Remuneration committee report
This report outlines Italtile's remuneration philosophy and policy for non-executive directors, executive directors and prescribed officers. It also provides a description as to how the policy has been implemented and discloses payments made to non-executive and executive directors and prescribed officers during the year under review.
The report focuses on the fixed and variable elements of executive remuneration, as well as fees paid to non-executive directors and uses the single-figure disclosure format. Assessed against King IV and the amended JSE Listings Requirements, the Remuneration Committee is satisfied with the Company's compliance.
In line with leading practice as prescribed by King IV, this report is divided into three sections:
Dear stakeholder
Background statement
I am pleased to present the Remuneration report of Italtile for the year ended 30 June 2024.
It is an honour to have the opportunity to serve as the Chairperson of the Remuneration Committee, and I wish to thank the Board for affording me this privilege. Mrs Susan du Toit stepped down as Chairperson, effective from 1 December 2023, she does however remain a member of the Committee. I wish to express my deep appreciation to Susan for her exemplary leadership in steering the Committee over the years and for her valuable support during the transition.
I believe that my business understanding and 27 years of experience in legal, governance, risk and regulatory compliance across various industries will add value to the Remuneration Committee as we navigate the changing framework under the proposed amendments to the Companies Act and align ourselves to the evolving reporting environment.
The mandate of the Committee is to exercise oversight of the remuneration practices and policies of the Group. It focuses on responsible remuneration practices across the Company and strives for fair, competitive and transparent remuneration.
The Committee is committed to:
- the principles of merit and 'pay for performance';
- ensuring that remuneration policies and practices effect alignment between the interests of executive management and shareholders;
- continuously monitoring pay levels to ensure market-related, competitive remuneration;
- ensuring fair pay and that there is no discrimination based on race or gender or any other factor; and
- narrowing the gap in compensation between executives and employees at lower levels to prevent unacceptable levels of inequality.
The approach of the Committee is to communicate and engage extensively with a range of shareholders regarding matters raised around the Remuneration policy and Implementation report.
At the AGM held on 9 November 2023, the Group's shareholders approved the Company's Remuneration policy and the Implementation report.
| 2022 in favour |
2023 in favour |
|
| Remuneration policy | 94,91% | 94,96% |
| Implementation report | 93,46% | 88,37% |
REMUNERATION COMMITTEE AT A GLANCE
As tasked by the Board, the Committee assists in setting the Company's Remuneration policy and reviews, recommends and approves the remuneration of executive and non-executive directors, prescribed officers and senior management (collectively referred to as 'the executive team').
A core responsibility of the Remuneration Committee is to ensure that the remuneration philosophy and policy support Italtile as follows:
- aligns the executive team's reward with the Group's commercial success and long-term sustainability; and
- supports the Group's strategic objectives and allows for the recruitment, motivation and retention of senior executives, ultimately maximising shareholder value while complying with relevant legislation and the requirements of King IV.
As per its terms of reference, the Committee's responsibilities are to:
- assist the Board in developing and setting the Group's Remuneration policy;
- determine and approve the total remuneration of the executive team;
- review executive performance contracts;
- determine and approve the performance measures for the executive team;
- review the compensation basis and proposed average annual increases for the Group's employees;
- review remuneration and apply best practice and trends in order to ensure the appropriateness of the Remuneration policy;
- review remuneration matters for executive team promotions, transfers and termination of employment;
- oversee any proposed major changes to employee benefit structures throughout the Group;
- review and recommend short and long-term incentive policies and targets for directors and executive management;
- set the participation principles for the various remuneration schemes;
- review and recommend performance management policies;
- ensure compliance with applicable laws and codes;
- advise on the fees for non-executive directors;
- review the Group's succession plan for the executive team; and
- review and evaluate the contribution of each member of the executive team and determine their salary adjustments on an annual basis, ensuring pay for performance and as a result, a high level of motivation, engagement and commitment.
