Remuneration report

Our performance and pay outcomes in FY22

The Group achieved a strong operational and financial performance across all divisions during FY22 despite global semiconductor shortages and ongoing supply chain constraints which have resulted in a growing backlog. We commenced a Strategic Review process seeking to unlock value for shareholders and paid a special dividend of US$70 million.

The main remuneration outcomes in FY22 are as follows with the detail set out in the policy and implementation sections of this report:

• Executives received a 5% increase in fixed pay for FY22 having had no rise the previous year due to Covid-19 uncertainty
• Likewise, non-executive directors' fees were increased 5% (the first increase in three years)
• Short-term incentives ("STI") earned for FY22 reduced compared to FY21 as targets were achieved but with less over-performance than the prior year
• The Conditional Share Plan ("CSP") awards granted in May 2019 with a performance period that ended 28 February 2022 vested at 25%, because the return on invested capital ("ROIC") was at the threshold for the performance conditions but the uEPS target was not achieved
• Long-term incentives ("LTI") vesting outcomes are less than for the prior year

Performance and pay targets for FY23

The main remuneration targets and outlook are summarised below with the detail set out in the policy and implementation sections of this report:

• Executives have received no increase in fixed pay for FY23
• Likewise, non-executive directors' fees will not increase for FY23
• STI – the weighting of metrics has changed slightly following consultation with shareholders:
  • uEPS will constitute 35% of the bonus (FY22: 45%)
  • Earnings before interest, taxation, depreciation and amortisation ("EBITDA") will constitute 30% of the bonus (FY22: 20%)
  • The weightings for the remainder of the metrics remain unchanged from FY22
• LTI
  • a new scheme, the Deferred Bonus Warrant ("DBW") has replaced the previous Deferred Bonus Plan ("DBP") and the co-investment by the Company now takes the form of share appreciation right ("SARs")
  • CSP awards were made in line with our policy – the absolute total shareholder return ("TSR") performance condition which previously applied to two-thirds of the grant is now the sole performance condition for the grant in June 2022

Linking pay to our strategy

In August 2021, Datatec announced a comprehensive Strategic Review to consider options and initiatives to unlock and maximise shareholder value going forward. The Strategic Review aims to address the persistent gap between Datatec's valuation and the inherent value of its underlying assets whilst also ensuring that the Group is positioned to take full advantage of the positive market dynamics for its technology solutions and services. In parallel, the strategy of pursuing a combination of corporate and business actions aimed at enhancing the competitiveness and profitability of our subsidiaries and operating divisions in order to enhance value remains in place.

The Group's remuneration policy seeks to align remuneration to the achievement of the Group's strategic objectives.

Aligning remuneration to our strategic objectives

STRATEGIC OBJECTIVE
SHORT-TERM INCENTIVE
LONG-TERM INCENTIVE
REF
Value generation
SHORT-TERM INCENTIVE
–
FY22 and FY23 – personal key performance indicator ("KPI") for the executive directors' STI: reduce structural discount.
–
LONG-TERM INCENTIVE
FY22: The performance condition for two-thirds of CSP vesting in 2024 is absolute TSR.
FY23: The performance condition for the whole of the CSP vesting in 2024 is absolute TSR. Furthermore, executive share ownership requirements and the additional two-year holding period post vesting for DBP and DBW ensure shareholder alignment over the long term.
FY23 – new STI deferral plan DBW co-investment only benefits participant if share price rise is generated.
REF
 
STRATEGIC OBJECTIVE
Underlying earnings per share
SHORT-TERM INCENTIVE
FY22 target for 45% of STI was budget uEPS.
FY23 target for 35% of STI is budget uEPS.
LONG-TERM INCENTIVE
FY22: Performance condition for one-third of CSP vesting is uEPS growth over three years to FY24.
 
REF
   
STRATEGIC OBJECTIVE
Earnings before interest, taxation, depreciation and amortisation (“EBITDA”)
SHORT-TERM INCENTIVE
FY22 target for 20% of STI was budget Group EBITDA.
FY23 target for 30% of STI is budget Group EBITDA.
LONG-TERM INCENTIVE
–
–
REF
   
STRATEGIC OBJECTIVE
Other quantitative measures addressing current short-term priorities
LONG-TERM INCENTIVE
FY22 and FY23 metrics addressing Logicalis and Westcon International working capital.
LONG-TERM INCENTIVE
–
REF
 

The context in which the committee has set STI and LTI targets for FY23 flows from the strategic imperatives of the Group.

The committee believes the use of absolute TSR as a performance condition for CSP vesting will align remuneration with value creation for shareholders and has decided to use this metric as the sole performance condition for the FY23 CSP grant.

Motivating the drive to improve profitability remains of high importance for which the uEPS and EBITDA growth targets are key in the STI. The committee has noted that the key metric used by investors for valuing businesses in our sector is EBITDA and hence it felt this metric should receive more prominence in the STI structure. After consultation with shareholders (see below) it was decided to change the relative weightings of uEPS and EBITDA in the FY23 STI structure to give more weight to EBITDA while maintaining the position of uEPS as the primary metric.

The Remuneration Committee is satisfied that the remuneration policy has achieved its objectives in FY22. We believe the policy and implementation set out in this report achieve an equitable alignment of shareholder and management interests.

