BUSINESS REVIEW

Remuneration report

PART 1 – BACKGROUND STATEMENT

Dear shareholders

I am pleased to present the report for the remuneration and nominations committee ("Remcom") for the financial year ended 30 June 2018, highlighting the key issues considered during this period. The Remcom has considered the recommendations provided in the King IV Report on Corporate Governance for South Africa*, 2016 ("King IV") as well as the amended JSE Listings Requirements, and has incorporated a number of the recommended practices in this report. As we implement the principles and recommended practices of King IV, we are pleased to note that many aspects of our remuneration policy already align with the spirit of King IV.

This remuneration report is aligned to the reporting structure recommended in King IV and is presented in three parts, namely:

  • Part 1: this background statement;
  • Part 2: an overview of the remuneration policy; and
  • Part 3: the implementation of the policy for the last 12 months from 1 July 2017 to 30 June 2018.

We trust it will provide clarity on how the company's remuneration policy informs actual pay and awards received by the executive directors, prescribed officers and senior management and how it supports the company's strategy to attract and retain talent.

Notwithstanding constrained consumer spending, challenging trading conditions, including a decline in government travel, political uncertainty, negative investor sentiment given the current political and economic climate, depressed business confidence, drought, competitor activity including aggressive discounting, travel advisories and union demands, the company performed credibly.

Remcom contracted the services of PwC for the purpose of obtaining independent external advice on the company's remuneration policy and report and 21st Century Pay Solutions to assess and benchmark executive director and prescribed officer remuneration, and is of the view that both service providers were independent and objective.

Key areas of focus and decisions taken during the reporting period included:

  • Revision of the remuneration policy and remuneration report to align with King IV.
  • Revision of the Remcom terms of reference to align with King IV.
  • Benchmarking of executive committee ("Exco") remuneration to compare levels of pay to companies of comparable size and complexity, taking affordability, performance and economic conditions into account.
  • Approved increases to executive director and prescribed officer guaranteed packages, as well as the general salary increase for the remaining employees.
  • Approved short-term incentive payments.
  • Set the performance targets applicable to the long-term incentive ("LTI") schemes and approved awards to eligible management employees.
  • Performance testing and approval of vesting of the 2014 Share Appreciation Rights ("SAR") and 2014 Restricted Share Plan ("RSP").
  • Considered management's recommendations for non-executive director fees, and the fees for board sub-committees, prior to recommending to the board and then to shareholders for approval.
  • Reviewed the executive succession plan and structure and approved the revised structure and reporting lines, including executive director appointments to the board.
  • Reviewed and approved the remuneration report for inclusion in the integrated report.

    There have been no deviations from the remuneration policy and no substantial changes have been effected to the remuneration policy since it was last presented. There have, however, been enhancements specifically in respect of disclosure of certain pay elements.

Future areas of focus:

  • Continue to review remuneration practices with a view to ensuring that employees are fairly, equitably and responsibly remunerated and that the critical skills required to deliver on the company's strategic objectives and promote positive outcomes over the short, medium and long-term, are retained.
  • Engaging with shareholders on remuneration.
  • Benchmarking the remuneration policy against best practice.
  • Review of the short and long-term incentive schemes for relevance.

In alignment with a value creation and pay for performance culture, the company places a greater emphasis on variable pay for executive directors ("ED") and Exco, which the Remcom monitors on a continuous basis.

The committee remains committed to remunerating its employees fairly and responsibly.

King IV states that the remuneration of executive management should be fair and responsible in the context of overall employee remuneration. City Lodge is sensitive to the wage differential between executive and lower-income employees and acknowledges the need to address the gap between the remuneration of executives and lower level employees. The Remcom is cognisant of this concern as is evident from the award of higher percentage increases to employees at the lower end of the pay scale when compared with the average increase awarded to the ED and prescribed officers. Minimum wage earners have for the past three years received a higher increase than the average increase for Exco. City Lodge's minimum wage is 2,32 times more than the statutory minimum for the industry.

In an effort to find a balance between the interests of executives and shareholders, a significant portion of their pay is at risk and subject to stretching performance conditions.

However, given the challenges our industry faces, the committee recognises that in order to ensure a focused drive to meeting shareholder expectations, the company's top talent must be presented with a competitive value proposition in terms of total remuneration.

We are conscious of the importance of employee wellbeing in the workplace and consistently and continuously assess and review the remuneration policies in place. Part of our review involved the movement of the Group Life and Disability cover which resulted in enhanced employee benefits in terms of additional funeral, dread disease and educational cover. Benefits are reviewed annually to ensure the company is offering the best benefits, bearing affordability in mind.

At the annual general meeting held on 9 November 2017, 97,5% of shareholders represented or present, voted in favour of the remuneration policy.

In compliance with King IV and the JSE Listings Requirements, the remuneration policy and the implementation report respectively set out in parts 2 and 3 will be tabled at the forthcoming annual general meeting, scheduled for 8 November 2018, for separate non-binding advisory votes. In the event that the remuneration policy and/or implementation report are voted against by 25% or more of the voting rights exercised, we will undertake to engage with our shareholders in order to determine how to address their legitimate and reasonable concerns.

The Remcom is of the view that:

  • it has discharged its obligations as detailed in its terms of reference responsibly and that the principles advocated by King IV, the Companies Act, 2008 and the JSE Listings Requirements as well as the remuneration policy have been applied;
  • the remuneration policy and its implementation are appropriately aligned with the company's strategic objectives and stakeholder interests; and
  • the principles adopted are appropriate for guiding its decisions to fairly and responsibly remunerate executive directors and prescribed officers.

Assessed against King IV and the JSE Listings Requirements, the Remcom is satisfied with remuneration compliance.

F W J Kilbourn

Chairman of the remuneration committee

15 October 2018

* Copyright and trademarks are owned by the Institute of Directors Southern Africa NPC and all of its rights are reserved.

PART 2 – OVERVIEW OF THE REMUNERATION PHILOSOPHY AND POLICY

This report details the activities of the Remcom and provides an overview of the company's philosophy, principles and approach with regards to remuneration, specifically highlighting remuneration applicable to ED, Exco and non-executive directors ("NED"), as well as its implementation during the year. The remuneration policy will be put forward to shareholders in order to obtain a non-binding vote at the next annual general meeting. The full remuneration policy is available online at www.clhg.com

GOVERNANCE AND THE ROLE OF THE REMCOM

The Remcom is responsible for overseeing the governance of remuneration matters. It is specifically responsible for ensuring that the company remunerates its EDs and senior executives fairly and responsibly, and that the remuneration policies in place serve the company's long-term interests. In discharging its responsibility, Remcom reviews the remuneration policy and its implementation on an annual basis.

Remcom also considers management's recommendations, and in turn makes recommendations to the board on the fees payable to the NEDs, which recommendation is subject to shareholder approval.

Specifics with regard to the composition, role and responsibilities of the Remcom, activities undertaken during the year and the remuneration policy are disclosed here.

REMUNERATION POLICY

Reward philosophy and strategy statement

The company's policy is to pay its staff at a market rate comparable to similar roles within the market. On the basis that the ED and Exco's guaranteed package is benchmarked across industries, with reference to size and turnover, and in order to attract scarce and critical skills to implement the company's strategy and retain high-calibre individuals at this level, the company aims to set its guaranteed pay at the upper quartile. In respect of the remaining employees, the company aims between the mean and upper quartile within a normal distribution range of the relevant industry (hotels and hospitality).

