process and following the successful completion of a band stratification process, a further analysis is being undertaken to evaluate whether employees within the newly stratified bands are receiving a market-related mix of fixed and variable remuneration.

To the extent that it is determined that this is not the case, the Committee will review and adjust the bands and variable remuneration allocation methodologies and quanta, as may be required for market alignment. Additionally, a formal analysis of the participants of the long-term incentive plan will be conducted, determining which participants should remain on an equity-settled long-term incentive plan and which should be placed on a similar cash-settled structure.

Further, to the extent that the Remuneration Committee becomes aware that there is significant misalignment between current pay band grading and the total reward review outcomes, discretion will be applied in how the remuneration policy is applied during FY24. Such discretion is intended primarily for levels below Executive Director and prescribed officers and shall be applied with caution and after careful consideration to Executive Directors and prescribed officers. Aligned with our policy in circumstances where discretion is applied, such discretion will be applied reasonably within the ambit of the principle of pay for performance and taking into account Blue Label's commitment to fair and responsible remuneration. Where any additional remuneration structures are introduced, these will be self-funding and be evaluated against the appropriateness of total remuneration relative to market.

ESG, sustainability, shared value and our purpose

Our rewards policy, value proposition, culture and ESG objectives must align with our purpose. Through good ethics and good commercials, it is our social responsibility to generate value for all. In this way we will:

  • Attract and retain key capabilities.
  • Reward employees for living our values and displaying our leadership behaviours.
  • Motivate our people to innovate and bring new ideas to achieve our goals and purpose.

We partnered with Deloitte to perform a gap analysis of our ESG goals and metrics that informed our enhanced ESG-related disclosures which are continuously monitored.

Blue Label's remuneration metrics include ESG targets which ensure that the Board members and senior executives align their objectives and performance to delivery of Blue Label's strategy and management of its impacts on people, the environment, and the economy. The ESG metrics measured and included in performance targets for the long-term incentive plan include:

  • Support the job creation project within Trust Blu through the U-Belong initiative, creating 200 new jobs and absorb 1% at the end of the financial year.
  • Retain BBBEE scorecard at level 4, leveraging procurement where possible.
  • Improve management control.
  • Appoint one more Black candidate onto the Blue Label Board in the under-represented category.

Voting at the 2023 Annual General Meeting

In line with the JSE Listings Requirements and King IV, we will table the following resolutions for shareholders voting at the AGM:

  • Advisory vote for the approval of the remuneration policy.
  • Advisory vote for FY23 implementation report.
  • A binding vote on Non-executive Directors' fees.

Shareholders are invited to engage on our remuneration policy and this remuneration report by sending a request for engagement to the Chairman of the Remuneration Committee at [email protected].

Remuneration Committee focus areas for FY24

The Committee is mandated by the Board to continually assess the executive remuneration market and governance framework.

The Committee will consider current market conditions, Blue Label's strategy and operational performance.

2024 focus areas

  • Attracting and retaining key talent to deliver our strategic goals and shareholder returns.
  • Continued benchmarking against best practice, refining where appropriate (for example, ensuring our growth targets are realistic given current economic conditions in the country).
  • Succession planning across all levels in Blue Label, with a focus on transformation.
  • Best practice reviews on ESG goals, to ensure it is measurable set targets to achieve and verifiable.
  • Continued annual engagement with our institutional shareholders for their input and advice.
  • Continuing our policy of gender and equity pay parity and the need to drive to achieve our targets in the next two years.
  • Continuing to identify and develop future leaders through the leadership development programme.
  • Market alignment of variable pay quanta and pay-mix following the stratification of employee-wide pay bands and reviewing our allocation methodology under our variable remuneration structures.

SECTION 2

Our remuneration philosophy, policy, and framework

Blue Label recognises that our people are one of our biggest assets and believes that it is important to allow each individual to thrive as an individual and grow their career, while excelling and succeeding together as an organisation. Our remuneration policy and practices, together with our WeLead programme, aims to create awareness of how important it is to be resilient, be achievement-driven and have a winning mindset.

We aim, with our Employment Value Proposition (EVP) of #HappinessisBlu and employee engagement #teamblu programmes, to differentiate ourselves from our peers. Our all-in culture creates a safe environment that leads to increased productivity and innovation.

This, together with our remuneration policy, enables us to:

  • deliver shareholder value by aligning our remuneration practices to our strategic goals;
  • achieve our employment equity aspirations;
  • align our employees' performance with shareholder interests;
  • support our talent strategy by enabling Blue Label to attract, motivate and retain the very best calibre of Directors and employees who have top tier industry ability and expertise;
  • create an entrepreneurial, competitive, innovative, and high-performance Company through rewarding achievement of demanding performance goals that are consistent with our strategy and shareholder growth expectations;
  • reinforce our desired culture through encouraging and rewarding ethical behaviour that is consistent with our values and leadership behaviours, thereby stimulating employee engagement and corporate citizenship simultaneously; and
  • drive our WeLead initiative that cultivates a growth mindset and innovative spirit that will dare to win.

This applies to all subsidiaries, associates and joint venture companies in which Blue Label holds a shareholding in excess of 40%, excluding Cell C who have their own remuneration policy and committee. The Remuneration Committee may approve by exception for the policy to apply to seconded Blue Label employees.

Employer of choice

Our objective is to be an employer of choice and our employee brand and reward programme should be designed to help us achieve this.

Competitive pay levels

Our localised benchmark on guaranteed pay practices helps us to stay committed to remuneration packages that are competitive and relevant for the role and experience.

Pay for performance

We strive to pay for performance and therefore structure remuneration around this. This allows us to reward strong individual performance as well as strong organisational performance. We apply malus and clawback provisions to STIP, as well as to vested and unvested LTIP awards for management.