Remuneration Committee constitution and operation

The role of the committee is to assist the Board in ensuring that the Company remunerates directors and executives fairly and responsibly in alignment with the creation of long-term shareholder value and to ensure that the disclosure of director and senior management remuneration is accurate, complete and transparent. The Remuneration Committee operates under terms defined in its charter, which has been approved by the Board.

The Remuneration Committee charter is available on the Group's website www.datatec.com.

The Remuneration Committee comprises the following independent non-executive directors:

• Maya Makanjee (Chair up to 28 February 2022)
• Stephen Davidson (Chair from 1 March 2022)
• Johnson Njeke
• Ekta Singh-Bushell
• Deepa Sita (from 1 March 2022)

Directors' attendance at Remuneration Committee meetings during FY22 and to the date of this report is as follows:

	10 March 2021	18 May 2021	14 July 2021	20 September 2021	26 October 2021	25 January 2022	9 March 2022	17 May 2022
M Makanjee	P	P	P	P	P	P	P	P
MJN Njeke	P	P	P	P	P	P	P	P
E Singh-Bushell	P	P	P	P	P	P	P	P
DS Sita							P	P
SJ Davidson							P	P

P = present
	= not a committee member

The CEO and CFO may be invited to attend portions of meetings of the Remuneration Committee, but neither may take part in any decisions regarding their own remuneration.

The Remuneration Committee employs the services of specialist consultants in the field of executive remuneration to provide advice. The independent service providers used to value LTIs are: ShareForce, BDO and Deloitte. Benchmarking services are provided by Mercer and Willis Towers Watson. PricewaterhouseCoopers, the Group’s external auditor, has reviewed this remuneration report and the new DBW share scheme and provided comments. The committee is satisfied that the consultants have provided independent and objective advice and, while giving due consideration to any advice received, has made its decisions independently in accordance with its charter.

The committee reviews its performance annually by means of questionnaires completed by individual committee members which are then discussed at committee and Board meetings. These appraisals enable the committee to evaluate its effectiveness objectively and to conclude whether it is meeting its objectives as described in its charter.

FUTURE FOCUS AREAS

The committee intends to continue the consultation process with shareholders and discuss the continuing evolution of the remuneration policy with an increasing focus on ESG. The committee will continue to focus its oversight on fair and responsible pay, diversity, equity and inclusion and talent management throughout the Datatec Group.

SHAREHOLDER ENGAGEMENT

Our process of shareholder engagement is detailed on the below. At the AGM on 27 July 2022, you will be requested to endorse our remuneration policy and the implementation thereof. We will continue our engagements with shareholders to discuss areas of concern you may have; your constructive input is valued and appreciated as we continue to improve our remuneration framework. On behalf of the Remuneration Committee, I thank you for your continued support and feedback.

Stephen Davidson

Chair, Remuneration Committee

May 2022

SHAREHOLDER ENGAGEMENT

The Remuneration Committee maintains a programme of shareholder consultation to ensure shareholders' views on remuneration are properly addressed by the committee and considered in the Group's remuneration policy and implementation practices.

VOTING OUTCOMES

The FY21 remuneration policy was put before shareholders for an advisory vote at the AGM on 29 July 2021 and received support from 93.0% of shares voted (2020: 91.5%).

The FY21 remuneration implementation report was put before shareholders for an advisory vote at the AGM on 29 July 2021 and received support from 64.7% of shares voted (2020: 87.2%).

If the remuneration policy or implementation is voted against by more than 25% of shareholders, consultation with shareholders will be undertaken per the King IV code.

CONSULTATION DURING FY22

During FY22, consultation was held in November 2021 with Stephen Davidson, then Chair of the Board and Maya Makanjee, then Chair of the Remuneration Committee visiting investment managers to address remuneration-related issues among other ESG matters.

The consultation process was open to all shareholders who were invited to make contact as per SENS announcement. In particular, reasons for voting against the implementation report at the AGM were sought to identify areas for improvement.

Committee's rationale

Shareholders' views

Actions taken

STI Metrics

 

 

The committee proposed increasing the weighting accorded to the EBITDA metric in STI because the Strategic Review had highlighted that the key valuation methodology used in the ICT sector is a multiple of EBITDA.

Shareholders generally supported the committee’s view but felt that uEPS should remain as the most important STI metric with the highest weighting.

The committee has changed the weighting for FY23 to: 35% uEPS and 30% EBITDA from 45% uEPS and 20% EBITDA in FY22. The remaining metrics will be unchanged from FY22.

LTI – CSP performance conditions

 

 

The committee proposed increasing the weighting accorded to the TSR performance condition for CSP grants from two-thirds to the sole performance condition and discontinuing the uEPS growth performance condition which constituted the other one-third in FY22. Again, the rationale is to align with the value realisation strategy.

Shareholders generally supported the committee’s view and agreed with the alignment of the CSP with TSR growth.

The committee has changed the performance conditions to be applied to the CSP grant in June 2022 (FY23) to be 100% absolute TSR growth with no uEPS growth component.

LTI – new DBW share scheme

 

 

The new DBW scheme to replace the DBP was discussed. In particular the Company co-investment in the form of SARs would only have value for participants if the share price grows.

Shareholders agreed the DBW retains the retention aspects of the DBP while aligning the Company co-investment element better with shareholders’ interests by being entirely dependent on share price growth.