City Lodge is committed to developing, implementing and upholding total reward strategies and practices which:

  • are fair and responsible and consistent with, and aligned to the vision, mission, values and business objectives of the company and to promote the achievement thereof;
  • pursue the best interests of the company, its shareholders and its internal and external stakeholder base;
  • offer an appropriate mix of fixed remuneration and variable remuneration, which includes short- term and long-term incentives;
  • are market-related;
  • are driven by, and show a commitment to, rewarding performance, integrity and quality innovation;
  • offer competitive benefits; and
  • articulate a distinctive value proposition for current and prospective employees.

Total reward strategy

The total reward strategy is aimed at:

  • providing an integrated approach for reward management that effectively attracts, motivates, engages and retains the talent required to achieve the desired business results;
  • aligning reward practices with business strategy through a process of analysis, thereby ensuring that they serve the business objectives; and
  • adhering to legal, ethical and best practice standards, and reflecting good corporate governance and citizenship by complying with and exceeding industry and statutory minimum standards.

Remuneration structure

The various components of remuneration applicable to South African employees are as follows:

Element of pay type     Purpose     Performance period     Performance measures     Settlement     Application
Fixed                              

Total guaranteed pay (“TGP”) (monthly salary, retirement funding based on pensionable salary, medical aid, death and disability cover)

   

The basis of the company’s ability to attract and retain the required skills.

Reflects the individual’s role and position.

   

Annually – 1 August to 31 July

   

Reviewed annually, having regard to the approved increase mandate, benchmark data received from independent remuneration consultants, where applicable, macro-economic factors, inflation, affordability, scarcity of skills, complexity of role, experience and performance.

   

Payment takes place monthly and comprises a mix of cash salary as well as compulsory and discretionary benefits.

   
  • Employees below manager level*/**
  • General managers*
  • Senior and head office management*
  • Exco
  • ED
Variable                              

Short-term incentive

Performance appraisal linked (“PAL”) bonus

   

Drive a “pay for performance” culture and reward the achievement of business objectives.

   

Bi-annually – 1 July to 31 December and 1 January to 30 June.

   

To create a performance culture and reward employees for achieving strong annual results when compared against predetermined targets and in so doing, aligning employee focus and shareholder experience.

   

Cash settlement capped at a percentage of GP depending on individual’s role.

The standard payout level is generally expressed as a percentage of salary and then moderated by the performance score.

   
  • Assistant general managers
  • General managers
  • Senior and head office managers

The merit of putting a qualifying employee forward for participation is debated between the divisional director of operations or head of division and the chief executive (“CE”), and once reviewed by the external auditors, qualifying candidates are recommended to Remcom for approval.

Executive committee performance management scheme (“ECPMS”)

   

Drive a “pay for performance” culture and reward the achievement of business objectives and in so doing aligns employee focus with shareholder expectations while simultaneously promoting retention through share ownership.

   

Financial measure: Bi-annually – 1 July to 31 December and 1 January to 30 June.

Non-financial measure: Annually – 1 July to 30 June.

   

Financial targets (65% weighting) are measured bi-annually with reference to the group average achieved for PAL.

Non-financial measures (35% weighting) comprise individual key performance areas (“KPA”), which in turn have reference to the group’s strategic objectives.

Targets for measuring the achievement of the non-financial performance criteria are individually tailored and are predetermined prior to the commencement of an incentive period, in consultation with the CE.

Achievement of these targets incrementally trigger awards.

  • Below target threshold: 0 points
  • Target threshold: 1 point
  • On-target: 5 points; and
  • Stretch target: 7 points
   

Financial measure: February and August

Non-financial measure: August

   
  • Exco

Executive director incentive scheme (“EDIS”)

   

Drive a “pay for performance” culture and reward the achievement of business objectives and in so doing aligns employee focus with shareholder expectations while simultaneously promoting retention through share ownership.

   

Annually – 1 July to 30 June.

   

Financial drivers (65% weighting) comprise the weighting assigned to the group pool drivers, namely normalised group EBITDA (70%) and normalised fully diluted HEPS (30%) with the percentage threshold performance scale reflecting a bonus rating of 75% if the percentage target achieved is 85% for EBITDA and 90% for HEPS.

The percentage target performance scale will reflect a bonus rating of 100% if the percentage target achieved is 100% for both EBITDA and HEPS.

The stretch performance scale will reflect a bonus rating of

  • 175% if the percentage target achieved is:
    • 110% for EBITDA; and
    • 115% for HEPS.
  • 250% if the percentage target achieved is:
    • 115% for EBITDA; and
    • 130% for HEPS.

Non-financial measures (35% weighting) include, but are not limited to, the achievement of, alternatively progress made towards the achievement of, strategic objectives, group performance against peers/competitor, increase in profit, completing projects within budget and/or prior to deadline and other key performance drivers of the business, eg ROE.

Scale used in evaluating achievement:

  • Threshold target percentage achieved = 80% of each driver.
  • On-target percentage achieved = 100% of each driver.
  • Stretch target percentage achieved = 120% of each driver.
    August    
  • ED

Long-term incentive

(“RSP” and “SAR”)

   

Aligns employee interests with shareholders’ interests.

   

Annual awards with three-year vesting periods and subject to vesting conditions being met.

   

RSP: earning of a bonus in the preceding financial year.

SAR: achievement of threshold or target performance conditions, measured over a three-year period and vesting only to the extent performance conditions are met.

   

Settlement takes place as directed by participant.

   

RSP:

  • General managers
  • Senior and head office management
  • Exco
  • ED

SAR:

  • Senior management
  • Exco
  • ED
* Thirteenth cheque over and above base pay and benefits.
** Employees’ share ownership opportunities exist through the 10th Anniversary Employees’ Share Trust and Injabulo Staff Trusts, subject to qualification criteria being met.

Re-pricing, re-granting and backdating of awards are prohibited. No awards are allocated or exercised during closed periods.

Bonus tables

The bonus achievable for each of the STI schemes are reflected in the tables below:

Bonus achievable percentage – PAL

Scale (total PAL score of 100%)

 

 

Assistant general managers – bonus % – half-yearly annual salary

 

General managers – bonus % – half-yearly annual salary

   

Head office management – bonus % – half-yearly annual salay

65% – 69%     2,5   5     Group average up to a maximum of 40%
70% – 74%     5   10    
75% – 79%     8,75   17,5    
80% – 84%     12,5   25    
85% – 89%     16,25   32,5    
90% – 95%+     20   40    

Bonus achievable – ECPMS

Overall PAL scale     Bonus % of half-annual TGP     Exco – bonus %
65% – 68%     10    

Financial element (65% of TGP): measured bi-annually with reference to the PAL group average
Non-financial element (35% of TGP): measured annually Total STI capped at 50%

69% – 72%     12,5    
73% – 76%     16,25    
77% – 80%     24,5    
+80%     32,5      

Table explanation:

  • If the group achieves an average PAL score below 65% then the payout percentage is 0% of 50% of total guaranteed package (“TGP”).
  • If the group achieves an average 65% to 68% PAL score for the relevant six-month period then the payout percentage is 10% of 50% of TGP.
  • If the group achieves an average 69% to 72% PAL score for the relevant six-month period then the payout percentage is 12,5% of 50% of TGP.
  • If the group achieves an average 73% to 76% PAL score for the relevant six-month period then the payout percentage is 16,25% of 50% of TGP.
  • If the group achieves an average 77% to 80% PAL score for the relevant six-month period then the payout percentage is 24,5% of 50% of TGP.
  • If the group achieves an average 80% PAL score or greater for the relevant six-month period then the payout percentage is 32,5% of 50% of TGP.