Fair and responsible remuneration

As far as possible, remuneration differentiation between employees is based on fair and objective criteria. The Committee has a policy in place which is aimed at monitoring and continuously addressing any fair pay-related matters. We have completed a pay equity analysis this past year as part of our commitment to diversity, equity, and inclusion. It helps us stay competitive as an employer, meet shareholder expectations, and ensure legal compliance. Our process included gathered data to analyse internal job grading in relation to remuneration and benchmarks (salary information, position information, tenure, and seniority). The analysis helps us identify pay differences within Blue Label. Further research was conducted to interpret and understand what causes the difference in pay. The final step is to take the results from the analysis report and communicate with each subsidiary leadership team to derive an implementation plan on how to close the gaps to correct discrepancies.

During the reporting year, the representation of women and African employees in leadership was a key focus of the Committee and the Board. In this regard, the following is noted:

  • We continue to see a positive trajectory in Top Management across most equity demographics.
  • The key focus in Senior Management must be to appoint African females and males.
  • We continue to balance our gender representation. Women comprise 48% (FY22: 48%) and men 52% (FY22: 52%) of our talent across the business closely aligned to our target of 50:50. We continue to seek a balance of gender representation at senior and top management levels.
  • About 65% of our employees are below the age of 40 and they continue to bring fresh perspectives and high energy levels as well as enthusiasm.
  • Promotions opportunities were within the junior management level, and our focus was on improving equity representation. Out of all the promotions in FY23, 55% were for females and 83% representing Black talent.

Our goal is to create an inclusive workplace where employees can bring their whole selves to work and live their purpose. Our robust strategic approach focuses on our people's diversity and inclusive leadership, providing an inclusive, fair, and supportive workplace and enabling work environment.

With our focus on equity, we see an improvement in new appointments, with 77.5% of new recruits in the organisation being African and 43% being female. Our key focus has been to improve our employer brand in the market to attract the right talent.

FY24 business plan

The preparation of the FY24 Business Plan is the responsibility of each subsidiary company. The business plans are motivated by the subsidiary executive committees to the Group Executive Committee. These plans undergo a thorough review and approval process by the executive committee of Blue Label. Ultimately, the Board of Directors of Blue Label provide their final approval.

Our approach

At Blue Label, we adopt a holistic approach to rewards, which includes guaranteed pay, variable pay, recognition and employee development and benefits.

We understand that the philosophy and each component of the policy are dynamic and should be reviewed from time to time to ensure we keep abreast of our objectives and market trends. We ensure that our practices comply with legislative and regulatory requirements.

We provide transparent and understandable information about our reward programme, policy and processes, to all employees to ensure that employees understand what they receive, why and when they receive it.

Our reward framework

Blue Label's reward framework comprises financial and non-financial components and applies to all employees. The framework is set out below:

  • fixed annual remuneration (FAR);
  • short-term incentive plan (STIP);
  • long-term incentive plan (LTIP);
  • commissions for sales staff;
  • ad hoc rewards for performance and behaviours linked to our values, leadership programmes and competitions; and
  • non-financial benefits aligned to our EVP #HappinessisBlu.

At Blue Label the pay mix differs when specific business circumstances require it, including costs and allowances related to relocation and international assignments. We reimburse all necessary and reasonable business expenses.

BLUE LABEL REMUNERATION AND TALENT RETENTION STRATEGY

GUARANTEED
  VARIABLE NON-FINANCIAL
Fixed annual remuneration   Sales commissions Short-term incentive plan Short-term variable remuneration Long-term incentive plan #HappinessisBlu

Objectives

Enables us to attract and retain talent, taking into consideration skills, experience, high potential and value contribution.

 

Aligned to drive continuous improvement, improved customer service and increased revenue in sales and operations.

Reward the achievement of challenging strategic, financial and operational objectives, aligning individuals to divisional and Blue Label performance and the interests of our shareholders. The scheme is structured to reward collaborative work across Blue Label to ensure we leverage our capabilities, increase innovation, improve customer and consumer service, reduce inefficiencies and increase revenue and profits.

Special-purpose variable remuneration arrangements to help attract and retain high potential talent who are the holders of scarce skills.

Arrangements are subject to individual performance and time-based conditions to ensure an appropriate return on the remuneration investment.

Aligning employees to shareholder interests through incentivising performance in line with strategic goals and long-term shareholder value.

Create a differentiated EVP and work experience to increase the engagement and retention of existing employees and position Blue Label as an employer of choice within an increasingly competitive landscape, focusing on employee experience.

Eligibility

All.

 

Specific roles within sales and operations.

All.

  • Critical and scarce skills.
  • High-performing employees with high potential and critical skills.

Executives and management.

All.

FY24 approach

The Remuneration Committee recommended up to 7% increases for FY24 (FY23: 6%). Increases awarded on exception to retain critical skills and high performing talent.

 

As defined by the operational plan and budget.

Schemes with varying components linked to:

  • individual performance;
  • divisional performance (where applicable); and
  • Blue Label performance.

Gatekeeper conditions are in place.

Individual metrics are limited to five KPIs and must be verifiable and challenging.

The following financial measures will be applied in determining the STIP for Blue Label head office and Executive Directors:

  • normalised EBITDA; and
  • core HEPS.

The following financial measure will be applied in determining the STIP at divisional levels:

  • Divisional NPAT; and
  • Blue Label normalised EBITDA and core HEPS.

Further details on targets can be found in the remuneration policy.

Cash-based sign-on awards and retention bonuses are assessed on a case-by-case instance in line with policy.

Conditional shares are offered (instead of forfeitable shares as has been done historically).