The new DBW will be implemented with the first grant planned for June 2022 as set out later in this report.

Malus and Clawback

 

 

The existing policy is based on the trigger of a material restatement of the Company’s financial results with the Board having a fiduciary duty to address material reputational issues which may not result in a restatement.

A shareholder expressed the view that the malus and clawback policy itself should include the wider reputational issues.

The committee will review the policy and intends to incorporate material reputational issues as triggers in the policy.

This is explained in more detail in the policy section of this report.

Overall quantum of remuneration

 

 

Although no shareholder raised the issue, the committee noted comments by a proxy voting adviser that executive directors' overall remuneration and non-executive directors' fees in FY21 were both higher than their expectations. The committee’s view is that base salaries and non-executive directors' fees are fair in the context of an international group. The bonuses are calculated strictly in accordance with the formulae set out in the policy based on base salaries.

Nevertheless, the committee has determined for FY23 there will be no increase in executive directors' base salaries and endorsed management’s recommendation of no increase in non-executive directors' fees.

Other matters discussed with shareholders

Other topics of discussion with shareholders during the consultation process included the development of fair and responsible pay reporting and the South African Companies Act amendments currently under consideration and their potential impact on remuneration committees and reporting of remuneration.

Shareholders and the committee both value the consultation process which has been continuing for a number of years now and will continue with further engagement in the next financial year.

PART 2 – REMUNERATION POLICY

Objectives of the policy

The objectives of the Remuneration Policy are to:

Set remuneration levels to attract and retain the best local and international talent who will enhance business performance.

Recognise and reward superior performance when it occurs.

Direct employees' energies and activities towards key business goals and strategic outcomes.

Align employees' and shareholders' interests.

To achieve this, Datatec rewards its executives and managers in a way that reflects market dynamics and the context in which it operates. Datatec is structured as a group which actively manages its principal divisions, Logicalis, Westcon International and Analysys Mason. The Remuneration Policy applies throughout the Group but the details provided are applicable to the Datatec executives. All elements of the Remuneration Policy are aligned to the strategic goals of the Group. For purposes of this report, a high level overview of the remuneration elements and design principles informing remuneration arrangements for all employees is provided, with in-depth focus on Datatec executives.

Key principles

Key principles of the Remuneration Policy are to:

Reward all employees suitably for their contribution to the Group’s operating and financial performance.

Apply fair and responsible pay principles to all employees across the Group.

Promote a common interest with shareholders.

Consider the international ICT industry, market and country benchmarks to ensure the Group’s remuneration is competitive in regions in which the Group operates, particularly the US, Brazil and the UK.

Ensure that a significant proportion of the remuneration of executive directors and senior managers is performance-based.

Balance the performance-based element of remuneration between the achievement of short-term and long-term objectives.

These principles are enshrined in the three main elements of remuneration:

Description and policy

Share-based remuneration plans with performance targets. Two share-settled Group plans are used, namely:

• CSP – a performance share plan; and
• DBW – a portion of the bonus is deferred and used to acquire shares and the Company contributes a co-investment in the form of SARs. Both of these elements are forfeitable.

A number of cash-settled share-based remuneration plans are operated in divisions. These are explained in further detail below.

Eligibility

Datatec Group executives and senior management participate in the Datatec CSP.

Executive directors and two other senior managers participate in the DBW.

Senior management of Logicalis, Westcon International and Analysys Mason participate in divisional share schemes.



Description and policy

Base salary and benefits including retirement and medical scheme contributions.

Eligibility

All employees.

Description and policy

Annual bonus plan with performance targets, subject to deferral as explained below.

Eligibility

Group executives participate in an annual STI plan as explained in detail below. Management of divisions participate in STI plans similar to the Group executives but based on divisional performance targets and personal performance targets.

Non-management employees typically receive lower levels of STIs based more on personal targets rather than on corporate goals.

Base salary

The base salary provides individuals with a fixed income and is subject to annual review by the Remuneration Committee. Executive directors and senior executives are entitled to employment benefits determined by the level of base salary including: defined contribution pension; medical insurance; and death and disability insurance.

Base salary levels for executives in the Group are determined by benchmarking exercises using databases of pay levels in comparator companies provided by third-party advisers. The comparator companies used are appropriate for the role being benchmarked. For example, the role of regional CEO in a subsidiary division would be benchmarked against subsidiaries of international groups in that region; divisional CEOs would be benchmarked against international unlisted corporations. The median pay of the comparator group is used as the guide for the pay of the executive concerned. Benchmarking exercises are typically done when executive roles change or new appointments are made and when internal corporate restructuring is undertaken. Routine annual benchmarking exercises are not undertaken as the committee recognises the potential for driving salaries up that this could cause.

Short-term incentive

Structural overview:

Bonus formula

The STI is calculated in relation to base salary as follows:
Base salary x On-Target STI percentage x [(personal score x personal weighting) + (corporate score x corporate weighting)]

On-target STI percentage

CEO: 175%

CFO: 95%

Potential outcomes for the STI in relation to base salary are illustrated in the scenario analysis.

