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Integrated annual report 2011 to the shareholders of Phuthuma Nathi Investments Limited

MultiChoice South Africa Holdings (Proprietary) Limited
Remuneration report

for the year ended 31 March 2011

Remuneration and equity committee and its role

The remuneration and equity committee comprises only non-executive directors. Executive directors and certain members of management attend meetings by invitation as appropriate. This committee met four times during the financial year.

The main responsibilities of the remuneration and equity committee are to:
  • Determine and approve general policy on strategic compensation issues, which must be tabled at each annual general meeting for a non-binding advisory vote by shareholders.
  • Prepare an annual remuneration report for inclusion in the company’s integrated annual report.
  • Review and approve annually the remuneration packages of the most senior executives, including incentive schemes and increases, ensuring they are appropriate and in line with the remuneration policy.
  • Annually appraise the performance of the chief executive.
  • Review the remuneration of nonexecutive directors of the board and its subcommittees annually.
  • Fulfil delegated responsibilities on share-based incentive plans, eg appointment of trustees and compliance officers.
  • Review incidents of unethical behaviour by senior managers and the chief executive.
  • Review annually the company’s code of ethics and business conduct.
  • Review annually the committee’s charter and, if appropriate, recommend required amendments for approval by the board.
  • Perform an annual self-assessment of the effectiveness of the committee, reporting these findings to the board of directors.

Remuneration strategy and policy

MultiChoice’s remuneration strategy aims to attract, motivate and retain competent leaders in its drive to create sustainable shareholder value. We aim to attract entrepreneurs and the best creative engineers to grow the value of the group and to recognise top performance.

Our remuneration policy and practices align the remuneration and incentives of executives and employees to the group’s long-term business strategy.

Primary objectives:
  • promote superior performance
  • direct employees’ energies towards key business goals
  • achieve the most effective returns for employee spend
  • address diverse needs across differing cultures, and have a credible remuneration policy.

MultiChoice has adopted an integrated approach to reward strategy, encompassing a balanced design, in which reward components are aligned to the strategic direction and businessspecific value drivers of MultiChoice.

Overview of remuneration

Non-executive directors of MultiChoice South Africa (Proprietary) Limited receive annual remuneration as opposed to a fee per meeting. This recognises the ongoing responsibility of directors for the efficient control of the company. This remuneration is augmented by compensation for services on the subcommittees of the board and boards of subsidiaries. A premium is payable to the chair of the board, as well as to the chairs of the subcommittees.

Remuneration is reviewed annually, with reference to competitors and companies of similar size to MultiChoice. Independent advice is acquired to review directors’ remuneration. This remuneration is not linked to the company’s performance. Non-executive directors do not qualify for allocation of shares in terms of the group’s incentive schemes. No remuneration is paid to directors of MultiChoice South Africa Holdings (Proprietary) Limited.

In remunerating executives, the group aims to attract, motivate and retain competent and committed leaders in its drive to create sustainable shareholder value. We aim to recognise top performance and attract entrepreneurs and the best engineers to grow the value of the group. The remuneration policy strives to meet this objective. Accordingly the focus is not primarily on guaranteed annual remuneration, but on individual incentive plans linked to the creation of shareholder value.

MultiChoice usually structures packages on a total cost to company basis (which incorporates base pay, car allowance, pension, medical aid and other optional benefits). In addition most executives qualify for individual and/or team performance incentives. At senior level we avoid standardised packages and aim to tailor compensation structure to the needs of the specific business. Remuneration packages are monitored and compared with reported figures for similar positions to ensure they are sensible.

Annual bonus

Most executives have an annual bonus scheme that may comprise a variable component based on achieving and surpassing financial and operational objectives, as well as fixed amounts for achieving specific discrete objectives. The incentive for each executive is agreed annually in advance. Incentives are based on targets that are verifiable and aligned to the business plan, risk management policy and strategy. If targets are not met, no bonus is paid.