Bonus achievable – EDIS

  • Financial element (65% of TGP) achievement of HEPS/EBITDA.
  • Non-financial element (35% of TGP) comprises strategic objectives and other key performance drivers.
  • Bonus capped at 120% of TGP.

Long-term incentive (“LTI”)

      Share Appreciation Rights (“SAR”) Scheme     Restricted Share Plan (“RSP”)
Description    

Participants receive a conditional right to receive shares in the company, equal to the difference between the exercise price and the grant price multiplied by the number of SAR awards exercised.

   

Participants will receive a full share and become a shareholder on the award date, but subject to forfeiture in the event that the employee leaves the employment of the company within a specified period. These shares entitle participants to share in dividends and to exercise voting rights. However, the participant cannot sell or encumber the shares prior to vesting.

Purpose    

To attract, retain and incentivise employees.

   

To attract, retain and incentivise employees.

To provide selected employees with the opportunity of receiving shares in the company.

The RSP was initially used as a retention mechanism or as a tool to attract prospective employees, but is now being used as a tool to incentivise and retain employees.

Eligibility    

ED

Exco

Senior management

   

ED

Exco

Senior management

Head office management

General managers

Company limit    

The aggregate number of shares which may be allocated under the SAR and RSP at any time may not exceed 2 997 074 shares. This limit excludes shares purchased in the market and shares forfeited.

Individual limit    

The maximum number of shares which may be allocated to any one individual in respect of unvested SAR and RSP awards may not exceed 428 154 shares.

Settlement method    

The rules of the LTI plans cater for the following:

  • Market purchase of shares.
  • Issue/subscription of new shares.

However, the company’s preference is to settle all awards under the SAR and RSP from a market purchase of shares.

The rules of the RSP have been drafted more broadly to also include the use of treasury shares as a settlement method. As a fall-back provision, the employee may be paid cash in lieu of shares (“SARs”).

Termination of employment    

Participants terminating employment prior to the vesting date of a particular award will be classified as a good or bad leaver.

Bad leavers will forfeit all awards on the date of termination of employment.

In the case of good leavers, a pro rata portion of all unvested awards will vest on the date of termination of employment. The pro rata portion will reflect the number of months served since the date of grant and the extent to which the performance conditions (if any) have been met. The balance of the awards will lapse. In the case of the SAR, all vested awards should be exercised within six months from the date of termination of employment.

Change of control    

In the case of a change of control, a pro rata portion of all unvested awards will vest on the date of change of control.

The pro rata portion will reflect the number of months served since the date of grant and the extent to which the performance conditions (if any) have been met and are to be exercised within a period determined by Remcom.

Variation in share capital    

In the event of a variation in share capital, the participants will continue to participate in the various LTI plans. Remcom may, however, where the company’s value has been materially affected, make an adjustment to the number of awards to give a participant an equivalent fair value of the equity capital as to which he/she would have been entitled prior to the event.

Allocation methodology    

Annual, subject to the discretion of the Remcom.

SAR awards = (SAR face value % of TGP x TGP)/grant price.

   

Restricted shares: ad hoc, as determined by Remcom.

Bonus shares: annually, subject to the discretion of Remcom and subject to the earning of a cash bonus as measured against the defined performance criteria of the STI.

Value of bonus = bonus match % x total bonus.

Bonus shares = (individual bonus/total bonus)/number of bonus shares acquired.

Grant price    

The volume weighted average share price for the 10 business days prior to the date of grant.

    N/A
Vesting period    

Three years

   

Three years

Lapse period    

Seven years

   

N/A

Performance conditions    

Growth in normalised, fully diluted, headline earnings per share (“HEPS”). Two HEPS targets will be set:

  • Threshold – consumer price index (“CPI”) over the three-year performance period;
  • Target – CPI + 2 percentage points per annum over the threeyear performance period

25% will vest if threshold performance is achieved and 100% will vest if target performance is achieved. Linear vesting will occur between the threshold and the target.

   

The earning of an STI, which is subject to defined performance criteria, is the proxy for participation. No other performance conditions, save for continued employment, are imposed.

PACKAGE DESIGN FOR EXECUTIVE DIRECTORS AND PRESCRIBED OFFICERS

  • CEO (R’000)

    CEO (R’000)
  • CFO (R’000)

    CFO (R’000)
  • COO (R’000)

    COO (R’000)
  • Prescribed officers (R’000) (Ave)

    Prescribed officers (R’000) (Ave)

Due to the leveraged nature of the SAR and the difficulty in predicting the value thereof, it has been excluded from the LTI component.

Employee share ownership – City Lodge 10th Anniversary Employees’ Share Trust (“10th Anniversary Trust”) and Injabulo Staff Share Scheme (“Injabulo Trust”)

All employees not participating in the company’s LTI plans and who, at the relevant date, being the first day of the month following that during which the company pays its final dividend, have been in the full-time employ of the company for at least 12 months, are eligible to participate in the 10th Anniversary Trust and when it unwinds, the Injabulo Trust.

10th Anniversary Trust

The 10th Anniversary Trust holds approximately 1,17% of the company’s issued share capital, which was acquired through an interest-free loan from the company, the details of which can be found in the directors’ report.

The Injabulo Trust

The Injabulo Trust was established with the implementation of the City Lodge black economic empowerment transaction whereby the Vuwa special-purpose vehicle (“SPV”) and the University of Johannesburg School for Tourism and Hospitality (“the Hotel School”) together with the Staff Trust SPV acquired 15% of the company’s issued share capital. The Injabulo Trust is the sole shareholder of the Staff Trust SPV, which holds 5,87% of the company’s issued share capital. Notes 13 and 14 of the notes to the financial statements provides more information in this regard.

Subject to the provisions of the respective trust deeds, including, inter alia, funding arrangements, beneficiaries are entitled to the following:

  • A proportion of all dividends received.
  • A proportion of the growth in the value of the shares held, distributed in the form of shares.

No income and/or growth distributions will be made under the Injabulo Trust until the loan in respect of the shares held by the Staff Trust SPV has been repaid in full.

Service contracts and notice periods

There are no contractual arrangements applicable to the appointments and termination of the EDs or Exco.

All employees are issued with a letter of appointment detailing their remuneration as well as notice period, which is one month for all staff, except for general manager, head office managers and heads of departments where two months’ notice applies and Exco and EDs where three months’ notice applies.

With regards the ED and Exco:

  • no sign on, retention or restraint payments are made, save for in exceptional circumstances; and
  • on early termination of employment,
    o there is no automatic entitlement to:
    • bonus; and
    • share-based payments.
    o good leavers will be entitled to:
    • leave pay; and
    • pro-rated vesting of long-term incentives, if applicable.