Weightings between corporate and personal performance measures

The weighting between corporate and personal performance is reflective of the participants seniority and the following weightings apply:

• Executive directors and some senior management: In FY22 the policy was to apply an 75% corporate and 25% personal weighting and this will continue in FY23.
• For other senior management we use 50% corporate and 50% personal (with exceptions where appropriate as agreed by the Remuneration Committee).

Target setting

Each element of the bonus is based on the achievement of a target: if that target is reached the bonus element is described as "on-target". The Remuneration Committee establishes the target and a range around the target demarcated by "guard-rails" such that the bonus for each element is capped if the upper guard-rail is reached. Below the lower guard-rail, zero bonus is earned and at the lower guard-rail 40% of on-target bonus is earned. Between the guard-rails and the on-target position the bonus outcome is obtained by linear interpolation.

The on-target bonus levels in relation to base salary are set out in the table below:

STI as a percentage of base salary

	On-target STI	Maximum STI (cap)
CEO	175%	175% x 143% = 250%
CFO	95%	95% x 153% = 145%

Potential outcomes for the STI in relation to base salary are illustrated in the scenario analysis.

 

The metrics used and bonus outcomes for FY22 are shown in the implementation report.

Delivery of the STI (applicable to executive directors and senior Group executives)

The STI is partly delivered in cash and partly delivered in shares which are deferred into the DBW plan with minimum mandatory deferral of 20% (for STI achievement above 50% of target) and a maximum permitted deferral of 50% of STI.

FY23 METRICS:

The corporate financial goals constitute 75% of the total STI for FY23. These targets include uEPS and EBITDA (with the relative weighting amended as described above). Also included are cash management/working capital targets with separate metrics for Logicalis and Westcon International as the two businesses have different working capital dynamics.

FY23 Bonus structure

1) Underlying earnings per share		US$ cents	Bonus
Lower guard-rail	-12%		40%		35%
On target	Budget		100%
Upper guard-rail	12%		160%

2) EBITDA		US$ million	Bonus
Lower guard-rail	-14%		40%		30%
On target	Budget		100%
Upper guard-rail	14%		160%

3a) Logicalis working capital – Operating cash conversion		US$ million	Bonus
Lower guard-rail	-20%		40%		5%
On target	Budget		100%
Upper guard-rail	25%		160%

3b) Westcon working capital – net working capital days		Days	Bonus
Lower guard-rail	10%		40%		5%
On target	Target		100%
Upper guard-rail	-10%		160%

4) Personal KPIs – CEO and CFO			Bonus
ESG			10%		25%
Leadership			5%
Reduce structural discount			10%

Total on-target bonus

100%

The FY23 targets for uEPS, EBITDA and working capital metrics based on budget are not shown as this is commercially sensitive information but will be fully disclosed next year in the implementation section of the FY23 remuneration report.

The personal KPIs agreed by the committee for the executive directors for FY23 are as follows:

• ESG – corporate citizenship and governance evolution
• Leadership – development of the Group’s operational and organisational strategy
• Reduce structural discount – initiatives to achieve value realisation

These KPIs are the same as used in FY22 and the committee has developed a culture scorecard to provide quantitative evaluation of achievement against the ESG and Leadership KPIs. This will be used to monitor and evaluate ESG developments such as setting targets for environmental metrics and reporting on progress.

Long-term incentives

Group plans – structural overview:

 

Deferred Bonus Plan Warrants

Conditional Share Plan

Instrument

The deferred STI is in the form of shares which will be held in escrow for the benefit of participants. The Company co-investment is awarded as SARs. The SARs will be awarded at market value using the same price applicable to purchase the deferred shares.

Conditional rights to shares subject to performance vesting conditions.

Eligibility

Executive directors (CEO and CFO) and two senior Group executives, provided the minimum STI levels are achieved as indicated above.

Executive directors and Group executives and staff.

Allocation levels

The mandatory deferral percentage in the DBW (if the bonus exceeds 50% of target) is 20%. The maximum deferral percentage is 50%.

The number of SARs to be awarded is based on an actuarial calculation of their value relative to the current share price.

The quantum of awards is based on annual base salary and the face value of awards which is the current Datatec share price (using a 30-day volume-weighted average price (“vwap”)) as follows:

• CEO – 150% x base salary
• CFO – 120% x base salary
• Datatec Group executives and staff – range from 100% to 50% of base salary

The number of awards granted to participants who also participate in the Westcon International Equity Appreciation Plan (“EAP”) is scaled down to avoid “double dipping” as explained below.

Vesting period

Three years.

Additional holding period

A holding period of two additional years will follow the vesting period of three years for the share element.

The SARs are subject to a four-year exercise period commencing on the vesting date and will be subject to a two-year holding period post vesting.

 

Performance period

One year, aligned with the STI performance as explained above.

Three years.

Performance conditions

No prospective performance conditions apply, but performance is an entry qualification requirement. Further performance alignment via share price appreciation before the SARs will be exercisable.

Performance conditions apply to the grants and the conditional awards are held for a performance period of three years. At the end of the three-year performance period the performance conditions are tested and if met, awards vest on a sliding scale between 50% at threshold and 100% at the upper target.

Dividends

Dividends will accrue on the shares purchased by participants using their STI and these dividends must be taken in the form of shares (provided the Company offers a scrip alternative) while the shares are held in escrow to the end of the holding period.

No dividends will accrue on the SARs during the exercise period.