The following metrics apply

  • core HEPS compounded cumulatively over three years;
  • strategy focused balanced scorecard measure which is linked to the execution of critical strategic milestones;
  • return on capital employed;
  • ESG performance scorecard; and
  • individual KPIs.

Individualised employee engagement, development and growth.

Fixed annual remuneration

FAR is a critical enabler in the attraction and retention of human capital, taking into regard skills, experience, high potential and value contribution. The components of guaranteed fixed remuneration are:

  • cash salary;
  • medical aid benefits;
  • allowances; and
  • disability and death benefits.

To ensure we apply the right competitive remuneration, we collected industry and country-relevant benchmarks from Deloitte and KornFerry. Fair and competitive compensation is critical to being an employer of choice.

Annual salary review process

Blue Label's annual salary review process provides an opportunity for management to reward for performance and adjust salaries in line with market increases and organisational affordability. Blue Label's annual performance-based increases are effected in June each year. We aim to differentiate between non-performance, average performance and exceptional performance. The Committee mandated up to 7% increases for FY24. The Remuneration Committee further mandated that where appropriate, by exception, higher increases may be awarded to retain critical skills and high-performing talent, or where there were enhanced responsibilities.

Short-term incentive plan

Our STIPs reward the achievement of critical short-term metrics comprising both financial and non-financial measures. Our STIPs also reward self-development and focus on developing others and the economic development of the communities we serve. In line with our entrepreneurial spirit, targets and metrics are challenging and align individuals KPIs to divisional and Blue Label performance and the interests of our shareholders.

We have introduced further incentives for managers to use within exceptional instances. The special-purpose short-term variable remuneration arrangements have been designed to help attract and retain high potential human capital who are the holders of scarce skills.

The emphasis remains on performance beyond target for Executive Directors for FY24:

  • Individual goals will account for 20% of the STI. In FY24, for Executive Directors, these will be:
    • Blue Label's overall performance;
    • facility targets with the banks;
    • debt equity ratios;
    • succession planning; and
    • BEE targets.
  • Blue Label's performance will account for 80% of the STIP.

The Executive Directors' thresholds and stretches are currently calculated as follows:

  • CEOs thresholds are calculated at 80% of FAR, target at 100% of FAR and a maximum payout at 150% of FAR.
  • FD threshold is calculated at 50% of FAR, target at 70% of FAR and a maximum payout at 100% of FAR.

Executive Directors STIP metrics#

Metrics Threshold Target Stretch*
KPIs (20%) Individual** Pro rata of target Specific No stretch
  Payout % of FAR 16% - CEOs
10% - FD
20% - CEOs
14% - FD
20% - CEOs
14% - FD
Normalised EBITDA (40%) Group 20% under
performance of
FY24 Business Plan
FY24 Business Plan 20% over
performance of
FY24 Business Plan
  Payout % of FAR 32% - CEOs
20% - FD
40% - CEOs
28% - FD
65% - CEOs
43% - FD
Core HEPS (40%) Group 20% under
performance of
FY24 Business Plan
FY24 Business Plan 20% over
performance of
FY24 Business Plan
  Payout % of FAR 32% - CEOs
20% - FD
40% - CEOs
28% - FD
65% - CEOs
43% - FD
# The bonus is calculated per metric. Values awarded will be a weighted average of scores attained versus target and pro-rated applying linear interpolation.
* Remco discretion to be applied for performance above target.
** The stretch component of the individual KPI targets in the STIP are assessed on a binary basis and only provide for the achievement of target performance, with threshold performance being assessed on a pro rata basis relative to target.

Remco will be guided by economic conditions and an annual review of the performance target percentage above CPI, with the most relevant metrics selected each year.

Executive Directors' composition of FY24 total remuneration

Joint CEO
Financial Director
* Conditional share plan vesting in August 2026.

Long-term incentive plan

Blue Label's LTIP aligns employees to shareholder interests through incentivising performance in line with strategic goals and long-term shareholder value creation. In addition, it aims to retain human capital with scarce or critical skills. The Remco, through engagement with shareholders, and guided by consultants through market benchmark reviews, has determined applicable criteria for the LTIP, ensuring that the interests of all stakeholders are appropriately considered.

These may be reviewed and adjusted in future, upon further engagement with shareholders. Awards are made once a year post our annual performance and pay reviews. All awards are subject to the necessary governance and approval processes. Awards are subject to vesting over a period of three years from the date of the grant.

Minimum levels of financial performance must be achieved. Employees who do not meet minimum performance requirements or are on a performance improvement plan, are not eligible.

Office
ASPECT
DESCRIPTION
Nature

Blue Label's long-term incentive plan is operated as a conditional share plan.

Eligibility

Eligibility based on:

  • senior leadership;
  • talent key to driving business strategy;
  • retention of talent with high potential and/or critical skills; and
  • transformation objective.
Allocation methodology

Allocation awards for Executive Directors are currently as follows:

  • 50% of FAR for the CEOs achieving target, with a threshold of 36% of FAR and a maximum of 70% of FAR; and
  • 50% of FAR for the FD achieving target, with a threshold of 36% of FAR and a maximum of 70% of FAR.

Allocation awards for Management are currently as follows:

  • 25% of FAR for Management achieving target, with a threshold of 18% of FAR and a maximum of 35% of FAR.
Performance conditions

Refer to the table that follows for FY24 performance metrics, weightings and associated targets.

Performance period

Three years.

Vesting period and profile

Three years, from the date of the award. Cliff vesting applies.

Plan limits

Overall plan limit: 10% of issued shares (c.91.37 million shares).

Individual participant limit: 1% of issued shares (c.9.14 million shares).

Termination of employment

Bad leavers: In cases of resignation or dismissal prior to vesting, all unvested awards are forfeited.