NON-EXECUTIVE DIRECTORS (“NED”) REMUNERATION

Appointment and term

The appointment of directors is subject to election or re-election at the annual general meeting and is a matter for the board as a whole, assisted where appropriate by Remcom, and subject at all times to the approval of shareholders. Board appointments are governed by the Companies Act 2008, JSE Listings Requirements and the company’s MoI, which provide for at least one-third of the NEDs to retire by rotation at the company’s annual general meeting. The directors so retiring may, if eligible, offer themselves for re-election. Termination of office may occur at retirement age, alternatively will occur if a director is prohibited by law from being a director, fails to be re-elected, is found to be guilty of misconduct or fails to attend meetings without good reason, or poor performance.

NEDs do not have service contracts, but are issued with letters of appointment detailing, among other things, their responsibilities.

They do not participate in the company’s STI and LTI schemes.

Fees and basis of remuneration

Fees payable to the NEDs are reviewed annually and are not linked to the company’s share price or performance.

In recognition of their ongoing responsibilities and contribution outside of meetings, as well as historically good meeting attendance, NEDs receive an annual fee, not a base fee and fee per meeting attended. The same applies to sub-committees, with a premium being paid to the chairmen. The fee paid to the chairman of the board is inclusive of all board and committee attendances as well as other responsibilities across the group. Exceptional circumstances may present themselves which merit the establishment of a sub-committee of the board to investigate and advise the full board on a matter and justify payment of fees in addition to those paid to directors for their services. In compliance with the Companies Act, the company would, without the prior approval of shareholders, not be able to remunerate the members of the temporary/ad hoc committee for the extraordinary services rendered. Accordingly provision is made for payment of such fees.

In accordance with Binding General Rules 40 and 41 issued by SARS on 10 February 2017, effective 1 June 2017, NED fees will not be classified as remuneration and will therefore not be subject to mandatory PAYE and NEDs receiving cumulative NED fees in excess of R1 million in a 12 month period, will be obliged to register for and charge VAT on the fees earned.

The fee structure is as far as possible aligned with the market, taking cognisance of the size and market capitalisation of the various companies included in the sample, as well as macro-economic factors, CPI, the financial position of the company and additional responsibilities placed on board members by new legislation and corporate governance principles.

Based on management’s recommendations on fees, Remcom and in turn the board review and propose the same to shareholders at the annual general meeting. Fees are:

  • paid quarterly, in arrears, in cash; and
  • pro-rated in line with the period served in the case of appointments or resignations during a financial year.

The fee structure, as approved by shareholders, remains in place for the financial year.

Expenses

Travel, hotel and other expenses reasonably and necessarily incurred on company business is covered by the company, subject to production of the appropriate supporting documentation in accordance with the documented travel policy.

Premiums for directors and officers’ insurance cover are also paid by the company.

PART 3 – IMPLEMENTATION REPORT

GUARANTEED PAY REVIEW AND INCREASES

Guaranteed pay is reviewed annually taking the approved increase mandate, macro-economic factors and performance into account. Mandated increases take effect on 1 August.

Exco members are formally graded using the 21st Century Pay Solutions Execumeasure system (“Execumeasure”), as well as in terms of the Patterson grading model in an effort to ensure effective benchmarking.

The annual review of Exco’s fixed remuneration, which takes place between May and July of each year, is benchmarked to the market. In carrying out its mandate to promote fair and responsible remuneration, Remcom engaged the services of 21st Century Pay Solutions to benchmark and advise on the level of pay for Exco.

Remcom authorised Exco total cost of employment increases, effective 1 August 2018, of between 5% and 37,2% (2017: between 6% and 8%), which averaged out at 13,5%, with higher increases being awarded to certain packages which were either found to be lagging the market or following a change in responsibilities or promotion.

The board further, on recommendation of Remcom, approved a general salary increase of 6% for manager level employees (2017: 6,5%), 7% (2017: 7,25%) for minimum wage earners and 6,5% (2017: 7%) for the balance, with effect from 1 August 2018.

ACHIEVEMENT OF STI OUTCOMES

PAL bonus

Hotel performance averaged at 71,08% and 66,57% respectively for the two measurement periods, with only a few units achieving scores in excess of 80%. This translated into a group average pay out of 12,04% and 9,21% of half-annual salary respectively, reflective of challenging operating conditions.

ECPMS

Achievement of non-financial measures averaged at 16,25% of TGP.

EDIS

ED performance yielded an average bonus percentage payable of 14% of TGP for the year under review.

THE LONG-TERM INCENTIVES GRANTED AND AWARDED

There have been no changes to policies regarding SAR and RSP. The details of the allocations made during the financial year are set out as follows:

SAR Scheme

Annual awards are made with reference to the face value of the award and determined using the below formula:

  • TGP x set multiple = number of SARs to be allocated.
  • 126 768 awards were granted to 11 participants during the year ended 30 June 2018.

The following performance conditions were imposed:

Performance conditions

  • Threshold performance condition average annual percentage growth in normalised fully diluted headline earnings per share (“HEPS”) (as reported in the published annual financial statements for the year ended 30 June 2017, being 833,6 cents) over a three-year period exceeds the average annual growth in the consumer price index (“CPI”) per annum over the same three-year period.
  • Target performance condition average annual percentage growth in normalised fully diluted HEPS (as reported in the published annual financial statements for the year ended 30 June 2017, being 833,6 cents) over a three-year period exceeds the average annual growth in CPI + 2 percentage points per annum over the same three-year period.

RSP

The RSP operates in conjunction with the STI. There are no performance criteria other than the earning of a cash bonus as measured against the defined performance criteria of the STI and continued employment with the company.

In total, 29 943 shares were allocated to 53 participants during the financial year.

Employee share ownership – 10th Anniversary Share Trust

In total, 958 employees received a cash distribution of R2 090 from the 10th Anniversary Trust during the reporting period (2017: 925 employees received a cash distribution amounting to R2 485).

LTI VESTING OUTCOMES

Vesting of 2015 SAR Award

Following the non-achievement of the performance conditions imposed in respect of the 2015 grant, the Remcom confirmed that the performance conditions have not been achieved and as a result the 2015 SAR award did not vest.

TOTAL REMUNERATION OUTCOMES

The composition of remuneration outcomes during the 2018 financial year for the executive directors and prescribed officers are represented graphically below

Actual (R000)
Actual (R000)

TERMINATION OF OFFICE PAYMENTS

No termination payments were made during the year.

DETAILS OF REMUNERATION PAID

The remuneration of executive directors and prescribed officers of City Lodge for the past two financial years is displayed in the following tables.

  2017  
R000 Basic
salary
Perform-
ance
bonus
Fringe
benefits
and
allowances
Pension
fund
contri-
butions
Total
annual
remuner-
ation
LTI
reflected1, 2
Total
single
figure of
remuner-
ation
 
Executive directors
               
C Ross 4 478 1 801 439 717 7 435 2 036 9 471  
A C Widegger 3 467 1 387 34 555 5 443 1 431 6 874  
  7 945 3 188 473 1 272 12 878 3 467 16 345  
Prescribed officers
               
A J Balabanoff 1 839 365 185 294 2 683 305 2 988  
A W Dooley 1 549 590 32 163 2 334 370 2 704  
Z Jantjies  
M S Kobilski 1 565 374 133 250 2 322 283 2 605  
N R B Parbhoo 1 338 415 29 214 1 996 282 2 278  
R V Phinn 1 747 257 27 279 2 310 250 2 560  
R Ruthven 1 176 257 58 123 1 614 203 1 817  
L G Siddo 1 562 340 5 164 2 071 136 2 207  
P M Schoeman 1 033 109 10 108 1 260 44 1 304  
P Tate 1 863 365 17 298 2 543 305 2 848  
M van Heerden 1 311 430 61 138 1 940 285 2 225  
  14 983 3 502 557 2 031 21 073 2 463 23 536  
1 The SARs granted on 1 September 2014 with performance period ended on 30 June 2017 are included in the LTIP reflected for 2017 at the intrinsic value of R26,97 per share based on 100% of the awards vesting.
2 The value of the bonus shares awarded in 2017 on the basis of performance for the 2017 financial year is reflected in the 2017 single figure of remuneration.