No dividends accrue on the CSP awards during the three-year performance period.

Plan and individual limits

The new DBW will be non-dilutive to shareholders as it will be settled by purchasing shares in the market.

The maximum number of shares which can be delivered to any individual participant in the CSP is 3.7 million shares. The maximum number of new shares which can be issued to participants to settle obligations under the CSP is 7.4 million shares.

Termination of employment provisions

Termination is at the Company’s instigation and not for fault (“good leaver”)

The executive will retain all the shares which he had deferred into the DBW and will retain a portion of the SARs which have been granted but not yet vested. The proportion will be determined pro rata, relative to the time of the vesting period which has elapsed up to the termination date. The terminated executive will continue to hold the reduced number of awards until the vesting date when they will vest along with the other grants in accordance with the rules of the scheme and be exercised within one year. SARs which have vested but not been exercised at the termination date must be exercised within one year thereof.

The executive will retain a portion of LTI share incentive awards which have been granted but not yet vested. The proportion will be determined pro rata, relative to the time of the vesting period which has elapsed up to the termination date. The terminated executive will continue to hold the reduced number of awards until the vesting date when they will vest in accordance with the rules of the scheme if the relevant performance conditions are satisfied.

Executive director resigns from the Company or is terminated for fault, eg dismissal on grounds of misconduct, proven poor performance, dishonest or fraudulent conduct (“bad leaver”)

All unvested (deferred shares and SARs) and vested but unexercised SARs are forfeited. In addition, such executives will be required to repay all dividends (pre-tax value) earned from the award date on the shares.

All unvested CSP awards are forfeited.

CSP Performance conditions for FY23:

The committee intends to apply a single performance condition to the May 2022 (FY23) CSP grant, being the absolute TSR performance condition (which in FY22 had a weighting of two-thirds):

Condition	Absolute TSR
Performance period	From the FY22 results announcement day being 24 May 2022 until the day of the FY25 results announcement approximately three years later.
Threshold (50% vesting)	10.8% compound annual growth rate ("CAGR") – the Group’s weighted average cost of capital ("WACC")
Maximum (100% vesting)	12.8% CAGR – the WACC plus 2%

Linear vesting applies between threshold and target levels. Potential outcomes for LTI in relation to base salary are illustrated in the scenario analysis below.

DIVISIONAL LONG-TERM INCENTIVES

The Group’s divisions operate the following share-based incentive schemes to incentivise management to generate value in the divisional entity:

• Westcon International EAP
• Logicalis and PromonLogicalis Latin America Limited (“PLLAL”) CSP Schemes
• Logicalis and PLLAL SARs Schemes
• Westcon International SARs Scheme
• Analysys Mason Performance Share Scheme
• Other Share Schemes, applicable to start-up businesses in the Group

These schemes are cash-settled (with the exception of the Analysys Mason Performance Share Scheme which is partly settled in Analysys Mason shares) and are based on the divisional entity’s valuation/notional share price. Datatec shares are not used in the settlement of the subsidiary share schemes.

All the divisional share-based remuneration schemes operating in the Group are accounted for under IFRS 2. Details of the operation of the subsidiary division share schemes, including grants, exercises and lapses during FY22 and the prior year, are included in Note 2 to the consolidated annual financial statements.

Further details on the divisional long-term incentives applicable to the Group executives are disclosed below.

Westcon International Equity Appreciation Plan

The Remuneration Committee implemented an EAP for Westcon International senior management to incentivise value generation. Participants have been awarded a once-off grant of “units”, whose value will be linked to the value of Westcon International; this is a notional base value which was estimated to be US$125 million (the “hurdle”). The units will not have any share rights, in particular they will not have the right to dividends or votes.

10% of the value of Westcon InternationaI above the hurdle will be paid to the EAP pool on a sale of Westcon InternationaI. Each unit will receive a pro rata share of the EAP pool when Westcon InternationaI is sold. For example, if Westcon InternationaI is sold for US$300 million, the EAP pool will be US$17.5 million: ((US$300 million – US$125 million) x 10%). If there are 100 000 units in issue, each unit will be worth US$175. During FY21, Datatec recapitalised Westcon International by converting $80 million of inter-company loans to equity investment. This capitalisation will be adjusted for in computing the equity appreciation for participants at the end of the EAP.

If Westcon InternationaI is not sold within five years of the start of the scheme on 1 March 2018, the business will be valued by an independent valuer at 1 March 2023 and the EAP will pay out to participants on the basis of that valuation. Such a valuation will be undertaken using a methodology which is fair and reasonable to all stakeholders including Datatec shareholders and participants in the EAP taking account of the recapitalisation noted above.

The following arrangements are in place for the Datatec Group executives:

Because the executive directors of Datatec Group have also been executives of Westcon International, they participate in the Westcon International EAP in addition to their participation in the Datatec CSP and DBP. The annual grant of Datatec CSP conditional shares for the Datatec executives who participate in the Westcon International EAP is reduced by an "equivalence" factor to avoid double participation in relation to reward opportunities.

In addition, for the Datatec executives who participate in the Westcon International EAP an adjustment of 10% carried interest (CAGR) will be added to the equity base of US$125 million. This annually increasing threshold will be used for the equivalence factor calculation above.