Good leavers: In cases of retrenchment, death, ill health, disability of any other reason, a portion of unvested awards, or such greater portion as the Board may determine in its absolute discretion, shall vest and be settled upon the date of termination of employment, pro-rated for time served between the award date and the date of termination, as well as for the extent to which performance has been achieved over the relevant period.

Retirement: Participants shall be entitled to the same rights and be subject to the same conditions as if they had continued to be an employee, unless the Board/Remuneration Committee decides otherwise.

The following metrics apply for the FY24 LTIP award:

  • 60% of LTI award is measured on financial criteria;
  • 20% of LTI award is measured on strategic criteria; and
  • 20% of LTI award is measured on non-financial criteria.

Group LTIP metrics*

Metrics Threshold Target Stretch
Core HEPS (30%) (compounded cumulatively over three years) Group CPI CPI + 2% CPI + 4%
  Vesting % 21.6% 30% 45%
ROCE (30%) (compared to WACC over the three-year period not compounded)** Group ROCE greater than or equal to WACC over three years ROCE greater than or equal to WACC + 1% over three years ROCE greater than or equal to WACC + 2% over three years
  Vesting % 21.6% 30% 45%
Strategy focused balanced scorecard (20%) Group Linked to strategic milestones Linked to strategic milestones Linked to strategic milestones
  Vesting % 14.4% 20% 30%
ESG (10%) (specific ESG metrics***) Group Pro rata of target Specific No stretch
  Vesting % 7.2% 10% 10%
Individual KPIs (10%)*** Group Pro rata of target Specific No stretch
  Vesting % 7.2% 10% 10%
* Remco may review metrics and targets post-FY24 for new awards to ensure that they are relevant. The LTIP is calculated per metric. Values awarded will be a weighted average of scores attained versus target. All metrics will be assessed and vest on a pro rata basis applying linear interpolation basis, save for the ESG/KPI metrics which will be assessed on a binary basis.
** ROCE is calculated using the following formula:
ROCE = Net operating profit (EBIT)/Capital employed. Capital employed = total assets - current liabilities (excluding interest-bearing borrowings). The Remuneration Committee will review any prior year impairments to assess if adverse outcomes have occurred, and if so, make the necessary adjustments to the capital employed number such that the average performance is a more accurate indication to shareholders over the measurement period.
*** The stretch component of the Individual and ESG KPIs in the LTIP are assessed on a binary basis and only provide for the achievement of target performance, with threshold performance being assessed on a pro rata basis relative to target.

As noted in section 1, as at the time of this publication, Blue Label continues to engage Remchannel in the review of its remuneration policy and overall variable remuneration practices. During the upcoming year, in addition to the employee-wide pay band stratification process, a formal analysis of the participants of the long-term incentive plan will be conducted, determining which participants should remain on the equity-settled long-term incentive plan (Conditional Share Plan) and which should be placed on a similar cash-settled structure. Further information regarding this process shall be detailed in next year's remuneration report.

Malus and clawback provision

This ensures that excessive risk-taking is not rewarded. This malus and clawback clause applies to both vested and unvested "at risk" remuneration. It is designed to be preventative rather than a purely remedial or punitive measure as it removes the incentive for executives to consider deliberately misstating company earnings to inflate variable pay. The clause applies to both the STIP and LTIP from June 2019 and September 2019 respectively. The provision may be implemented up to 10 years after a trigger event and is applicable to financial year ended 31 May 2020 and each financial year-end thereafter.

The Board may act on the recommendation of the Remuneration Committee to adjust (malus) or recover (clawback) unvested and vested "at risk" remuneration where there is reasonable evidence that a Blue Label employee has materially contributed to, or been materially responsible for, the need for the restatement of financial results.

The malus and clawback clause does not apply in the case of a restatement of financial results caused by a change in applicable accounting standards or interpretations thereof, provided originally approved by Blue Label's auditor.

The CEOs or Company Secretary are required to notify the Chairman of the Remco and the Chairman of the Board respectively, of any circumstances that could constitute a "trigger" under this policy as soon as practical. If either the CEOs or Company Secretary is involved in the trigger event, the Head of Group Risk and Compliance is required to notify the Chairman of the Remco and the Chairman of the Board respectively.

Before the Remco makes a recommendation to the Board to implement malus or clawback provisions under the policy, they shall:

  • review the situation to understand the impact of the misstatement;
  • assess the involvement of the employee and their level of responsibility regarding the trigger; and
  • provide the relevant employee with written notice of the intended actions and the right to respond in writing within 15 working days to raise salient matters.

Having completed an investigation and following due process, the Board, on advice from the Remco, may decide to clawback, cancel or adjust any vested or unvested STIP or LTIP awards, where they are not satisfied that an award is appropriate or warranted due to exceptional circumstances.

Minimum shareholding requirements for Executive Directors

To further align the Executive Directors' interests directly with those of shareholders and to encourage long-term commitment to the organisation, Executive Directors will be required to accumulate a prescribed minimum holding of share allocations within five years from September 2019. Joint CEOs will be required to accumulate two times their Fixed Annual Remuneration over a period of five years.

Our joint CEOs own a significant shareholding in Blue Label, and we will continue to review this.

The FD will be required to accumulate one times his fixed annual remuneration over a period of five years.

Executive Directors' service contracts

The service contracts of the following Executive Directors will expire on 4 November 2025 and are subject to renegotiation. Should the Joint CEOs' employment be terminated for whatever reason, a restraint clause will apply. There are no contractual termination benefits, including restraint of trade payments, in place for the Executive Directors:

  • BM Levy
  • MS Levy
  • DA Suntup

Termination arrangements

Conditions of employment are comparable to those companies in our sector. In ordinary practice, no special or extraordinary conditions are applicable to senior executives. Exceptions may exist because of acquisitions and these must be reviewed and signed off by the Board and Remco.