  2018  
R000 Basic
salary
Perfor-
mance
bonus
Fringe
benefits
and
allowances
Pension
fund
contri-
butions
Total
annual
remuner-
ation
LTI 
reflected3, 4
Total
single
figure of
remunera-
tion
 
Executive directors                
C Ross 4 756 701 63 761 6 281 351 6 632  
A C Widegger 3 679 701 37 589 5 006 351 5 357  
  8 435 1 402 100 1 350 11 287 702 11 989  
Prescribed officers                
A J Balabanoff 1 953 347 41 313 2 654 139 2 793  
A W Dooley 1 645 486 32 173 2 336 194 2 530  
Z Jantjies 390 100 10 23 523 40 563  
M S Kobilski 1 660 375 2 266 2 303 150 2 453  
N R B Parbhoo 1 427 271 29 228 1 955 109 2 064  
R V Phinn 1 861 340 173 298 2 672 136 2 808  
R Ruthven 1 269 422 58 133 1 882 169 2 051  
L G Siddo 1 686 242 9 177 2 114 97 2 211  
P Tate 1 977 371 17 316 2 681 148 2 829  
M van Heerden 1 413 338 61 148 1 960 135 2 095  
  15 281 3 292 432 2 075 21 080 1 317 22 397  
3 The SARs granted on 1 September 2015 with performance period ended on 30 June 2018 are included in the LTIP reflected for 2018 at the intrinsic value of Rnil per share based on 0% of the awards vesting.
4 The value of the bonus shares awarded in 2018 on the basis of performance for the 2018 financial year is reflected in the 2018 single figure of remuneration.

SCHEDULE OF UNVESTED AWARDS AND CASH FLOW ON SETTLEMENT

  2017  
Awards per grant date Opening
number on
1 July 2016
Granted
during
2017
Forfeited/
lapsed
during
2017
Exercised/ 
settled 
during 
2017 
Closing
number on
30 June
2017
Cash value  
received  
during the  
year8
Closing 
estimated 
fair value at 
30 June 
2017
8, 9, 10, 11, 12, 13
 
  Number
of
awards
Number
of
awards
Number
of
awards
Number 
of 
awards 
Number
of
awards
ZAR ZAR  
Executive director                
C Ross                
Share appreciation rights5                
1/9/2011  79 163  –  –  (79 163) –  7 234 707       
1/9/2012  92 313  –  –  (92 313) –  6 400 983       
1/9/20136  39 929  –  –  –  39 929  –  1 170 247    
1/9/20147  42 108  –  –  –  42 108  –  1 135 577    
1/9/2015  39 081  –  –  –  39 081  –  1 607 892    
1/9/2016     36 812  –  –  36 812  –  1 407 260    
1/9/2017                         
Restricted Share Plan – bonus shares5                         
6/9/2013  10 221  –  –  (10 221) –  1 665 512       
8/10/2014  11 386  –  –  –  11 386  59 207  1 709 474    
4/9/2015  11 488  –  –  –  11 488  59 738  1 724 788    
5/9/2016  10 210  –  –  –  10 210  27 771  1 532 911    
15/9/2017                         
Executive Share Incentive Scheme                         
9/11/2006  52 650  –  –  (52 650) –  4 947 287       
8/5/2007  28 000  –  –  (28 000) –  2 132 002       
Total                 22 527 207  10 288 149    

  2018  
  Granted
during
2018
Forfeited/
lapsed
during
2018
Exercised/ 
settled 
during 
2018 
Closing
number on
30 June
2018
Cash value  
received  
during the  
year8
Closing
fair value
at 30 June
2018
14, 15, 16, 17, 18, 19
 
  Number
of
awards
Number
of
awards
Number 
of 
awards 
Number
of
awards
ZAR ZAR  
Executive director              
C Ross              
Share appreciation rights5              
1/9/2011              
1/9/2012              
1/9/20136  –  –  (39 929) –  1 458 606       
1/9/20147   –  –  (42 108) –  1 439 673       
1/9/2015  –  (2 171) –  36 910  –    
1/9/2016  –  (14 316) –  22 496  –  410 640   
1/9/2017  47 111  (34 025) –  13 086  –  659 924   
Restricted Share Plan – bonus shares5                      
6/9/2013                      
8/10/2014  –  –  (11 386) –  1 551 570    
4/9/2015  –  –  –  11 488  55 257  1 734 099   
5/9/2016  –  –  –  10 210  49 110  1 541 187   
15/9/2017  6 337  –  –  6 337  16 033  956 562   
Executive Share Incentive Scheme                      
9/11/2006                      
8/5/2007                      
Total              4 570 249  5 302 412   
5 Vesting will be assessed three years from the grant of the awards.
6 The SARs granted on 1 September 2013 vested during the 2017 financial year.
7 The SARs granted on 1 September 2014 vested during the 2018 financial year.
8 The cash value received includes the value participants receive on the vesting/exercise of awards as well as dividends received on outstanding awards.
9 The SARs granted on 1 September 2013 are included at an intrinsic value of R29,31 per instrument which includes an estimate of 100% of performance conditions being met.
10 The SARs granted on 1 September 2014 are included at an intrinsic value of R26,97 per instrument which includes an estimate of 100% of performance conditions being met.
11 The SARs granted on 1 September 2015 are included at an estimated fair value based on an indicative valuation at R41,14 per instrument which includes an estimate of 100% of performance conditions being met.
12 The SARs granted on 1 September 2016 are included at an estimated fair value based on an indicative valuation at R38,23 per instrument which includes an estimate of 100% of performance conditions being met.
13 The restricted bonus shares granted in 2014, 2015 and 2016 are included at the 20-day VWAP of R150,14 at year-end and an estimated 100% vesting.
14 The SARs granted on 1 September 2013 are included at an intrinsic value of R30,12 per instrument which includes an estimate of 100% of performance conditions being met.
15 The SARs granted on 1 September 2014 are included at an intrinsic value of R27,78 per instrument which includes an estimate of 100% of performance conditions being met.
16 The SARs granted on 1 September 2015 are included at an intrinsic value of Rnil per instrument which includes an estimate of 0% of performance conditions being met.
17 The SARs granted on 1 September 2016 are included at an estimated fair value based on an indicative valuation at R18,25 per instrument which includes an estimate of 50% of performance conditions being me
18 The SARs granted on 1 September 2016 are included at an estimated fair value based on an indicative valuation at R50,43 per instrument which includes an estimate of 100% of performance conditions being met.
19 The restricted bonus shares granted in 2015, 2016 and 2017 are included at the 20-day VWAP of R150,95 at year-end and an estimated 100% vesting.