Further, the committee has capped the level of ultimate reward possible for the Datatec executives who participate in the Westcon International EAP. The cap is based on the pay-out which would be achieved if the Westcon International business is valued at/sold for US$400 million. The level of the cap is:

• CEO: US$6.6 million
• CFO: US$3.3 million

Datatec Group additional incentive

The CEO has an additional incentive in relation to Westcon International which will be earned if the business is sold for more than US$300 million. This additional incentive is equal to the cash value of 10 000 Westcon EAP awards with the same condition of 10% CAGR in the threshold as the other awards.

Discretion

The remuneration policy set out in this part 2 of the remuneration report sets out in detail the methodology, metrics and principles which will be used to determine the remuneration of Datatec directors and executives. It is not intended that there should be any departure from the policy in FY23.

However, the Remuneration Committee notes that exceptional circumstances can arise which make it expedient for the committee to retain the ability to exercise discretion in responding to exceptional situations. It also notes that the STI is discretionary and the Board may exercise its fiduciary duty to override the outcome of the financial and personal metrics in exceptional circumstances of malfeasance by an executive – see malus and clawback policy below.

If the committee’s exercising of discretion necessitates any departure from the policy, such an occurrence would be reported in future implementation reports. Any significant changes to the policy will be undertaken only after consultation with shareholders.

Exceptional incentive awards

In addition to the three elements of remuneration noted above (base salary, short-term and long-term incentives) the Remuneration Committee may, in highly exceptional circumstances, award bonuses to management for the successful execution of significant disposal transactions which generate exceptional value for shareholders. In such rare circumstances the committee would consult with shareholders in advance of making such awards.

Scenario analysis

The following tables show the minimum, threshold, on target and maximum remuneration the executive directors can earn under the remuneration policy in the next financial year, FY23, compared to FY22. The actual remuneration earned in FY22 is shown in part 3 of this report – implementation.



 



 

Under the minimum scenario the executives earn only their guaranteed package of base salary, benefits and Company pension contributions. All STI metrics are assumed to be below the lower guard-rail resulting in no STI payment and consequently no DBP deferral being possible. The CSP performance conditions are assumed to have not been met, resulting in no LTI value.

The threshold scenario includes the guaranteed package plus the minimum STI which would be earned if all STI metrics were triggered at the lower guard-rail threshold and 40% of on-target bonus was earned. It assumes that 20% of the bonus would be deferred into the DBW (FY22: this assumption for the DBP was 25%) with the corporate co-investment applied. Under this scenario it is assumed that the CSP performance conditions are triggered three years after grant only at threshold level resulting in 50% vesting.

The on-target scenario assumes the achievement of STI targets and it assumes the mandatory minimum deferral of 20% of STI into the DBW (FY22: this assumption for the DBP was 50%) with the corporate co-investment applied. In addition the CSP award is assumed to vest 75% (halfway between the threshold and maximum scenarios).

The maximum scenario assumes the all STI metrics are over-achieved above the upper guard-rail resulting in the maximum STI being earned (which is 143% of the on-target STI for the CEO and 153% of the on-target STI for the CFO). This scenario also assumes the mandatory minimum deferral of 20% of STI into the DBW (FY22: this assumption for the DBP was 75%) with the corporate co-investment applied. For the CSP, the assumption is that all performance conditions are met at target level resulting in 100% vesting of the conditional share awards (there is no “over-performance” provision in the CSP).

The mandatory minimum deferral of 20% of STI into the DBW is assumed in each scenario above (except the minimum scenario in which there is no STI). If the maximum deferral of 50% of STI were to be made into the DBW, the on-target scenario total for the CEO would increase by US$630 000 to US$5 959 000 and the on-target scenario total for the CFO would increase by US$151 000 to US$1 892 000.

It should be noted that the CSP and DBP components of the scenario analysis will only become available to the executives three and five years, respectively, after the financial year shown in the analysis. The LTI values shown in the above analysis are based on the share price at the date of grant and no discounting for the time value of money has been applied.

The annual grant of Datatec CSP conditional shares for the Datatec executives who participate in the Westcon International EAP is reduced by an “equivalence” factor to avoid “double dipping” in relation to reward opportunities. The equivalence factor was 39.2% for the May 2021 CSP grant in the FY22 figures above and 29.9% for the June 2022 CSP grant in the FY23 figures above. This reduction in the annual CSP grants is to take into account the potential benefit of the once-off Westcon International EAP grant in FY19 and consequently the potential benefit arising from the Westcon International EAP is illustrated in the above tables using the element of the CSP grant foregone by the CEO and CFO as a proxy for the notional increase in the value of the Westcon International EAP units, even though the one-off grant of Westcon International EAP units was in FY19 before the years shown in the analysis.

Shareholding guidelines

The Board has set out shareholding guidelines for executive directors whereby a shareholding with a market value of twice annual base salary should be held. The LTIs are intended to enable new executive directors to achieve this shareholding guideline over time.

Directors’ service contracts

The employment contracts of executive directors are terminable at six months’ notice by either party and contain contractual provisions for payment on termination covering the guaranteed package but no commitment relating to STI. The termination rules applicable to the LTIs are disclosed in the LTI section above.

All non-executive directors have letters of appointment with Datatec Limited. Under these contracts, non-executive directors retire in accordance with the MoI of the Company, which is at least every three years. Retiring directors may offer themselves for re-election.