Key decisions taken by the Remuneration Committee during the year under review include:
- an annual review of the guaranteed salaries of executives;
- approval of the framework for increases for all other employees;
- approval of short and long-term incentive structures and awards for the executive team, as well as the framework for all other employees;
- approval of the KPIs for the executive team; and
- recommendation of non-executive director fees for approval by the Board.
As required by the Companies Act and King IV, the following resolutions will be tabled for shareholder voting at the AGM, details of which can be found in the Notice:
- binding vote on non-executive directors' fees; and
- non-binding advisory vote on the Group's Remuneration policy and Implementation report.
In the event that the Remuneration policy or Implementation report is voted against by shareholders representing 25% or more of the voting rights, dissenting shareholders will be invited to engage with the Company. The manner and timing of such engagement will be communicated to these shareholders, if necessary.
The Committee Chairperson reports to the Board after each Committee meeting and attends the AGM to answer questions from shareholders on the Committee's area of responsibility.
The Committee is focused on maintaining competitive remuneration practices across the Company while balancing the reward and motivation of key personnel with the need to drive accountability for performance. We recognise the need to retain top talent as it is a prerequisite to meet growth targets and shareholder expectations.
REMUNERATION COMMITTEE COMPOSITION
The Remuneration Committee is a sub-committee of the Board and meets at least twice per annum. The Committee is chaired by an independent non-executive director and comprises five directors. The majority of directors on the Committee are independent.
The assessment of the independence of any director who has been on the Board for longer than nine years is done annually by the Nominations Committee, to ensure the directors exercise objective, unfettered judgement and meet the required standards for independence.
The current members of the Committee are: Mrs A M Mathole (Chairperson), Mrs L R Langenhoven, Mr G A M Ravazzotti, Mrs S M du Toit and Mr S G Pretorius.
The Board considers the Committee's composition to be appropriate in terms of the necessary knowledge, skills and experience of its members. The Committee obtains expert advice to ensure it is kept up to date on remuneration practices.
The Italtile Group Company Secretary, Acorim Proprietary Limited, attends all meetings of the Committee as secretary. The Chairperson of the Board attends meetings by invitation. The CEO and CFO attend all meetings by invitation to provide input and guidance regarding executive team remuneration.
No attendee may participate in any discussion or decision regarding his or her own remuneration.
The Committee met twice during the year. Attendance at the meetings was as follows:
| Members | Attendance at meetings |
| A M Mathole* | 2/2 |
| L R Langenhoven | 2/2 |
| G A M Ravazzotti | 2/2 |
| S G Pretorius | 2/2 |
| S M du Toit | 2/2 |
| L A Foxcroft** | 2/2 |
| B G Wood** | 2/2 |
| * | Appointed Committee Chairperson on 1 December 2023. |
| ** | By invitation. |
We trust that this Remuneration report provides an accurate overview of the Remuneration policy of the Company, its implementation and specifically an in-depth view on executive management remuneration in the past year.
As the applicable framework and environment change in the year ahead, we will adapt accordingly to ensure that our remuneration practices and disclosures are compliant and appropriate.
Alex Motshwanetsi Mathole
Remuneration Committee Chairperson
20 September 2024
REMUNERATION PHILOSOPHY
Italtile is committed to maintaining pay levels that reflect an individual's worth to the Group. The Group's philosophy is to treat employees as business partners, developing their sense of ownership, and to pay for performance.
Our remuneration philosophy is governed by the principles of equity, fairness, pay for performance and affordability, ensuring alignment between management and shareholder requirements.
Remuneration policies are designed to attract, reward and retain the executive team and employees needed to deliver on the business strategy, as well as the key corporate objectives.
REMUNERATION POLICY
The Remuneration policy subscribes to King IV recommendations and principles on which it is based including the following principles:
- remuneration practices are aligned with Company strategy;
- total rewards are set at competitive levels in the relevant market to ensure we attract, motivate and retain highly talented individuals;
- total rewards are managed to align to the principle of responsible and fair pay;
- total remuneration costs need to be affordable at an individual corporate entity level and justifiable to employees and stakeholders;
- incentive-based results are linked to achieving demanding performance conditions consistent with shareholder interest over the short, medium and long term; and
- performance measures and targets for incentive plans are structured to operate effectively throughout the business cycle and support the business strategy.