  2017  
Name Opening
number on
1 July 2016
Granted
during
2017
Forfeited/
lapsed
during
2017
Exercised/ 
settled 
during 
2017 
Closing
number on
30 June
2017
Cash value  
received  
during the  
year8
Closing 
estimated 
fair value at 
30 June 
2017
8, 9, 10, 11, 12, 13
 
  Number
of
awards
Number
of
awards
Number
of
awards
Number 
of 
awards 
Number
of
awards
ZAR ZAR  
Executive director                
A C Widegger                
Share appreciation rights5                
1/9/2010 39 155 (39 155) 3 147 279    
1/9/2011 53 905 –  53 905 4 664 303   
1/9/2012 62 110 –  62 110 4 004 741   
1/9/20136 26 136 –  26 136 765 999   
1/9/20147 27 359  –  27 359 737 823   
1/9/2015 25 207 –  25 207 1 037 080   
1/9/2016   23 633 –  23 633 903 449   
1/9/2017                
Restricted Share Plan – bonus shares5                
6/9/2013 8 253 (8 253) 1 344 826    
8/10/2014 9 020 –  9 020 46 904 1 354 247   
4/9/2015 9 016 –  9 016 46 883 1 353 646   
5/9/2016 7 902 –  7 902 21 493 1 186 392   
15/9/2017                
Executive Share Incentive Scheme                
9/11/2006 31 590 (31 590) 2 985 571    
8/5/2007 16 800 (16 800) 1 254 624    
Total           8 847 580 16 007 680   
     
  2018  
  Granted
during
2018
Forfeited/
lapsed
during
2018
Exercised/ 
settled 
during 
2018 
Closing
number on
30 June
2018
Cash value  
received  
during the  
year8
Closing
fair value
at 30 June
2018
14, 15, 16, 17, 18, 19
 
  Number
of
awards
Number
of
awards
Number 
of 
awards 
Number
of
awards
ZAR ZAR  
Executive director              
A C Widegger              
Share appreciation rights5              
1/9/2010              
1/9/2011 (53 905) 4 894 035    
1/9/2012 –  62 110 4 055 084  
1/9/20136 –  26 136 787 183  
1/9/20147 –  27 359 759 999  
1/9/2015 –  25 207  
1/9/2016 –  23 633 431 395  
1/9/2017 30 245 –  30 245 1 525 249  
Restricted Share Plan – bonus shares5              
6/9/2013              
8/10/2014 (9 020) 1 229 155    
4/9/2015 –  9 016 43 367 1 360 954  
5/9/2016 –  7 902 38 009 1 192 797  
15/9/2017 4 882 –  4 882 12 351 736 932  
Executive Share Incentive Scheme              
9/11/2006              
8/5/2007              
Total         6 216 917 10 849 593  

  2017  
Name Opening
number on
1 July 2016
Granted
during
2017
Forfeited/
lapsed
during
2017
Exercised/ 
settled 
during 
2017 
Closing
number on
30 June
2017
Cash value  
received  
during the  
year8
Closing 
estimated 
fair value at 
30 June 
2017
8, 9, 10, 11, 12, 13
 
  Number
of
awards
Number
of
awards
Number
of
awards
Number 
of 
awards 
Number
of
awards
ZAR ZAR  
Divisional director                
A J Balabanoff                
Share appreciation rights5                
1/9/2010 9 000 –  9 000 679 664   
1/9/2012 9 000 –  9 000 580 304   
1/9/20136 5 633 –  5 633 165 093   
1/9/20147 5 912 –  5 912 159 436   
1/9/2015 5 413 –  5 413 222 705   
1/9/2016   5 075 –  5 075 194 009   
1/9/2017                
Restricted Share Plan – bonus shares5                
6/9/2013 1 277 (1 277) 208 087    
8/10/2014 1 594 –  1 594 8 289 239 320   
4/9/2015 2 242 –  2 242 11 658 336 610   
5/9/2016 1 492 –  1 492 4 058 224 006   
15/9/2016                
Executive Share Incentive Scheme                
8/5/2007 6 800 (6 800) 497 869    
15/8/2007 2 200 (2 200) 186 437    
Total           916 398 2 801 147   
Divisional director                
A W Dooley                
Share appreciation rights5                
1/9/20136 4 651 –  4 651 136 312   
1/9/20147 4 973 –  4 973 134 113   
1/9/2015 4 552 –  4 552 187 281   
1/9/2016   4 268 –  4 268 163 158   
1/9/2017                
Restricted Share Plan – bonus shares5                
6/9/2013 969 (969) 157 899    
8/10/2014 1 432 –  1 432 7 446 214 998   
4/9/2015 1 824 –  1 824 9 485 273 852   
5/9/2016 1 085 –  1 085 2 951 162 900   
15/9/2017                
Total           177 781 1 272 614   
     
  2018  
  Granted
during
2018
Forfeited/
lapsed
during
2018
Exercised/ 
settled 
during 
2018 
Closing
number on
30 June
2018
Cash value  
received  
during the  
year8
Closing
fair value
at 30 June
2018
14, 15, 16, 17, 18, 19
 
  Number
of
awards
Number
of
awards
Number 
of 
awards 
Number
of
awards
ZAR ZAR  
Divisional director              
A J Balabanoff              
Share appreciation rights5              
1/9/2010 (9 000) 559 260    
1/9/2012 –  9 000 587 599  
1/9/20136 –  5 633 169 659  
1/9/20147 –  5 912 164 228  
1/9/2015 –  5 413  
1/9/2016 –  5 075 92 639  
1/9/2017 6 495 –  6 495 327 541  
Restricted Share Plan – bonus shares5              
6/9/2013              
8/10/2014 (1 594) 217 214    
4/9/2015 –  2 242 10 784 338 427  
5/9/2016 –  1 492 7 177 225 216  
15/9/2016 1 027 –  1 027 2 598 155 024  
Executive Share Incentive Scheme              
8/5/2007              
15/8/2007              
Total         797 033 2 060 333  
Divisional director              
A W Dooley              
Share appreciation rights5              
1/9/20136 4 651  199 109    
1/9/20147 4 973  201 257    
1/9/2015 –  4 552  
1/9/2016 –  4 268 77 908  
1/9/2017 5 462 –  5 462 275 447  
Restricted Share Plan – bonus shares5              
6/9/2013              
8/10/2014 (1 432) 195 139    
4/9/2015 –  1 824 8 773 275 331  
5/9/2016 –  1 085 5 219 163 779  
15/9/2017 1 661 –  1 661 4 202 250 726  
Total         613 699 1 043 191  

  2017  
Name Opening
number on
1 July 2016
Granted
during
2017
Forfeited/
lapsed
during
2017
Exercised/ 
settled 
during 
2017 
Closing
number on
30 June
2017
Cash value  
received  
during the  
year8
Closing 
estimated 
fair value at 
30 June 
2017
8, 9, 10, 11, 12, 13
 