Malus and Clawback policy

The Board instituted a malus and clawback policy with effect from 1 March 2020 which was described in the FY21 Remuneration Report. This policy was based on a trigger being a material restatement (“restatement”) of the Company’s financial results caused by material non-compliance with financial reporting requirements including fraud, wilful negligence and misrepresentation. As the restatement of annual financial statements is a published event, the trigger of the malus and clawback policy was seen as well-defined and the process of clawing back STI and LTI which had been based on the annual financial statements before restatement will be transparent.

The committee noted that eventualities other than those which cause a restatement of annual financial statements may also arise which could inflict reputational damage on the Company. It believes the Board’s fiduciary responsibility and the committee’s ability to apply discretion in exceptional circumstances will enable appropriate actions to be taken.

However, noting some concerns raised by a shareholder, the committee has decided to extend the malus and clawback policy during FY23 to cover a broader range of triggers as follows:

• Material restatement of annual financial statements (already covered in the existing policy)
• Errors in the calculation of STI or LTI (already covered but to be clarified as a separate trigger)
• Material failure of risk management
• Action or conduct of a participant which, in the reasonable opinion of the Board, amounts to serious misconduct or gross negligence
• Fraud or action or conduct of a participant which, in the reasonable opinion of the Board, amounts to serious dishonesty or breach of trust

The additional triggers are all matters which the committee believes would be the Board’s fiduciary responsibility to address but incorporating them into the malus and clawback policy itself will facilitate appropriate measures to be taken in the event of the Company suffering reputational damage through the fault of executives.

External appointments of executive directors

Subject to the approval of the Board, executive directors are permitted to hold a directorship in one non-Group listed company and to retain the fees payable from such an appointment.

Non-executive directors’ remuneration

The fee structure for non-executive directors, including the Chair, is recommended to the Remuneration Committee by executive management. It is periodically reviewed based on benchmarking studies prepared by external advisers using data from comparable companies and taking account of the international nature of the business.

No increase in non-executive directors’ annual fees is proposed for FY23 and the fees remaining at FY22 levels will be put to shareholders for approval at the AGM on 27 July 2022. The fees for FY22 are set out in the implementation report below.

The Chair’s fee covers her role on the Board and its committees and attendance at subsidiary board meetings and shareholder meetings as required. Other non-executive directors receive a fee for their Board role plus fees for membership/chairship of individual committees.

The terms and conditions of appointment of non-executive directors are available on request from the Company Secretary. Non-executive directors are not eligible to participate in the annual bonus plan or any of the Datatec share incentive schemes.

PART 3: REMUNERATION IMPLEMENTATION

Base pay adjustments

For FY22, the base salary for the executive directors was increased by 5% from FY21 levels after no increase in the prior year.

For FY23, the Remuneration Committee has not increased the base salary for the executive directors, keeping it at FY22 levels.

Datatec Group short-term incentives

The FY22 STI bonus structure comprised Company and individual performance targets. The outcome is set out in the table below.

The committee assessed achievement against the personal KPI goals as follows:

For the CEO:

• ESG – during FY22, the Group appointed a Head of Responsible Business to co-ordinate the Group’s activities in the area of responsible business – particularly the environmental and social aspects of ESG and to drive improvements in these areas. Great progress has already been made as reflected in the Group’s Integrated Report. The committee considered that the CEO’s direction and close involvement in championing responsible business merits an achievement of 11% for this KPI (target 10%)
• Leadership (operational and organisational) – qualitative measure assessed by the Remuneration Committee considering how the CEO has led the Group while promoting its values and Code of Conduct. This was assessed to be 6%, above the target of 5%
• Reduce structural discount – during FY22, Datatec announced a Strategic Review with the aim of unlocking the value perceived to be contained in the Group’s assets but not recognised in the share price. The Strategic Review is progressing very well and the Company’s share price grew notably during FY22. The committee considers the achievement of this metric to be 9% (target – 10%)

For the CFO:

• ESG – the CFO’s role in ESG is primarily focused on the governance area with the committee viewing financial reporting and compliance of paramount importance. In assessing achievement of this KPI the committee noted the positive outcome of the JSE’s pro-active monitoring review of the Group’s FY21 annual financial statements carried out during FY22 and initiatives in financial governance led by the CFO during the year. The committee concluded an achievement of 11% for this KPI was merited (target 10%)
• Leadership (operational and organisational) – qualitative measure assessed by the Remuneration Committee considering how the CFO has led the finance teams across the Group while promoting its values and Code of Conduct. This was assessed to be 6% (target 5%)
• Reduce structural discount – the committee assessed that the CFO’s inputs on the Strategic Review have been highly effective in support of the CEO and therefore the same achievement of 9% (target 10%) for this metric is merited

FY22 Bonus

1) Underlying earnings per share		US$ cents	Bonus		Target		Actual
Lower guard-rail	-13%	14.0	40%		45%		72.0%
On target	Budget	16.0	100%
Upper guard-rail	13%	18.0	160%
Actual		18.7	160%

2) EBITDA		US$ million	Bonus		Target		Actual
Lower guard-rail	-13%	140	40%		20%		16.7%
Actual		154.5	84%
On target	Budget	160	100%
Upper guard-rail	13%	180	160%