In the event that services are terminated due to a no-fault basis, Executive Directors, prescribed officers and senior managers are entitled to severance pay equal to one week's FAR per completed year of service. Contractual notice and accrued leave will also be paid out in the normal course. Treatment of any unpaid bonus or unvested LTIP awards, will be dealt with in accordance with this policy and will in all instances be subject to Group Remco and Board oversight and approval.

In line with King IV, Blue Label has not concluded any termination agreements with its Executive Directors. No fixed sums of money or "balloon payments" in recognition of service to Blue Label, without any performance conditions attached, will be paid on termination of employment.

Non-executive Director remuneration

The fees of the Group Chairman and the Non-executive Directors reflect their specific responsibilities relating to their membership of the Board and, where applicable, Board Committees. Blue Label's Non-executive Directors do not receive any performance-related remuneration or any employee benefits. For FY23, together with Executive Directors and Senior Management, an increase of 6% for NED fees was approved. For FY24, Non-executive Director fee increases have been proposed at 7% to be approved by shareholders at the November AGM.

SECTION 3

Implementation report

SHORT-TERM INCENTIVE BONUS

Executive Directors

The performance metrics for Executive Directors, relating to the STIP for the year ended 31 May 2023, were 20% for individual goals and 80% for financial achievement, of which 40% related to growth in EBITDA and 40% to growth in core HEPS.

For the joint CEOs, achievement of threshold is calculated at 80% of FAR, target at 100% of FAR and a maximum payout at 150% of FAR. For the FD, achievement of threshold is calculated at 50% of FAR, target at 70% of FAR and a maximum payout at 100% of FAR.

The individual goals set for the Executive Directors related to the turnaround strategy and performance of Cell C, Blue Label's overall performance, the facility targets with the banks, debt equity ratios, succession planning and BEE targets.

The recapitalisation of Cell C was implemented at the end of September 2022.

Cell C has implemented a turnaround strategy, focusing on operational efficiencies, reducing operational expenditure, and optimising traffic. This includes a significant reduction in capital expenditure and a conversion of a fixed cost infrastructure-based network to a variable operational expenditure model. This, together with the recapitalisation of the current debt structure, has resulted in an improvement in its liquidity and ensures the long-term sustainability of Cell C.

Cell C's strategic blueprint has been put into action, signalling a transformative phase for Blue Label. A new, dynamic management team has taken charge, bringing fresh vision and vitality to the organisation. This capable team swiftly assumed critical roles and has started integrating their unique expertise into all aspects of Cell C's operations. The strategic execution, combined with the recruitment of top-tier talent, is driving Cell C into an exciting era of innovation and growth.

The core businesses of the Blue Label Group have shown consistent growth in revenue, gross profit, and core headline earnings per share for the year ended 31 May 2023.

All conditions and repayments pertaining to the banking facilities entered into with the banking consortium, post the recapitalisation of Cell C, have been met and no defaults have occurred. Furthermore, the working capital financing facility with African Bank remains intact and is currently being renegotiated.

A succession planning strategy was implemented whereby critical positions within the organisation were identified and action plans were developed to enable key individuals to assume those positions, if required, across all subsidiaries and occupational levels in the last financial year.

Blue Label maintained a BBBEE scorecard compliant level 4.

The financial metrics for the financial year ended 31 May 2023 were normalised EBITDA and core headline earnings per share for Blue Label financial targets and NPAT for divisional financial targets.

EBITDA increased by R91 million (7%) from R1.372 billion to R1.463 billion, excluding the extraneous contributions of R146 million in the current year and non-recurring income of R326 million in the prior year. Excluding the R145 million costs attributable to learnership initiatives in the current year and R65 million in the prior year as well as the negative impact of R88 million relating to load shedding in the current year, EBITDA increased by R259 million (17.98%) from R1.437 billion to R1.696 billion. The benefit thereof is realised through income tax savings resulting from the section 12H allowances claimed for these learnerships.

Core headline earnings for the year ended 31 May 2023 amounted to R402 million, equating to core headline earnings of 45.55 cents per share. In the comparative year, core headline earnings amounted to R1.061 billion, equating to core headline earnings of 121.01 cents per share.

The core businesses of the Blue Label Group have shown consistent growth in revenue, gross profit, and core headline earnings per share for the year ended 31 May 2023. The predominant extraneous contributions to the May 2023 basic, headline, and core headline earnings per share are primarily associated with the recapitalisation transaction of Cell C.

Excluding the extraneous contributions of R523 million and the negative impact of R64 million relating to load shedding in the current year and the non-recurring income of R214 million in the prior year, core headline earnings increased by R142 million (17%) from R847 million to R989 million. Core headline earnings per share increased by 16.08% from 96.56 cents per share in the prior year to 112.09 cents per share.

From a Blue Label financial target perspective, the financial metrics of both normalised EBITDA and core HEPS exceeded prior year by 17.98% and 16.08% respectively. Normalised EBITDA exceeded target with core HEPS falling short of target. A 12-month CPI rolling average equating to 7.08%, for the period 1 June 2022 to 31 May 2023, was applied.