ELEMENTS OF REMUNERATION
Italtile has an integrated remuneration and reward model which includes guaranteed remuneration, and short-term incentives ("STIs") and long-term incentives ("LTIs"). The components of total remuneration for permanent employees, prescribed officers and executives are fixed and variable remuneration.
Fixed remuneration comprises a basic salary and benefits, aligned to roles and performance. Variable remuneration comprises STIs and LTIs, aimed at retention of critical employees. Performance is measured against set performance indicators.
All employees share in Group profits, based on an individual's contribution to the Group. The Group has a minimum annual cost-to-company target of R134 600 per employee (2023: R134 000).
A new Staff Share Scheme for all employees of the Group and its franchisees was approved by shareholders in November 2022. The first awards under this new scheme were made to qualifying employees in March 2023, with subsequent awards in March 2024. Awards to participants are in the form of units linked to shares held by a trust, and dividends accruing to participants from the date of issue of awards are retained by the trust to offset the future income tax liability of participants on vesting of the awards. Awards vest after three years if the participant remains in the employ of the Group or its franchisees.
The various elements of remuneration are outlined below.
Guaranteed salary for employees
Guaranteed salary is reviewed annually and positioned competitively against peers that are comparable in size, sector and business. Company performance, affordability, individual performance and average industry and sector increases are considered in determining any annual adjustment. Increases are generally inflation-linked and, where affordable, additional budget is allocated for adjusting remuneration levels that are not appropriately aligned to internal pay ranges and/or market rates for a specific job.
Benefits
Benefits offered to employees include medical aid, provident fund and other benefits relevant to Italtile.
Fair and responsible remuneration
Steps that have been taken to improve the lives of the most junior employees are as follows:
- the minimum monthly basic wage levels were increased to R8 050 for CTM (4,5%), R7 250 for TopT (5,1%) and R8 300 (5,1%) at Ceramic Industries with effect from 1 July 2024;
- assistance to buy property: pension-backed housing loans are offered through FNB;
- programmes helping employees manage their finances are available through our Employee Wellness Programme, Ask Nelson. Employees have access to qualified financial consultants who can assist with budgeting, saving, investments, debt counselling, wills and estate planning, home loans, insurance, personal tax, garnishee orders and vehicle finance;
- training programmes are run for incoming employees. CTM and TopT incoming employees are placed on a six-week induction programme, consisting of factory visits, practical plumbing and tiling courses, as well as sales training. In addition, they go through a four-week NQF 4 qualification in retail management over 12 months; and
- primary healthcare cover (medical assistance or insurance) has been introduced for full-time permanent employees, fully funded by the Company.
Incentives
The Italtile Group administers incentive schemes to encourage and reward delivery of its strategic priorities over the short, medium and long term. The STI focuses on achieving business targets in that financial year, while the long-term incentive closely aligns the interests of executives with shareholders over the longer term. It is also a retention mechanism.
Short-term incentives
All employees in the Group share in profit. There is a direct correlation between profit share and the profitability of the business. Therefore, no additional performance targets are set for profit share, as the profit share allocation is directly impacted by the level of the business's profitability, thereby ensuring a clear alignment between performance and pay. This is consistent for all employees across the business and demonstrates the core principle of partnership.
The profit pool range is determined as a percentage of profits per business unit.
Executives take part in the Executive Profit Share Scheme. The Executive Profit Pool is 0,25% of Group profit before tax shared between the CEO and CFO on a shared unit basis:
- CEO: 60 units
- CFO: 40 units
For the 2025 financial year, the Executive Profit Pool will be 0,33% of Group profit before tax shared between the CEO, COO and CFO on a shared unit basis:
- CEO: 45 units
- COO: 30 units
- CFO: 25 units
The prescribed officer (the CEO of Ceramic Industries) shares in a percentage of Ceramic's profit. The profit pool at Ceramic for senior management is calculated as 0,89% of profit before tax, shared by five individuals. The CEO of Ceramic is a prescribed officer because he exercises general executive control and management over a significant portion of the business and he is allocated 40,8% (100/245 units) of the pool.
