Remuneration

The human capital committee of the board ensures the evaluation and approval of a remuneration strategy, including market-related incentive schemes for executive and senior management..

Performance-linked short-term incentives

Annual performance bonuses are payable and are based on a combination of performance achieved in terms of profit growth and return on average net assets. Depending on seniority this bonus is limited to an amount that varies between 15% and 75% of a year’s remuneration package. An additional bonus, limited to one month’s remuneration package is payable to executive management if predetermined broad-based black economic empowerment goals are achieved.

Performance bonuses are also payable to other members of management, based on the achievement of personal goals, as well as Group, divisional or unit profit performance.

Long-term share incentive scheme

A share incentive scheme exists and the human resources committee annually determines the allocation to management. The last offer in terms of a share option scheme was in February 2007 at R31.42, the market price at the time. New allocations in terms of the share option scheme was discontinued in 2008 and replaced with a share appreciation rights plan. Subject to the terms and conditions of the share appreciation rights plan, selected employees will be granted the opportunity to acquire ordinary shares in future, with the quantum of their awards. This is based on the future increase in the value of the Pioneer Foods share price from date of allocation of such specific share appreciation rights. The number of share appreciation rights offered is based on exactly the same principles as applied in determining the number of share options offered in the discontinued scheme. It is based on a multiple of the total remuneration package per year that varies from half a year’s package up to three years’ package. The total value of share appreciation rights offered takes into account the value of share options and share appreciation rights offered in any past five years. The last offer under this scheme was made in January 2009 at R24.20. Share options and share appreciation rights that have been accepted may be traded at 20% per year within a maximum period of 10 years.

The total number of ordinary shares that may be transferred to employees under the share appreciation rights plan is limited to 14.5 million shares and represented approximately 7.5% of the issued ordinary shares at the date of approval of the plan by shareholders.