Strong growth in normalised EBITDA and core headline earnings per share, excluding extraneous costs and non-recurring income in both the current and prior years, resulted in Blue Label exceeding the target set for the Executive Directors for the year ended 31 May 2023, as illustrated in the table:

Executive Directors STIP metrics#

Metrics Threshold Target Stretch* Actual performance
and pro rata payout
% achieved
KPIs (20%) Individual Pro rata of target Specific No stretch
Payout % of FAR 16% - CEOs
10% - FD
20% - CEOs
14% - FD
20% - CEOs
14% - FD
20% - CEOs
14% - FD
Normalised
EBITDA (40%)
Group 80% of target =
13.66%
CPI + 10% = 17.08% 125% of target* =
21.35%
17.98%
Payout % of FAR 32% - CEOs
20% - FD
40% - CEOs
28% - FD
65% - CEOs
43% - FD
45% - CEOs
31% - FD
Core HEPS (40%) Group 80% of target =
13.66%
CPI + 10% = 17.08% 125% of target* = 21.35% 16.08%
Payout % of FAR 32% - CEOs
20% - FD
40% - CEOs
28% - FD
65% - CEOs
43% - FD
38% - CEOs
26% - FD
Total payout % of FAR 80% - CEOs
50% - FD
100% - CEOs
70% - FD
150% - CEOs
100% - FD
103% – CEOs
71% – FD
# The bonus is calculated per metric. Value awarded was a weighted average of scores attained versus target and pro-rated applying linear interpolation.
* Remco discretion to be applied for performance above target.

In order to showcase a balanced approach in applying Remco discretion for performance above target, Remco capped the FY23 STI payout at an on-target level of performance, thus not allowing stretch performance to be achieved on a load shedding adjusted basis.

With reference to the above, the total payout percentage of FAR equated to 100% for the Joint CEOs and 70% for the Financial Director, in line with target.

The bonuses awarded to the three Executive Directors, amounted to R25.926 million, of which R10.936 million was payable to each joint CEO and R4.054 million to the Financial Director.

Prescribed officers

For prescribed officers, achievement of threshold is calculated at 25% of FAR, target at 50% of FAR and a maximum payout at 75% of FAR.

The performance metrics for JS Newman, relating to the STIP for the year ended 31 May 2023, was 40% for Individual goals and 60% for financial achievement, of which 30% related to growth in normalised EBITDA and 30% to growth in core HEPS. This is illustrated in the table that follows:

Group prescribed officer STIP metrics#

Metrics Threshold Target Stretch* Actual
performance
and pro rata
payout %
achieved
KPI's (40%) Individual Pro rata of target Specific No stretch
Payout % of FAR 10% 20% 20% 20%
Normalised EBITDA (30%) Group 80% of target = 13.66% CPI + 10% = 17.08% 125% of target* = 21.35% 17.98%
  Payout % of FAR 7.50% 15% 27.50% 17.64%
Core HEPS (30%) Group 80% of target = 13.66% CPI + 10% = 17.08% 125% of target* = 21.35% 16.08%
Payout % of FAR 7.50% 15% 27.50% 12.82%
Total payout % of FAR 25% 50% 75% 50%
# The bonus is calculated per metric. Value awarded was a weighted average of scores attained versus target and pro-rated applying linear interpolation.
* Remco discretion to be applied for performance above target.

With reference to the above, the total payout percentage of FAR equated to 50% for JS Newman, in line with target. The bonus awarded amounted to R2.417 million.

The performance metrics for GB Levin, relating to the STIP for the year ended 31 May 2023, were 20% for Individual goals and 80% for financial achievement, of which 60% was linked to divisional financial targets and 20% to Blue Label financial targets. Of the 20% Blue Label financial targets, 10% related to growth in normalised EBITDA and 10% to growth in core HEPS. No bonus was awarded to GB Levin.

Long-term incentive plan

The long-term incentive plan related to the allocation of shares in 2019, which vested on 31 August 2022. The financial measurement was for the period 1 June 2019 to 31 May 2022.

Executive Directors and prescribed officers

              Amount paid to  
Performance metric Threshold
72%
Target
100%
Stretch
140%
Actual
performance
Weighting
%
BM Levy
R'000
MS Levy
R'000
DA Suntup
R'000
GB Levin
R'000
Long-term incentive plan (2019 forfeitable share scheme vested 31 August 2022)
Growth in core HEPS (30%) CPI + 5% CPI + 10% CPI + 15% Above threshold 24.63 3 055 3 055 1 618 510
Shareholder returns (30%) JSE capped all share index JSE capped all share index return + CPI + 5% JSE capped all share index return + CPI + 15% Above target 40.90 5 074 5 074 2 687 846
Return on capital employed (20%) Greater than or equal to WACC Greater than or equal to WACC + 2.5% Greater than or equal to WACC + 5% Stretch 28.00 3 473 3 473 1 840 580
Environmental, social and governance (20%) Specific ESGs Specific ESGs Specific ESGs Target 20.00 2 481 2 481 1 314 414
Total vesting related to performance conditions included in 2023 total single figure of remuneration 113.53 14 083 14 083 7 459 2 350

JS Newman, a prescribed officer, was only employed in September 2021 and as such did not participate in the 2019 forfeitable share scheme.

Growth in core headline earnings per share, over the three-year performance period, fell short of target, resulting in a vesting percentage of 24.63%, of the total target vesting percentage of 30%, for the Executive Directors and senior management of the head office and subsidiary companies.

Blue Label's closing share price as at 31 May 2019 and 31 May 2022 was R3.78 and R5.63 respectively, resulting in a TSR of 49% over the three-year performance period, in comparison to a growth of 34% in the JSE Capped All Share Index over the same period. The TSR, over the three-year period, was therefore achieved at a stretch level on a pro rata basis, resulting in a vesting percentage of 40.90%.

The average weighted ROCE over the three-year performance period was 20.27%, which exceeded Blue Label's WACC + 5% over three years of 19.81%. The ROCE metrics, over the three-year period, was achieved at a stretch level, resulting in a maximum vesting percentage of 28.00%.

Management achieved the ESG targets that were set for 2022 financial year.

