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INTEGRATED REPORT 2013

Above: Community members planting trees as part of the rehabilitation process

Remuneration report

The DRDGOLD remuneration policy is based on four elements: basic salary, bonus incentives, soft rewards and retention of key staff.

Remuneration policies

DRDGOLD strives to be fair and responsible in its remuneration policies with respect to all employees. Broadly, employees fall into the following groups: executive directors, non-executive directors, senior management, non-unionised employees and unionised employees.

The company’s MOI makes provision for directors’ fees to be determined from time to time in a general meeting or by a quorum of non-executive directors. Remco, which comprises directors who are independent and non-executive, is primarily responsible for approving the remuneration policies of DRDGOLD, and the terms and conditions of employment of executive and non-executive directors. Items considered by the committee include salaries, performance-based incentives and the eligibility and performance measures of the DRDGOLD phantom share scheme applicable to senior management.

Remuneration Policy

DRDGOLD amended its remuneration policy to endorse the corporate governance improvements introduced by the King III recommendations. The salient principles found in this remuneration policy are summarised as follows:

Following our interaction with shareholders and in order to respond accordingly, the Remuneration Committee implemented the changes set out below.

Share option scheme

In November 2012 the Remuneration Committee suspended the share option scheme, approved the share option buy back and replaced it with the phantom share scheme. The advantages presented by the suspension of the share option scheme are inter alia listed as follows:

Phantom share scheme

This scheme, which replaces the share option scheme, is part of the long-term retention strategy intended to grow the company. Some of the issues raised by shareholders against the share option scheme include:

These and other issues are addressed by the phantom share scheme through the introduction of inter alia:

Short-term incentive scheme

The scheme was introduced in April 2013 to align employees’ individual performances with short-term performance criteria of the company in order to optimise output. The total annual incentive payments are based on two equal criteria – individual performance and company performance. Individuals are assessed through a performance management system and for company performance Remco looks at:

No incentive payment will be payable if the annual free cash flow is negative.

Remuneration Policy for Non-Executive Directors

To obtain an objective report on non-executive directors’ fees the board commissioned Deloitte, an independent professional company, to conduct a benchmarking exercise within the mining industry. Thereafter a remuneration policy for non-executive directors was prepared to set the standard and give guidance on their remuneration. Some of the features of that policy to be emphasised are:

Executive directors’ remuneration

The remuneration of executive directors comprises a basic salary and an annual performance bonus. The remuneration of the executive directors is paid by DRDGOLD for any services rendered to DRDGOLD or its subsidiaries.

Basic salary

Each executive director receives a basic salary as recommended by Remco in accordance with the remuneration policy. All salaries are reviewed annually, with the salaries of executive directors being benchmarked to external market surveys.

Annual performance bonus

Executive directors’ service contracts make provision for the members of the executive committee to be eligible for a discretionary bonus based on agreed key performance indicators. This bonus is approved by Remco.

Other benefits

All directors who meet the qualification requirements are members of the Group Life Scheme. All directors are reimbursed for any reasonable business expenses they incur.

Non-executive directors’ remuneration

The fees paid to non-executive directors are recommended by the board and approved by shareholders. The current fees payable, effective 1 January 2012, are as follows:

Non-executive directors’ fees are adjusted annually on the basis of the Consumer Price Index.

Previously non-executive directors were granted share options in respect of DRDGOLD’s ordinary shares; details of the directors with unexercised options are provided below.

Directors’ service contracts

Service contracts have been concluded with the executive as well as the non-executive directors. Details of the service contracts are set out in the table below.

The directors had no conflicting interests during the year under review and up to the date of issue of the financial statements.