  Number
of
awards
Number
of
awards
Number
of
awards
Number 
of 
awards 
Number
of
awards
ZAR ZAR  
Divisional director                
M S Kobilski                
Share appreciation rights5                
1/9/20136 4 726 –  4 726   138 511   
1/9/20147 4 937 –  4 937 133 142   
1/9/2015 4 519 –  4 519 185 923   
1/9/2016   4 237 –  4 237 161 973   
1/9/2017                
Restricted Share Plan – bonus shares5                
6/9/2013 1 056 (1 056) 172 075    
8/10/2014 1 455 –  1 455 7 566 218 451   
4/9/2015 1 622 –  1 622 8 434 243 524   
5/9/2016   1 377 –  1 377 3 745 206 740   
15/9/2017                
Executive Share Incentive Scheme                
8/5/2007 4 200 (4 200) 276 822    
15/8/2007 1 400 (1 400) 97 482    
Total           566 124 1 288 264   
Divisional director                
N R B Parbhoo                
Share appreciation rights5                
1/9/2010 6 000 –  6 000 453 109   
1/9/2012 6 000 –  6 000 386 869   
1/9/20136 4 117 –  4 117 120 662   
1/9/20147 4 301 –  4 301 115 990   
1/9/2015 3 936 –  3 936 161 937   
1/9/2016   3 691 –  3 691 141 101   
1/9/2017                
Restricted Share Plan – bonus shares5                
6/9/2013 898 (898) 146 329    
8/10/2014 1 267 –  1 267 6 588 190 225   
4/9/2015 1 256 –  1 256 6 531 188 574   
5/9/2016   962 –  962 2 617 144 433   
15/9/2017                
Executive Share Incentive Scheme                
15/3/2007 4 000 (4 000) 320 280    
Total           482 345 1 902 900   
   
  2018  
  Granted
during
2018
Forfeited/
lapsed
during
2018
Exercised/
settled
during
2018
Closing
number on
30 June
2018
Cash value  
received  
during the  
year8
Closing
fair value
at 30 June
2018
14, 15, 16, 17, 18, 19
 
  Number
of
awards
Number
of
awards
Number
of
awards
Number
of
awards
ZAR ZAR  
Divisional director              
M S Kobilski              
Share appreciation rights5              
1/9/20136 –  4 726 142 341  
1/9/20147 –  4 937 137 144  
1/9/2015 –  4 519  
1/9/2016 –  4 237 77 342  
1/9/2017 5 423 –  5 423 273 481  
Restricted Share Plan – bonus shares5              
6/9/2013              
8/10/2014 (1 455) 198 273    
4/9/2015 –  1 622 7 802 244 839  
5/9/2016     1 377 6 623 207 856  
15/9/2017 1 054 –  1 054 2 667 159 100  
Executive Share Incentive Scheme              
8/5/2007              
15/8/2007              
Total         215 365 1 242 103  
Divisional director              
N R B Parbhoo              
Share appreciation rights5              
1/9/2010 (6 000) 373 020    
1/9/2012 –  6 000 391 732  
1/9/20136 –  4 117 123 999  
1/9/20147 –  4 301 119 476  
1/9/2015 –  3 936  
1/9/2016 –  3 691 67 375  
1/9/2017 4 745   4 745 239 289  
Restricted Share Plan – bonus shares5              
6/9/2013              
8/10/2014 (1 267) 172 654    
4/9/2015 –  1 256 6 041 189 592  
5/9/2016 –  962 4 627 145 213  
15/9/2017 1 168 –  1 168 2 955 176 308  
Executive Share Incentive Scheme              
15/3/2007              
Total         559 297 1 452 984  

  2017
Name Opening
number on
1 July 2016
Granted
during
2017
Forfeited/
lapsed
during
2017
Exercised/
settled
during
2017
Closing
number on
30 June
2017
Cash value  
received  
during the  
year8
Closing 
estimated 
fair value at 
30 June 
2017
8, 9, 10, 11, 12, 13
 
  Number
of
awards
Number
of
awards
Number
of
awards
Number
of
awards
Number
of
awards
ZAR ZAR  
Divisional director                
R V Phinn                
Share appreciation rights5                
1/9/20136 5 048 –  5 048 147 948   
1/9/20147 5 448 –  5 448 146 923   
1/9/2015 5 056 –  5 056 208 017   
1/9/2016   4 785 –  4 785 182 922   
1/9/2017                
Restricted Share Plan – bonus shares5                
6/9/2013 1 009 (1 009) 164 417    
8/10/2014 1 428 –  1 428 7 426 214 397   
4/9/2015 2 094 –  2 094 10 889 314 389   
5/9/2016   1 362 –  1 362 3 705 204 488   
15/9/2017                
Total           186 437 1 419 084   
Divisional director                
R Ruthven                
Share appreciation rights5                
1/9/20136 3 957 –  3 957 115 973   
1/9/20147 3 711 –  3 711 100 079   
1/9/2015 3 421 –  3 421 140 749   
1/9/2016   3 326 –  3 326 127 147   
1/9/2017                
Restricted Share Plan – bonus shares5                
8/10/2014 414 –  414 2 153 62 157   
4/9/2015 607 –  607 3 156 91 134   
5/9/2016   496 –  496 1 349 74 469   
15/9/2017              
Total           6 658 711 708   
     
  2018  
  Granted
during
2018
Forfeited/
lapsed
during
2018
Exercised/
settled
during
2018
Closing
number on
30 June
2018
Cash value  
received  
during the  
year8
Closing
fair value
at 30 June
2018
14, 15, 16, 17, 18, 19
 
  Number
of
awards
Number
of
awards
Number
of
awards
Number
of
awards
ZAR ZAR  
Divisional director              
R V Phinn              
Share appreciation rights5              
1/9/20136 –  5 048 152 039  
1/9/20147 –  5 448 151 339  
1/9/2015 –  5 056  
1/9/2016 –  4 785 87 345  
1/9/2017 6 152 –  6 152 310 244  
Restricted Share Plan – bonus shares5              
6/9/2013              
8/10/2014 (1 428) 194 594    
4/9/2015 –  2 094 10 072 316 087  
5/9/2016 –  1 362 6 551 205 592  
15/9/2017 723 –  723 1 829 109 136  
Total         213 046 1 331 782  
Divisional director              
R Ruthven              
Share appreciation rights5              
1/9/20136 3 957  169 399    
1/9/20147 3 711  150 184    
1/9/2015 –  3 421  
1/9/2016 –  3 326 60 713  
1/9/2017 4 317 –  4 317 217 705  
Restricted Share Plan – bonus shares5              
8/10/2014 (414) 56 416    
4/9/2015 –  607 2 920 91 626  
5/9/2016 –  496 2 386 74 871  
15/9/2017 723 –  723 1 829 109 136  
Total         383 134 554 051  


  2017  
Name Opening
number on
1 July 2016
Granted
during
2017
Forfeited/
lapsed
during
2017
Exercised/
settled
during
2017
Closing
number on
30 June
2017
Cash value  
received  
during the  
year8
Closing 
estimated 
fair value at 
30 June 
2017
8, 9, 10, 11, 12, 13
 
  Number
of
awards
Number
of
awards
Number
of
awards
Number
of
awards
Number
of
awards
ZAR ZAR  
Divisional director                
L G Siddo                
Share appreciation rights5                
1/9/2016   8 136 –  8 136 311 025   
1/9/2017                
Restricted Share Plan – bonus shares5                
5/9/2016   595 –  595 1 618 89 332   
15/9/2017                
Total           1 618 400 357   
Divisional director                
P Tate                
Share appreciation rights5                
1/9/2010 9 000     (9 000) 692 010    
1/9/2011 9 000 (9 000) 791 100    
1/9/2012 9 000   9 000    
1/9/20136 5 633 –  5 633 165 093   
1/9/20147 5 912 –  5 912 159 436   
1/9/2015 5 413 –  5 413 222 705   
1/9/2016   5 075 –  5 075 194 009   
1/9/2017                
Restricted Share Plan – bonus shares5                
6/9/2013 1 249 (1 249) 203 525    
8/10/2014 1 594 –  1 594 8 289 239 320   
4/9/2015 2 143 –  2 143 11 144 321 746   
5/9/2016   1 306 –  1 306 3 552 196 080   
15/9/2017                
Executive Share Incentive Scheme                
8/5/2007 6 800 (6 800) 481 372    
15/8/2007 2 200 (2 200) 163 922    
Total           2 354 914 1 498 389   
 