Long-term incentives
In terms of the policy on LTIs, there are three long-term incentive schemes within the Italtile Group, each rewarding performance in an appropriate manner, designed to reward and retain key personnel. The LTIs include:
- the Italtile Share Appreciation Rights Scheme ("SARS");
- the Italtile Retention Scheme; and
- the Ceramic Industries Share Retention Scheme.
Qualifying criteria for the LTIs are as per the executive scorecards.
- SARS
- In accordance with the SARS, selected directors and employees of the Group are awarded a conditional share award linked to the value of notional Italtile Limited shares ("shares"). A total of 25% of the awards vest after three years from grant date, and the balance (75%) after five years. The value of an award is equal to the increase in the value of the shares between grant date and vesting date (the value at the latter date is defined as the volume-weighted average price of Italtile Limited shares as traded on the JSE over the 10 trading days preceding and including the vesting date).
- The qualifying criteria specific to SARS awards are the short- term strategic initiatives and operational KPIs per the executive scorecards.
- The Italtile Retention Scheme
- In line with the Group's remuneration philosophy of partnership and in accordance with the Group's recognition of the importance of efficient and transparent succession planning, Italtile established the scheme to retain and incentivise selected high-performing employees, identified by the Remuneration Committee from time to time, with a proven track record of their contribution to the growth and sustainability of the Group.
- Performance targets for each award are set by the Remuneration Committee. The targets include HEPS, return on invested capital ("ROIC") and individual performance targets as appropriate, considering the role of the employee, and are weighted at the time of the award.
- Awards to participants are in the form of units linked to shares held by a trust, and participants receive dividends from the date of issue of units.
- To the extent that the performance targets have been attained at the end of the five-year retention period, awards are automatically redeemable and shares are transferred to participants.
- The number of shares allocated for all share schemes ("SARS", existing Executive Retention Scheme and the new Retention Scheme) cannot exceed 154 999 923 shares, being 11,7% of issued shares.
- The number of shares linked to units that may be acquired by any participant in terms of the scheme, when added to the number of Italtile shares which are issued and/or transferred to the same participant under the SARS, Italtile Retention Scheme and the former Executive Retention Plan, may not exceed 20 666 656 Italtile shares, being 1,6% of issued shares.
- Ceramic Industries Share Retention Scheme
- This scheme is a mechanism to retain and reward selected high-performing Ceramic executives and senior management in line with the Group's values and philosophy of partnership. Shares are held in escrow for participants without monetary payment being made for such shares. The consideration of the shares is the rendering of services by the participant over the retention period. Participants receive dividends from the date of issue of awards. The shares are held in escrow until the end of the retention period of five years, at which time the shares are transferred out of escrow to the participant if performance targets are achieved.
Executives and prescribed officers are encouraged to build a meaningful shareholding in the Company over time. The guideline from the Remuneration Committee is for executives to hold between 0,5% and 1,5% of issued shares.
Malus and clawback
The Remuneration Committee has the discretion to implement a Malus and Clawback policy, pursuant to which, on the occurrence of a trigger event, and at the instance and direction of the Remuneration Committee, the relevant employer in the Group will be entitled to clawback, in cash, the whole or any portion of the pre-tax proceeds and/or the value of any variable pay which has been paid to an executive director or prescribed officer, including any short-term incentives, discretionary payments or Italtile shares which have been transferred to such executive director or prescribed officer in terms of the Italtile Retention Scheme.