Tables of single total figure of remuneration for FY23

The single total figure of remuneration disclosure is based on the IoDSA and SARA application guidance issued in November 2017 on remuneration disclosure in accordance with King IV and presents the remuneration for the Executive Directors and prescribed officers of Blue Label. The comparative information has been presented in a manner consistent with the current year presentation.

Executive Directors and prescribed officers remuneration for the year ended 31 May 2023  Explanatory 
notes 
BM Levy 
R'000 
MS Levy 
R'000 
DA Suntup 
R'000 
GB Levin 
R'000 
JS Newman 
R'000 
Total 
R'000 
Fixed remuneration (including salary, allowances and retirement benefits) 10 936  10 936  5 792  4 970  4 833  37 467 
Other benefits  —  —  —  206  —  206 
Short-term incentive bonus  10 936  10 936  4 054  —  2 417  28 343 
2019 forfeitable share scheme – growth performance component on vesting date (31 August 2022) at fair value  14 083  14 083  7 459  2 350  —  37 975 
Single total figure of remuneration   35 955  35 955  17 305  7 526  7 250  103 991 
Dividends on vested shares  —  —  —  —  —  — 
Short-term incentive bonus to be settled post-year-end  (10 936) (10 936) (4 054) —  (2 417) (28 343)
Short-term incentive bonus of prior year paid in August 2022  10 793  10 793  4 645  3 282  2 280  31 793 
Total cash equivalent value remuneration received for the year ended 31 May 2023  35 812  35 812  17 896  10 808  7 113  107 441 
Reconciliation to note 5.3 of the Group annual financial statements 
Remuneration as disclosed in terms of IFRS  21 872  21 872  9 846  5 176  7 250  66 016 
Total cash equivalent value remuneration received for the year ended 31 May 2023  35 812  35 812  17 896  10 808  7 113  107 441 
Difference to remuneration as disclosed in note 5.3 of the Group annual financial statements  13 940  13 940  8 050  5 632  (137) 41 425 
Reconciling items: 
Remaining short-term incentive bonus accrued in May 2023, to be settled post-year-end  (10 936) (10 936) (4 054) —  (2 417) (28 343)
Short-term incentive bonus accrued in May 2022, paid in August 2022  10 793  10 793  4 645  3 282  2 280  31 793 
2019 forfeitable share scheme that vested in the current year at fair value  14 083  14 083  7 459  2 350  —  37 975 
13 940  13 940  8 050  5 632  (137) 41 425 
1 No dividends were applicable to the 2019 forfeitable share scheme.
2 Cash equivalent value remuneration represents the total proceeds paid to the Executive Directors and prescribed officers for the period 1 June 2022 to 31 May 2023, inclusive of the cash element of basic remuneration, STIs, LTIs and dividends.
Executive Directors and prescribed officers remuneration for the year ended 31 May 2022  Explanatory 
notes 
BM Levy 
R'000 
MS Levy 
R'000 
DA Suntup 
R'000 
GB Levin 
R'000 
JS Newman 
R'000 
Total 
R'000 
Fixed remuneration (including salary, allowances and retirement benefits) 10 317  10 317  5 464  4 689  3 262  34 049 
Other benefits  36  36  —  192  —  264 
Short-term incentive bonus  12 793  12 793  4 645  3 282  2 280  35 793 
2018 forfeitable share scheme - growth performance component on vesting date (16 March 2022) at fair value  —  —  —  170  —  170 
Single total figure of remuneration  23 146  23 146  10 109  8 333  5 542  70 276 
2018 forfeitable share scheme - vesting of retention component in the current year at fair value  845  845  448  128  —  2 266 
Dividends on vested shares  —  —  —  —  —  — 
Short-term incentive bonus to be settled post year end  (10 793) (10 793) (4 645) (3 282) (2 280) (31 793)
Short-term incentive bonus of prior year paid in August 2021  9 733  9 733  3 608  3 150  —  26 224 
Restraint of trade award paid in five equal monthly instalments  1 391  1 391  —  —  —  2 782 
Total cash equivalent value remuneration received for the year ended 31 May 2022  24 322  24 322  9 520  8 329  3 262  69 755 
Reconciliation to note 5.3 of the Group annual financial statements 
Remuneration as disclosed in terms of IFRS  24 537  24 537  10 109  8 163  5 542  72 888 
Total cash equivalent value remuneration received for the year ended 31 May 2022  24 322  24 322  9 520  8 329  3 262  69 755 
Difference to remuneration as disclosed in note 5.3 of the Group annual financial statements  (215) (215) (589) 166  (2 280) (3 133)
Reconciling items: 
Remaining short-term incentive bonus accrued in May 2022, to be settled post-year-end  (10 793) (10 793) (4 645) (3 282) (2 280) (31 793)
Short-term incentive bonus accrued in May 2021, paid in September 2021  9 733  9 733  3 608  3 150  —  26 224 
2018 forfeitable share scheme that vested in the current year at fair value  845  845  448  298  —  2 436 
2018 forfeitable share scheme – growth performance component on vesting date (16 March 2022) at fair value  —  —  —  170  —  170 
2018 forfeitable share scheme – vesting of retention component in the current year at fair value  845  845  448  128  —  2 266 
(215) (215) (589) 166  (2 280) (3 133)
1 R2 million of the total STIP for the year ended 31 May 2022 was paid each to Brett Levy and Mark Levy prior to year-end. The balance to Executive Directors and prescribed officers was paid post-year-end.
2 Under normal circumstances, vesting of the 2018 forfeitable share scheme would have occurred on 31 August 2021. However, since Blue Label was in a closed period, vesting was deferred to 16 March 2022. The 33.33% LTIP growth in market price per share of was not achieved. The 33.34% LTIP growth in core HEPS was not achieved on a Group level but was achieved in the case of a subsidiary pertinent to GB Levin.
3 The 33.33% LTIP retention portion of the 2018 forfeitable share scheme is added to "the total cash equivalent value remuneration received", as vesting took place on 16 March 2022. In the case of GB Levin, 40% LTIP retention applied.
4 No dividends were applicable to the 2018 forfeitable share scheme.
5 These amounts represent the five monthly instalments received during the year relating to the restraint of trade payments payable in 12 equal instalments which commenced on 1 November 2020 and ended on 31 October 2021.
6 Cash equivalent value remuneration represents the total proceeds paid to the Executive Directors and prescribed officers for the period 1 June 2021 to 31 May 2022, inclusive of the cash element of basic remuneration, STIP and LTIP.