  2018  
  Granted
during
2018
Forfeited/
lapsed
during
2018
Exercised/
settled
during
2018
Closing
number on
30 June
2018
Cash value  
received  
during the  
year8
Closing
fair value
at 30 June
2018
14, 15, 16, 17, 18, 19
 
  Number
of
awards
Number
of
awards
Number
of
awards
Number
of
awards
ZAR ZAR  
Divisional director              
L G Siddo              
Share appreciation rights5              
1/9/2016 –  8 136 148 514  
1/9/2017 5 535 –  5 535 279 129  
Restricted Share Plan – bonus shares5              
5/9/2016 –  595 2 862 89 814  
15/9/2017 957 –  957 2 421 144 458  
Total         5 283 661 915  
Divisional director              
P Tate              
Share appreciation rights5              
1/9/2010              
1/9/2011              
1/9/2012 –  9 000 587 599  
1/9/20136 –  5 633 169 659  
1/9/20147 –  5 912 164 228  
1/9/2015 –  5 413  
1/9/2016 –  5 075 92 639  
1/9/2017 6 495   6 495 327 541  
Restricted Share Plan – bonus shares5              
6/9/2013              
8/10/2014 (1 594) 217 214  
4/9/2015 –  2 143 10 308 323 483  
5/9/2016 –  1 306 6 282 197 139  
15/9/2017 1 027 –  1 027 2 598 155 024  
Executive Share Incentive Scheme              
8/5/2007              
15/8/2007              
Total         236 402 2 017 312  

  2017  
Name Opening
number on
1 July 2016
Granted
during
2017
Forfeited/
lapsed
during
2017
Exercised/
settled
during
2017
Closing
number on
30 June
2017
Cash value  
received  
during the  
year8
Closing 
estimated 
fair value at 
30 June 
2017
8, 9, 10, 11, 12, 13
 
  Number
of
awards
Number
of
awards
Number
of
awards
Number
of
awards
Number
of
awards
ZAR ZAR  
Group company secretary                
M van Heerden                
Share appreciation rights5                
1/9/20136 3 965 –  –  3 965   116 207   
1/9/20147 4 200 –  –  4 200 113 266  
1/9/2015 3 899 –  –  3 899 160 415  
1/9/2016   3 689 –  –  3 689 141 024  
1/9/2017                
Restricted Share Plan – bonus shares5                
6/9/2013 396 –  (396) 64 528    
8/10/2014 480 –  –  480 2 496 72 066  
4/9/2015 686 –  –  686 3 567 102 995  
5/9/2016   557 –  –  557 1 515 83 627  
15/9/2017                
Total           72 106 789 600  
Divisional director                
P Schoeman – resigned during the year                
Share appreciation rights5                
1/9/20136 4 726 –  (4 726) 187 528  
1/9/20147 4 937 (4 937) –   
1/9/2015 4 519 (4 519) –   
1/9/2016 4 237 (4 237) –   
Restricted Share Plan – bonus shares5                
6/9/2013 1 046 –  (1 046) 170 446    
8/10/2014 1 337 (1 337) –  3 316    
4/9/2015 1 650 (1 650) –  4 092    
5/9/2016   1 155 (1 155) –   
15/9/2017                
Executive Share Incentive Scheme                
8/5/2007 4 200 –  (4 200) 339 234  
Total           704 616  
     
  2018  
  Granted
during
2018
Forfeited/
lapsed
during
2018
Exercised/
settled
during
2018
Closing
number on
30 June
2018
Cash value  
received  
during the  
year8
Closing
fair value
at 30 June
2018
14, 15, 16, 17, 18, 19
 
  Number
of
awards
Number
of
awards
Number
of
awards
Number
of
awards
ZAR ZAR  
Group company secretary              
M van Heerden              
Share appreciation rights5              
1/9/20136 –  3 965 119 421  
1/9/20147 –  4 200 116 671  
1/9/2015 –  3 899  
1/9/2016 –  3 689 67 339  
1/9/2017 4 788 –  4 788 241 458  
Restricted Share Plan – bonus shares5              
6/9/2013              
8/10/2014 (480) 65 410    
4/9/2015 –  686 3 300 103 551  
5/9/2016 –  557 2 679 84 078  
15/9/2017 1 211 –  1 211 3 064 182 799  
Total         74 453 915 317  

NON-EXECUTIVE DIRECTORS (“NEDs”)

(Refer to special resolution number 1 in the notice of AGM, detailing non-executive director fees)

The fees currently paid, as approved by shareholders at the annual general meeting held on 9 November 2017, together with the proposed fees for the 2018/2019 financial year, reflecting a 5% increase in fees payable, are detailed hereunder.

  1 July  
2018  
per annum*
(R) 
      1 July
2017
per annum
(R)
  (%)  
Services as a director 247 170       235 400   5  
Chairman of audit committee 173 250       165 000   5  
Other audit committee members 79 695       75 900   5  
Chairman of remuneration and nominations committee 152 933       145 650   5  
Other remuneration and nominations committee members 69 050       65 800   5  
Chairman of the risk committee 118 545       112 900   5  
Other risk committee members 54 075       51 500   5  
Chairman of social and ethics committee 78 225       74 500   5  
Chairman 999 915       952 300   5  
Lead independent director 322 823       307 450   5  
Ad hoc committee fees (per hour) R2 000       R1 890      
  capped at       capped at      
  R40 000       R37 485   5  

* The proposed fees exclude VAT, which is authorised to be paid in addition the above fees to qualifying non-executive directors.

The board, having considered both the King IV recommendation that NEDs’ fees comprise a base fee as well as an attendance fee, and attendance by the NEDs over the past year has determined that the current policy with regard to NED fees remain unchanged. Accordingly, it recommends that NEDs continue to be paid a fixed fee for their services on the board and committees and that the chairman of the board be paid an inclusive fee for his services.

STAKEHOLDER ENGAGEMENT

The company received and addressed a few remuneration related queries prior to the 2017 AGM. These related to:

  • NED fees, specifically ad hoc/temporary committee fees; and
  • performance measures for the various LTI schemes.

On the basis that the remuneration policy was endorsed by 97,5% of shareholders at the 2017 AGM, no further engagement was undertaken.

STATEMENT OF COMPLIANCE

Remcom, having considered the principles and guidelines detailed in the remuneration policy, is satisfied that there has been no material deviation in the application of the policy during the year under review and having reviewed the report, including details relating to ED and prescribed officer emoluments, confirms its inclusion in the Integrated Report.

VOTING ON IMPLEMENTATION REPORT

This report is subject to an advisory non-binding vote by shareholders at the 2018 annual general meeting scheduled for 8 November. Shareholders are requested to cast an advisory vote on the remuneration implementation report as contained in Part 3 of this report.

APPROVAL OF REMUNERATION REPORT BY THE BOARD OF DIRECTORS

This remuneration report was approved by the board of directors of City Lodge Hotels Limited on 15 October 2018.