A trigger event would include, inter alia, the occurrence of any of the following events or circumstances:
- the discovery of any material misstatement of the financial statements, in terms of which any incentive payment was made, in respect of which the Remuneration Committee is satisfied that the executive director or prescribed officer has contributed to or is responsible for;
- the discovery that the assessment of any metric, figure, value or component upon which an incentive payment was made was based on erroneous, inaccurate or misleading information;
- the discovery of any action or conduct which, in the reasonable opinion of the Remuneration Committee, amounts to either dishonesty, gross negligence, misbehaviour, fraud or misconduct on the part of the executive director or prescribed officer;
- the discovery of a material failure in risk management to which the executive director or prescribed officer had contributed to or is responsible for; and/or
- the discovery that performance related to financial and/or non-financial targets was misrepresented, misstated or presented in error, and such misstatement led to the over-payment or miscalculation of any incentive payments.
The clawback applies for a period of three years after the cash payment of any short-term incentive and/or discretionary payment has been made to the executive director or prescribed officer in question or, in the case where payment has been made in the form of Itatile shares, three years after the Italtile shares have been transferred to the executive director or prescribed officer in question in terms of the Italtile Retention Scheme.
EXECUTIVE AND KEY MANAGEMENT PERFORMANCE MANAGEMENT
Executive and key management's performance is measured in the following categories, with specific performance targets/indicators per category, namely:
- financial performance (growth in trading profit and HEPS, and return on shareholders' interest ("ROSI"));
- strategic plan objectives per five-year plan;
- operations;
- human capital;
- B-BBEE;
- customer satisfaction and operational excellence;
- cultural fit/values;
- stakeholder relations; and
- ESG.
Targets are set for each individual scorecard. Financial targets carry a weighting of 70% (HEPS, operating profit and ROSI). The other non-financial KPIs carry a weighting of 30%.
For the 2025 financial year, there is a 50/50 split in weighting of financial and non-financial targets. This is informed by the need to enhance focus on operational and strategic goals that are crucial to drive financial performance.
The Remuneration Committee believes that the set of KPIs as per the executive scorecard agreed with the CEO, is suitably challenging.
ESG matters have become more prominent globally. Given the appreciation of material sustainability issues facing our business and the strategic importance of building a sustainable business, additional tangible KPIs related to ESG matters have been included in the year-end scorecards from 2021, in order to improve the link between ESG and remuneration.
The outcome of the performance evaluation of the CEO is disclosed in the Implementation report to follow.
SERVICE CONTRACTS OF EXECUTIVE DIRECTORS AND PRESCRIBED OFFICERS
Executive directors and prescribed officers have permanent contracts, and the notice period prescribed by the contracts is one calendar month. Contracts are periodically reviewed to ensure they remain aligned with governance and legislative requirements.
NON-EXECUTIVE DIRECTOR FEES
- Non-executive director appointments are made in terms of the Company's MOI and confirmed at the AGM of shareholders after the appointment.
- Fees reflect the directors' role and Committee membership and are not linked to Italtile's share price. A fee applies to any additional ad hoc work not exceeding 144 hours a year above Board and Committee meetings.
- Fees are reviewed by the Committee annually and require approval from shareholders at the AGM.
- Non-executive directors do not participate in any of the Company's short or long-term incentive plans and they are not employees of the Company.
- The recommendation of the Remuneration Committee on the proposed fees is submitted to the Board for consideration before being proposed to shareholders for consideration and approval at the AGM.
Non-executive director fees for 2024 are tabulated in the Implementation report overleaf.
USE AND JUSTIFICATION OF REMUNERATION BENCHMARKS
The Remuneration Committee reviews remuneration and Board-leading practice and remuneration trends to assess competitiveness in the market. External remuneration benchmark reviews published by PwC, EY and the Institute of Directors in South Africa are reviewed and taken into account when determining pay levels and structures.
NON-BINDING ADVISORY VOTE
Shareholders are requested to cast a non-binding advisory vote on section 2 of this Remuneration report (Remuneration policy).
The Implementation report details the outcomes of implementing the approved policy in section 2 of this report.
The financial performance in the last year has been disappointing as sales volumes declined and profits did not grow at anticipated levels. Total system-wide turnover was flat at R11,5 billion (2023: R11,5 billion). The Group's trading profit declined by 11% to R2,1 billion (2023: R2,3 billion).
While the results failed to meet expectations, the largely solid performance was achieved under very difficult trading conditions.