Compliance with policy

The Remuneration and Nomination Committee is satisfied that the remuneration and reward policy has been complied with for the year under review in so far as executive management is concerned.

Termination of office

No payments were made on termination of employment to any members of executive management.

Forfeitable share scheme - granted and unvested instruments

Issue date  Issue price 
Vesting date  Awards 
outstanding 
as at the 
beginning of 
the year 
Number of 
shares 
awarded 
during 
the year 
Awards 
forfeited 
during 
the year 
Awards 
vested during 
the year 
Balance 
as at the end 
of the year 
Fair value at 
grant date 
R'000 
Fair value at 
31 May 2023*
R'000 
Forfeitable share scheme 
For the year ended 31 May 2023 
Executive Directors 
BM Levy  18 November 2019  2.55  31 August 2022   1 908 425  258 210  —  (2 166 635) —  —  — 
BM Levy  1 September 2020  3.20  31 August 2023   1 520 776  —  —  —  1 520 776  4 866  5 505 
BM Levy  6 April 2022  6.42  31 August 2024   803 501  —  —  —  803 501  5 158  2 909 
BM Levy  1 September 2022  6.25  31 August 2025   —  874 878  —  —  874 878  5 468  3 167 
4 232 702  1 133 088  —  (2 166 635) 3 199 155  15 492  11 581 
MS Levy  18 November 2019  2.55  31 August 2022   1 908 425  258 210  —  (2 166 635) —  —  — 
MS Levy  1 September 2020  3.20  31 August 2023   1 520 776  —  —  —  1 520 776  4 866  5 505 
MS Levy  6 April 2022  6.42  31 August 2024   803 501  —  —  —  803 501  5 158  2 909 
MS Levy  1 September 2022  6.25  31 August 2025   —  874 878  —  —  874 878  5 468  3 167 
4 232 702  1 133 088  —  (2 166 635) 3 199 155  15 492  11 581 
DA Suntup  18 November 2019  2.55  31 August 2022   1 010 776  136 758  —  (1 147 534) —  —  — 
DA Suntup  1 September 2020  3.20  31 August 2023   805 462  —  —  —  805 462  2 577  2 916 
DA Suntup  6 April 2022  6.42  31 August 2024   425 565  —  —  —  425 565  2 732  1 541 
DA Suntup  1 September 2022  6.25  31 August 2025   —  463 369  —  —  463 369  2 896  1 677 
2 241 803  600 127  —  (1 147 534) 1 694 396  8 205  6 134 
Prescribed officers 
GB Levin  18 November 2019  2.55  31 August 2022  318 400  43 080  —  (361 480) —  —  — 
GB Levin  1 September 2020  3.20  31 August 2023  328 125  —  —  —  328 125  1 050  1 188 
GB Levin  6 April 2022  6.42  31 August 2024  615 300  —  —  —  615 300  3 950  2 227 
GB Levin  1 September 2022  6.25  31 August 2025  —  198 801  —  —  198 801  1 243  720 
1 261 825  241 881  —  (361 480) 1 142 226  6 243  4 135 
JS Newman  6 April 2022  6.42  31 August 2024  177 570  —  —  177 570  1 140  643 
JS Newman  1 September 2022  6.25  31 August 2025  —  193 344  —  —  193 344  1 208  700 
177 570  193 344  —  —  370 914  2 348  1 343 
* The fair value at 31 May 2023 is based on the closing price of R3.62.

Non-executive remuneration

2023
R'000
2022
R'000
Non-executive Directors
LM Nestadt 2 323 2 191
KM Ellerine* 720 929
GD Harlow** 722 2 010
NP Mnxasana 760 947
JS Mthimunye 1 274 1 447
LE Mthimunye*** 632
SJ Vilakazi 1 102 1 229
PL Zim**** 514 857
8 047 9 609
* Resigned 5 June 2023
** Resigned 19 October 2022
*** Appointed 1 November 2022
**** Resigned 22 February 2023

The proposed fees payable to Non-executive Directors are set out below:

Current fee
2023
R
Proposed fee
2024
R
Services as Directors
– Chairman of the Board (per annum) 2 146 211 2 296 446
– Board members (per annum) 473 429 506 569
Audit, Risk and Compliance Committee
– Chairman (per annum) 429 242 459 289
– Member (per annum) 265 120 283 678
Remuneration and Nomination Committee
– Chairman Remuneration (per annum) 252 495 270 170
– Chairman Nomination (per annum) 176 747 189 119
– Member (per annum) 151 497 162 102
Investment Committee
– Chairman (per annum) 252 495 270 170
– Member (per annum) 151 497 162 102
Transformation, Social and Ethics Committee
– Chairman (per annum) 151 497 162 102
– Member (per annum) 94 686 101 314
Ad hoc Committee
– Chairman (per meeting) 56 812 60 789
– Member (per meeting) 34 086 36 472

SJ Vilakazi

Chairman

29 September 2023