Trustee Remuneration Details 2015/2016

Transcription

1 Trustee Remuneration Details 2015/2016 Recommendation of the Board of Trustees to the Annual General Meeting 2015 (including Annexure A Recommendation by the Remuneration Committee) Page 1 of 6

2 Proposed Trustee Remuneration for 2015/16 Recommendation of the Board of Trustees to the AGM 2014 The remuneration of the trustees is determined and recommended by an independent Remuneration Committee. The members of the Remuneration Committee are Mr Ian McGorian (Chairman), Mrs Barbara Lebogang Lombard and Ms Jennifer Jeftha. The CVs of the Remuneration Committee members are available on the website, The Remuneration Committee recommendation for the remuneration of the trustees took cognisance of both the guidelines issued by the Council for Medical Schemes and the King III Practice Notes on remuneration. The Council for Medical Schemes Guidelines require the composition of the fee structure for trustees to be not significantly different to that of a non-executive director and to be consistent with the principles of the King III Report, read with the King III Remuneration Practice Notes. Paragraph 153 of the King III Practice Recommendation states that fees for non-executive directors should comprise a base fee as well as an attendance fee per meeting. The recommendation by the Remuneration Committee is annexed hereto as Annexure A for the information of members. The view of the Board is that these recommendations should not be implemented in a single financial year and it recommends the following remuneration for the trustees and the Chairman for 2015/16: 1. A base fee of R per trustee per year. 2. An attendance fee for Board meetings of R per meeting, calculated on the basis of 5 hours preparation and a 5 hour meeting at a rate of R per hour. This constitutes an increase in the hours allowed for preparation in accordance with the workload imposed on trustees but no increase in the hourly rate that was approved at the 2014 AGM. 3. An attendance fee for Board Committee meetings of R per meeting, calculated on the basis of 3 hours preparation and a 3 hour meeting. This similarly constitutes an increase in the hours allowed for preparation but no increase in the previously approved hourly rate. 4. An attendance fee for Audit and Risk Committee meetings of R per meeting calculated on the basis of 4 hours preparation and a 3 hour meeting. This similarly constitutes an increase in the hours allowed for preparation but no increase in the previously approved hourly rate.. 5. An attendance fee for ad hoc meetings at the rate of R per hour. This does not constitute an increase. 6. Meeting attendance fees for chairmen of Committees at an additional 50% of the relevant meeting fee, in accordance with the approved Remuneration Policy. 7. A 7% increase of the Chairman's retainer to R per year. In terms of the approved Remuneration Policy, the Chairman and Vice-Chairman of the Board receive a retainer only, which is related to the time they spend on Board and Committee matters. No recommendation is made in respect of remuneration for a Vice-Chairman as the Board agreed to do away with the position of Vice-Chairman. Board of Trustees 14 May 2015 Page 2 of 6

3 Annexure A Recommendation of the Remuneration Committee for the Trustee Remuneration for 2015/2016 The recommendation for the remuneration of the trustees takes cognisance of both the CMS guidelines and the King III Remuneration Practice Notes. In respect of an attendance fee per meeting, the King III Remuneration Practice Notes read as follows: PN Companies should consider an attendance or meeting fee for all non-executive directors. In determining an appropriate and fair attendance fee structure, the following could be considered: 1. The general level of hourly or daily rates of fees earned by directors in their professional capacities (for instance, as lawyers, accountants, executives, partners in audit or legal firms or management consultants); 2. The hours spent in travel and preparation for meetings, as well as actual attendance; 3. The number of meetings held (as this is an indication of the workload); 4. Attendance only should not be a qualification for meeting fees. Directors carry responsibilities whether they attend meetings or not and could for example still qualify for the meeting fee if they provide detailed input and feedback on board submissions prior to the meeting. 5. Disqualification of attendance fees should be based on the holistic performance of the director as determined by the chairman from time to time; 6. For multi-national companies that require non-executive directors to travel abroad for purposes of attending Board and Committee meetings, an additional allowance may be considered; and 7. In the case of companies of similar size or complexity, a comparison may be made on typical fees. Company performance (profit, dividend and share price) is not considered to be of special significance for the purpose of setting an attendance fee." In applying the Practice Notes above, the following was taken into consideration, and is dealt with in order of the paragraph numbering of the Practice Notes above: 1. The Board of Trustees of Profmed is composed of professionals from the legal, medical, actuarial and accounting professions: a. The Department of Public Service sets out remuneration levels at band 15 at R per hour and at band 16 at R per hour. These levels represent professionals of an equivalent stature to the trustees of Profmed. b. The Profmed fee per hour for the period was set at R per hour. c. Salary increases in South Africa have averaged 7% for this period (per 21 st Century Pay Solutions). d. Adjusted for increases, the rate of R 2 7% amounts to R 2 675, rounded to R In the previous fee structure, hours spent travelling were not considered. This does not take into account that some of the trustees are domiciled in Cape Town. It is proposed that the following travel component be added to the meeting fees: Regional (Cape Town) (8 Hours) x R 540 = R Local (within Gauteng) (2 Hours) x R 540 = R The number of meetings held by Profmed matches the norm for the comparator group (as detailed in the 21 st Century Trustee Benchmarking Report): Page 3 of 6