Despite the performance, the Group considered the current economic conditions and the need for remuneration to remain competitive and the following salary increases were approved effective 1 July 2024:
- Under-achievers 0 – 3%;
- Achievers 3 – 4%; and
- Superior achievers 5 – 6%.
In accordance with the Group's commitment to fair pay and being cognisant not to increase the wage gap, the following minimum basic adjustments will be implemented as from 1 July 2024:
| Minimum basic salary | 1/7/2024 - 30/6/2025 | 1/7/2023 - 30/6/2024 | % increase |
| CTM | R8 050 | R7 700 | 4,5% |
| TopT | R7 250 | R6 900 | 5,1% |
| Ceramic Industries | R8 300 | R7 900 | 5,1% |
As part of the focus to promote fair and responsible remuneration, the Committee is committed to identifying and addressing pay gaps.
PERFORMANCE ASSESSMENT OUTCOME FOR THE CEO
The key performance areas for the CEO for the year under review were as per KPIs set for each category of the scorecard, as done in prior years. Below is an extract of key KPIs and an assessment of performance against targets set.
Notes and targets |
Assessment |
|||
| Financial (70%) | Group-wide trading profit declined by 11% and HEPS declined by 7%, compared to growth targets of CPI +2%. Group working capital decreased by R95 million compared to a target of R30 million. |
Under-achieved | ||
| Strategic (5%) | Retail tile sales volumes declined by 2%. Online sales contribution grew by 2,5%. Target achieved. Profitability of East African business declined by 6%. Ceramic Industries Energy Security Plan developed. Turnaround performance at manufacturing operations - profit declined by 27% - target not met. However, improvements were noted in manpower, systems, quality, and product range. |
Under-achieved | ||
| Operations (5%) | Return on property portfolio in South Africa improved by 16,4% compared to a target of 18,5%. Operating costs as a percentage of net sales was 27,5% from 27,0% in prior year. |
Under-achieved | ||
| Human capital (5%) | Health and safety scores and employee engagement scores improved. Pipeline targets for retail and manufacturing executives, factory managers, and store operators were achieved. Revised organisational structure implemented. Senior executive succession plan developed. |
Achieved | ||
| B-BBEE (2,5%) | Level 2 B-BBEE target score achieved. | Achieved | ||
| Customer experience (2,5%) | A new CRM software platform was implemented. Net promoter score declined for two of the three retail brands. Online experience and content were improved. |
Partially achieved | ||
| Cultural and values (5%) | Core values of partnership, a hands-on approach, being performance driven, entrepreneurial flair, high work ethic, transparency in communication, dignity, empowerment, integrity, and customer first continue to be promoted. There is scope for improvement in the performance and customer service dimension. Driving a performance culture across the Group with KPIs and performance reviews, showed progress. |
Partially achieved | ||
| ESG (5%) | Solar power infrastructure was expanded. Targets were adopted for monitoring energy emissions and water consumption intensity.Social investments through the Italtile and Ceramic Foundation corporate social investment initiatives made meaningful impact. Supplier and enterprise development initiatives were supported, and local products sold by local people were prioritised. |
Achieved |
Considering the disappointing financial results relative to targets set for the year, the overall performance of executives and the prescribed officer is regarded as 'under-achieved'. Financial targets weigh 70% of the overall scorecard, and the balance of the KPIs is 30%. It should be noted that management has placed enormous focus on leveraging opportunities related to people, products, and processes, and good progress has been made towards achieving other targets related to human resources, ESG and B-BBEE. The resolve, resilience and resourcefulness displayed by the management team in difficult trading conditions is commended.
Although key performance indicators can be further improved, the following successes are noteworthy:
- Group-wide working capital reduced by R76 million year on year;
- online sales as a percentage of Group sales continued to improve;
- management capacity in manufacturing and retail operations was strengthened;
- like-on-like cost growth was contained through cost leadership disciplines; and
- B-BBEE and transformation targets were achieved.
Areas of focus for improvement include increasing tile sales volumes, improving manufacturing productivity measures and improving customer experience.
