Human resources and remuneration committee and its role

The human resources and remuneration committee comprises only independent non-executive directors. Executive directors and certain members of management attend meetings by invitation. This committee met five times during the financial year. Details of attendance at meetings are provided here. 

The main responsibilities of the committee are as follows:

• Determine and approve the group’s general remuneration policy, 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 non-executive directors of the board and its subcommittees annually. Make proposals to the board for final approval by shareholders in the annual general meeting. Remuneration is approved by shareholders in advance.
• Fulfil delegated responsibilities on Naspers’s share-based incentive plans, eg appointing trustees and compliance officers.
• Approve the most senior appointments and promotions.
• 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 recommend required amendments.
• Approve amendments to the Naspers share-based incentive plans.
• Perform an annual self-assessment of the effectiveness of the committee, reporting these findings to the board.
• Review annually the charters of the group’s significant subsidiaries’ remuneration committees, and their annual assessment of compliance with these charters to establish if the Naspers committee can rely on the work of the subsidiary companies’ committees.

The committee fulfilled its remit during the year.

Remuneration strategy and policy

Naspers’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 policies and practices align the remuneration and incentives of executives and employees to the group’s long-term business strategy. Group companies are responsible for developing their own policies and benefits within the confines of the group remuneration policy and in accordance with their local laws and each company’s needs.

Primary objectives include the need to promote superior performance; direct employees’ energies towards key business goals; achieve the most effective returns for employee spend; address needs across differing cultures; and have credible remuneration policies.

Naspers has an integrated approach to its reward strategy, encompassing a balanced design in which reward components are aligned to the strategic direction and business-specific value drivers of Naspers.

Overview of remuneration

Non-executive directors 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 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 that have a dual listing on the JSE and an overseas securities exchange. Independent advice is acquired to review directors’ remuneration. This remuneration is not linked to the company’s share price or performance. Non-executive directors do not qualify for shares in terms of the group’s incentive schemes. The board annually recommends remuneration of non-executive directors for approval by shareholders in advance.

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 creative engineers to grow the value of the group. The remuneration policies strive to meet this objective. Accordingly, the focus is not primarily on guaranteed annual remuneration, but on individual incentive plans linked to creating shareholder value.

Naspers 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 reviewed annually and are monitored and compared with reported figures for similar positions to ensure they are fair and sensible. In some cases independent consultants provide benchmarks. We have no specific group policies to, for example, pay the median, as the requirements of a group serving a multitude of countries differ widely.

Annual bonus

Most executives have an annual bonus scheme that may comprise a variable component based on 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 group’s business plan, risk management policy and strategy. If targets are not met, no bonus is paid.

Long-term incentives

Long-term incentives are generally share-based incentive schemes for Naspers N shares and/or shares or appreciation rights in respective companies or subsidiaries. These awards normally vest over a period of four or five years and must be exercised within five to ten years from the date of grant. The shares/appreciation rights are not free. The employee is offered the shares/appreciation rights at market value on the day of the award. Employees benefit only if they, together with colleagues in that unit, can create additional value above the value on the date of issue. The various remuneration committees in the group annually review the share awards. In addition, if a particular group company employs people during the year, that remuneration committee may decide to make awards to those individuals. No awards of shares/appreciation rights are made during a closed period for trading, backdating awards is prohibited, there is no repricing and automatic regranting of underwater shares/appreciation rights. There is no automatic entitlement to bonuses or early vesting of share-based incentives should an executive leave the employ of the company.

The group operates numerous share-based incentive schemes, detailed in the notes to the annual financial statements enclosed with this report under equity compensation benefits.

Service contracts

Executives’ contracts generally are subject to terms and conditions of employment in the local jurisdiction. Top executive and non-executive directors’ contracts do not contain ‘golden parachute’ clauses.

Non-executive directors are subject to regulations on appointment and rotation in terms of the company’s articles of association/memorandum of incorporation and the South African Companies Act No 61 of 1973.