Share options
Executive Non-executive Prescribed officers
D J Pretorius C C Barnes G C Campbell R P Hume J Turk E A Jeneker C M Symons T J Gwebu W J Schoeman Other
parti-cipants
Total
Balance at 1 Jul 2012
Number 1 283 486 1 453 667 37 994 39 157 1 282 976 958 158 396 700 14 172 447 19 624 585
Avg strike price – rand per share 6.19 4.84 19.74 19.93 5.44 5.01 5.12 7.99 7.32
Granted during year
Number
Avg strike price – rand per share
Exercised during year
Number 1 283 486 1 219 163 29 394 28 457 1 064 626 765 508 198 350 10 110 296 14 699 280
Avg strike price – rand per share 6.19 4.89 17.00 16.48 5.42 5.09 5.12 7.08 6.61
Lapsed during year
Number 8 600 10 700 6 300 1 244 348 1 269 948
  29.10 29.10 29.10 17.12 17.36
Balance at 30 Jun 2013
Number 234 504 212 050 192 650 198 350 2 817 803 3 655 357
Director Title Date of appointment Term Unexpired term of service contract
D J Pretorius Chief executive officer 1/1/2012 3 years 18 months
C C Barnes Chief financial officer 1/5/2011 3 years 12 months
R P Hume Non-executive director 1/10/2012 2 years 15 months
G C Campbell Non-executive chairman 1/11/2011 2 years 4 months
J Turk Non-executive director 1/11/2012 2 years 16 months
E A Jeneker Non-executive director 1/11/2011 2 years 4 months

Prescribed officers’ remuneration

The remuneration of the prescribed officers comprises an all-inclusive salary and a bi-annual performance bonus

All inclusive salary

Prescribed officers receive an all-inclusive salary in accordance with the remuneration policy. All salaries are reviewed annually.

Bi-annual performance bonus

Depending on the nature of the position of a prescribed officer, his/her service contract might make provision for the officer to be eligible for a discretionary bonus based on agreed key performance indicators. This bonus is approved by Remco.

Service contacts

Each of the prescribed officers has a separate service contract with a specified notice period.

Directors' and prescribed officers' emoluments
2013 Board fees Salary Bonuses and
performance
related
payments
Pre-tax gain
on share
options
Pension/
provident
scheme
contributions
Total Tax
deducted
by
company
Net
Group and company R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Executive directors                
D J Pretorius 4 664 4 238 2 423 11 325 4 358 6 967
C C Barnes 3 367 931 2 505 6 803 3 130 3 673
  8 031 5 169 4 928 18 128 7 488 10 640
Non-executive directors                
G C Campbell 1 348 4 1 352 1 352
R P Hume 703   708 199 509
J Turk 647 647 647
E A Jeneker 729 729 304 425
  3 427   3 436 503 2 933
Prescribed officers                
C M Symons 2 209 1 304 2 043 267 5 823 1 923 3 900
T J Gwebu 2 075 1 181 1 132 4 388 1 503 2 885
W J Schoeman 2 830 1 340 389 4 559 1 524 3 035
  7 114 3 825 3 564 267 14 770 4 950 9 820
Total 3 427 15 145 8 994 8 501 267 36 334 12 741 23 393

The remuneration of executive directors and prescribed officers comprises a basic salary and an annual bonus for directors and bi-annual bonus for prescribed officers. Non-executive directors receive board fees which are approved at each AGM of the company.

2012 Board fees Salary Bonuses and
performance
related
payments
Pension/
provident
scheme
contributions
Total Tax
deducted
by
company
Net
Group and company R'000 R'000 R'000 R'000 R'000 R'000 R'000
Executive directors
D J Pretorius 4 470 3 666 8 136 2 348 5 788
C C Barnes     5 191 1 900 3 291
      13 327 4 248 9 079
Non-executive directors
G C Campbell 1 317 1 317 1 317
R P Hume 691 691 192 499
J Turk 616 616 616
E A Jeneker 686 686 334 352
  3 310       3 310 526 2 784
Prescribed officers
C M Symons 2 043 1 242 250 3 535 1 178 2 357
T J Gwebu 1 870 1 292 3 162 1 149 2 013
W J Schoeman 1 989 960 2 949 1 105 1 844
  5 902 3 494 250 9 646 3 432 6 214
Total 3 427 13 485 9 238 250 26 283 8 206 18 077