EXECUTIVE PERFORMANCE IMPACT ON REMUNERATION
The outcome of the performance assessment directly impacts decisions on guaranteed pay, STIs and LTIs, as illustrated in the table below.
Description |
Assessment of performance |
Impact on executive remuneration |
|||
| Guaranteed basic salary | The rating for the CEO and CFO was 'under-achieved' due to the non-achievement of the financial targets. Good progress was made in other areas as noted above. |
Performance-based increases approved:
Due to the former CFO assuming a more complex portfolio as COO effective 1 July 2024, his basic salary was increased by 6,1%. The new CFO was appointed effective 1 July 2024. |
|||
| Short-term incentives ("STIs") |
0,25% of Group profit before tax is shared between the CEO and CFO on a shared unit basis:
The prescribed officer shares in a percentage of Ceramic's profit. Ceramic's profit share pool for senior management is 0,89% of profit before tax and the CEO is allocated 31,7% of the pool. |
Executives and the prescribed officer shared in profit as disclosed in the table below. Profit share across the Group is a core remuneration principle. As profits decrease, so does profit share, linking pay to performance. The pool remains constant unless the number of participants change. Group profit before tax decreased by 11%, and the direct impact on executive STIs can be seen in the like-on-like STI pool:
|
|||
| Long-term incentives ("LTIs") | Awarded to high-performing, high-potential employees, and executives in line with the Group's philosophy of partnership. LTIs are subject to performance conditions. Performance targets for each award are set by the Remuneration Committee. The targets include HEPS, ROIC and individual performance targets as appropriate, considering the role of the employee, and are weighted at the time of the award. |
Both executives and the prescribed officer share in LTIs as disclosed in this section of the report. New retention awards set out below were made to executives, the prescribed officer and the newly appointed CFO effective 30 August 2024:
|
BENCHMARKING OF GUARANTEED PAY AND STIs AND LTIs
A review of the industry and JSE benchmarks of executive remuneration was conducted during the year, looking at best practice and comparable companies in terms of market capitalisation ("cap") to ensure competitiveness while considering fairness and stakeholder expectations around executive pay.
The September 2023 executive directors' practices and remuneration trends report, published by PwC, shows the following Total guaranteed package ("TGP") for medium cap companies:
- CEOs: R6,55 million for the lower quartile and R10,45 million for the upper quartile; and
- CFOs: R3,70 million for the lower quartile and R6,20 million for the upper quartile.
Further internal sector benchmark reviews confirmed that Italtile provides more moderate executive base salaries relative to peers with similar market caps.
The Remuneration Committee approved zero increases to the basic salary of the CEO and the prescribed officer. Due to the CFO assuming a more complex portfolio as COO effective 1 July 2024, his basic salary was increased by 6,1%.
EXECUTIVE DIRECTORS' AND PRESCRIBED OFFICERS' PARTICIPATION IN SHARE INCENTIVE SCHEMES
Executive directors' holdings under the SARS are set out in the table below.
Changes in directors' interest in the stated share capital of the Company after financial year-end, as well as participation in share incentive schemes, were announced on SENS on 3 September 2024.
Directors' participation in share incentive schemes
Directors' holdings under the Share Appreciation Rights Scheme are set out in the table below:
| Executive director | Awards held at 1 July 2023 |
Awarded during the year |
Vested and exercised during the year |
Forfeited during the year |
Awards held at 30 June 2024 |
|---|---|---|---|---|---|
| B G Wood | 1 350 000 | – | – | (337 500) | 1 012 500 |
Note: Directors no longer participate in new awards under the Share Appreciation Rights Scheme but rather only in the Italtile Retention Scheme.