4 Comparators Average number of meetings per annum Profmed Number of meetings per annum Board meetings held 7 7 Audit/ Risk/ Audit and Risk Committee meetings held 3 3 Remuneration Committee meetings held 4 3 Nominations Committee meetings held 2 1 Annual General Meeting Not reported 1 Medical Committee Not reported 3 4. Attendance at meetings is expected but where this is not possible and, in the circumstances set out in the Practice Notes, exceptions will be considered by the Chairman. 5. As point 4 above. 6. Not applicable. 7. A comparison has been made against Bonitas Medical Fund, Discovery Health Medical Scheme, Government Employees Medical Scheme (GEMS), Medihelp and Sizwe Medical Fund using the latest actual fees per trustee as reported in the CMS Annual Report The percentiles for the comparator group are illustrated below. The data set represents the latest actual fee per trustee as reported in the CMS Annual Report 2013: Position 10 th Percentile Lower Quartile Actual Fee Per Trustee 2013 Annual Fees Median Upper Quartile 90 th Percentile Profmed Average Chairperson Trustee The Profmed average of actual remuneration per trustee and the Chairman s remuneration is between the lower quartile and the median of the comparator group. The schemes chosen for the purpose of benchmarking the remuneration of the trustees are mostly open schemes, which compete for membership and therefore have the responsibility of sales and marketing. These schemes have membership above principal members and therefore the responsibility and fiduciary duties of these schemes is very similar and do not become proportionally greater with higher membership numbers. Another reason Profmed is being benchmarked against the larger membership schemes is because Profmed is run by the trustees and principal officer, not by its administrator as is the case with most of the larger schemes benchmarked, which places an additional responsibility on the Profmed officers. Page 4 of 6

5 Recommendation The Remuneration Committee proposes that the remuneration be approved for the trustees, from the 2015 AGM to the 2016 AGM: Trustee Fees Time for duration of and preparation for Board and committee meetings Board Meetings Committee Meetings Ad hoc Meetings Per hour rate: Board meetings = R Committee meetings = R hrs (prep) + 5hrs (meeting) = 10hrs x R per hour 3hrs (prep) + 3hrs (meeting) = 6hrs x R per hour R per hour + 1 hr preparation Rate per meeting = R travel hours = R travel hours Audit and Risk Committee Meetings Time for duration of and preparation for meetings Audit and Risk Committee Per hour rate: Board meetings = R Committee meetings = R hrs (prep) + 3hrs (meeting) = 7hrs x R per hour Rate per meeting = R travel hours With regard to the rate for the chairman of the Audit and Risk Committee, Remuneration Committee and Medical Committee, the Remuneration Committee agreed that it be recommended to the AGM that the chairperson of these committees be paid an additional 50% of the meeting fee: Time for duration of and preparation for committee meetings Chairman of the Audit and Risk Committee Chairman of the Remuneration Committee Chairman of the Medical Committee Per hour rate: Board meetings = R Committee meetings: R hrs (prep) + 3hrs (meeting) = 7hrs x R per hour 3hrs (prep) + 3hrs (meeting) = 6hrs x R per hour 3hrs (prep) + 3hrs (meeting) = 6hrs x R per hour = = = Rate per meeting R % of meeting fee = R travel hours R % of meeting fee = R travel hours R % of meeting fee = R travel hours Page 5 of 6

6 With regard to the rate for the Chairman of the Board of Trustees, the Remuneration Committee agreed that it be recommended to the AGM that the Chairman s retainer be calculated as follows: 7 Board R per meeting + additional 50% + 14 hours R 540 = R per meeting 2 ordinary Board meetings (Strategy R x 5 hours + 4 hours travel 6 Committee R x (1hr prep + 3hr meeting) + 12 hours travel 3 Audit Committee R x (2hr prep + 3hr meeting) + 12 hours travel = R = R = R = R Total for Board and Committee meetings R Ad hoc meetings 4 hours per month x 12 x R per hour (R % of R 2 700) TOTAL RETAINER = R R (Round to R ) It is the recommendation of the Remuneration Committee that trustees be paid a base fee in addition to the meeting fees in accordance with the structure proposed in King III, paragraph 153. The retainer/base fee should be calculated as follows: 1 hour per month on scheme business outside of meeting R per hour = R per annum. The Remuneration Committee agreed to recommend that there no longer be a position of Vice- Chairman of the Board as provision is no longer made for this position by any of the comparator schemes or of public companies. The Remuneration Committee agreed that the above proposed remuneration be recommended to the AGM for approval. These fees would be payable from the 2015 AGM to the 2016 AGM. Remuneration Committee 11 May 2015 Page 6 of 6