Directors' and prescribed officers' holdings under the Italtile Retention Scheme are set out in the table below:
| Executive director/prescribed officer | Awards held at 1 July 2023 |
Awarded during the year |
Vested and exercised during the year |
Forfeited during the year |
Awards held at 30 June 2024 |
|---|---|---|---|---|---|
| B G Wood | 1 500 000 | – | – | – | 1 500 000 |
| L A Foxcroft | 4 500 000 | – | – | – | 4 500 000 |
| G Maartens | 200 000 | – | – | – | 200 000 |
Prescribed officers' holdings under the Ceramic Industries Retention Scheme are set out in the table below:
| Prescribed officer | Awards held at 1 July 2023 |
Awarded during the year |
Vested and exercised during the year |
Forfeited during the year |
Awards held at 30 June 2024 |
|---|---|---|---|---|---|
| G Maartens | 20 161 | 15 000 | (2 661) | – | 32 500 |
Refer to note 6 for further details pertaining to these schemes.
Directors' remuneration
| All figures in R'000 | Salary | Short-term incentives | Provident fund and medical aid contributions |
Gain on share scheme awards |
Other | Total 2024 |
Total 2023 |
|
|---|---|---|---|---|---|---|---|---|
| Executive directors | ||||||||
| L A Foxcroft | 4 485 | 3 237 | 744 | 9 438 | 624 | 18 528 | 23 401 | |
| B G Wood | 3 000 | 2 158 | 497 | 3 146 | 528 | 9 329 | 10 439 | |
| 2024 | 7 485 | 5 394 | 1 240 | 12 584 | 1 152 | 27 857 | ||
| 2023 | 6 819 | 6 075 | 1 136 | 17 832 | 1 978 | 33 840 |
| All figures in R'000 | Salary | Short-term incentives |
Provident fund and medical aid contributions |
Gain on share scheme awards |
Other | Total 2024 |
Total 2023 |
|
|---|---|---|---|---|---|---|---|---|
| Prescribed officers | ||||||||
| G Maartens* | 3 000 | 1 698 | 834 | 148 | 396 | 6 076 | 1 309 | |
| T Molefakgotla** | – | – | – | – | – | – | 6 640 | |
| 2024 | 3 000 | 1 698 | 834 | 148 | 396 | 6 076 | ||
| 2023 | 2 879 | 3 935 | 703 | 44 | 388 | 7 949 |
| * | Appointed on 24 May 2023 as a prescribed officer. |
| ** | Resigned on 28 April 2023. |
NON-EXECUTIVE DIRECTORS' FEES
Payments to non-executive directors
| All figures in R'000 | Board fees | Other | Total 2024 |
Total 2023 |
|
|---|---|---|---|---|---|
| Non-executive directors | |||||
| L R Langenhoven | 3 124 | 7 | 3 131 | 416 | |
| G A M Ravazzotti | 468 | – | 468 | 2 050 | |
| S M du Toit | 777 | 3 | 780 | 960 | |
| S G Pretorius | 745 | – | 745 | 763 | |
| N P Khoza | 526 | 2 | 528 | 501 | |
| L C Prezens | 638 | 2 | 640 | 608 | |
| J N Potgieter | 370 | – | 370 | 370 | |
| A M Mathole | 483 | – | 483 | 473 | |
| 2024 | 7 131 | 14 | 7 145 | ||
| 2023 | 6 141 | – | 6 141 |
The following fixed fees (excluding VAT) were in place for the year under review:
| Basic annual fee | R131 000 | |
|---|---|---|
| Board meeting fee | R31 500 | |
| Committee fee | R26 500 | |
| Chairperson of Committee | R32 750 | |
| Strategy session | R38 000 | |
| Chairperson of the Board | R1 575 000 |
Hourly rate for ad hoc work, not exceeding 144 hours a year: R4 500 per hour.
BOARD MEETING ATTENDANCE OF EXECUTIVE DIRECTORS
Executive directors and prescribed officers do not draw any additional remuneration for attending the main Board or Committee meetings.
NON-BINDING ADVISORY VOTE
Shareholders are requested to cast a non-binding advisory vote on section 3 of this Remuneration report.
STAKEHOLDER ENGAGEMENT
We value our continued engagement with various stakeholders, and we endeavour to maintain our relationships with all in the hope that we will continue to receive their valued input.
APPROVAL
This Remuneration report was approved by the Board of directors of the Company on 20 September 2024.