3a) Working capital – Logicalis net cash/overdraft		US$ million	Bonus
Outcome		-32	0%		5%		0.0%
Lower guard-rail	-25%	6	40%
On target	Target	8	100%
Upper guard-rail	25%	10	160%

3b) Working capital - Westcon net working capital days		Days	Bonus
Lower guard-rail	10%	21	40%		5%		8.0%
On target	Target	19	100%
Upper guard-rail	-10%	17	160%
Outcome		15	160%

Total corporate

75%

96.7%

4) Personal KPIs – CEO and CFO	Target	Actual
ESG	10%	11%		25%		26.0%
Leadership (operational and organisational)	5%	6%
Reduce structural discount	10%	9%
	25%	26%

Total on-target bonus

100%

122.7%

The achievement of the targets set out below translated into the following bonus payment for FY22. The executive directors are required to defer a mandatory minimum of 20% of their FY22 bonus into the DBW (the final STI disclosed below includes the mandatory deferral percentage). See section "Deferred Bonus Plan awarded during FY22" for details.

Executive director	Base salary	On target bonus  rate	Weighted  corporate  score  (target 75%)	Weighted  personal  score  (target 25%)	Final STI
	(A)	(B)	(C)	(D)	(A x B x (C + D))
Jens Montanana – CEO	1 200 000	175%	96.7%	26.0%	2 577 116
Ivan Dittrich – CFO	530 000	95%	96.7%	26.0%	617 894

The targets and outcomes of the annual bonuses of the executive directors for FY22 shown as a percentage of base salary and split by the bonus elements, are illustrated below.





The metrics for the executive directors’ STI in FY23 are set out in part 2 of this remuneration report.

Datatec Group long-term incentives awarded during FY22

Conditional Share Plan awarded during FY22

The annual grant of CSP awards was made on 1 June 2021 following approval by the Remuneration Committee. The awards will vest after three years subject to the Group meeting certain performance conditions set by the Remuneration Committee. The performance conditions used for the FY22 award are in line the policy communicated in the FY21 remuneration report, namely:

PERFORMANCE CONDITIONS AND WEIGHTING

THRESHOLD – 50% VESTING

MAXIMUM – 100% VESTING

TSR – two-thirds, calculated as follows:

CAGR(t0 , t) = (

V (t) V (t0)

)

1 –1 t – t0

Where:

• V(t0) is the average TSR index for the 30 trading days up to and including 25 May 2021, the date of the FY21 results announcement;
• V(t) is the average TSR index for 30 trading days up to the date of the FY24 results announcement;
• t0 is the start date, ie commencement of the performance period: 25 May 2021;
• t is the test date, ie end of the performance period: the date of the FY24 results announcement; and
• The difference between the dates is expressed in terms of years.

TSR must exceed 11.10% which was the Company’s weighted average cost of capital as at 29 February 2020, as measured over a three-year performance period.

TSR must equal or exceed 13.10%, as measured over a three-year performance period.

Underlying earnings per share – one-third

uEPS must grow by the rate of US CPI inflation +2% CAGR per annum over the three-year performance period starting from the reported uEPS for FY21 of 13.6 US cents.

uEPS must grow by the rate of US CPI inflation +4% CAGR per annum over the three-year performance period starting from the reported uEPS for FY21 of 13.6 US cents.

Linear vesting applies between threshold and maximum levels.

Executive directors’ CSP awards are as follows:

			Number of awards – movement in FY22					Fair value of awards
CSP	Grant date	At 28 February 2021	Granted	Vested	Lapsed	Modifi- cation	At 28 Feb 2022	On grant US$’000	On grant as % of base pay	On vesting US$’000	At 28 Feb 2022 US$’000	At 28 Feb 2021 US$’000
J P Montanana	01-Jun-18	1 291 148	–	(645 574)	(645 574)	–	–	2 142	150	1 317	–	1 096
	01-Jun-19	538 870	–	–	–	73 825	612 695	1 246	109		372	91
	01-Jun-20	782 719	–	–	–	107 233	889 952	1 086	95		1 442	886
	01-Jun-21	–	519 555	–	–	71 179	590 734	1 094	91		957	–
		2 612 737	519 555	(645 574)	(645 574)	252 237	2 093 381				2 771	2 073
I P Dittrich	01-Jun-18	405 066	–	(202 533)	(202 533)	–	–	672	120	413	–	344
	01-Jun-19	190 212	–	–	–	26 059	216 271	344	87		131	32
	01-Jun-20	276 286	–	–	–	37 851	314 137	383	76		509	313
	01-Jun-21	–	183 576	–	–	25 150	208 726	387	73		338	–
		871 564	183 576	(202 533)	(202 533)	89 060	739 134				978	689

The fair value of the CSP awards granted during FY22 at date of grant (1 June 2021) was R29.09 (FY21: R24.12) per award being the 30-day vwap on the day the Group’s FY21 results announcement. The fair value as at 28 February 2022 is based on the 30-day vwap on 28 February 2022, R37.53 (FY21: R25.67) multiplied by an estimate of the performance conditions being achieved. The 2018 awards vested in June 2021 with 50% vesting based on the uEPS performance condition being achieved but the other 50% lapsing as the ROIC performance condition was not achieved. For the 2019 awards, the fair value at 28 February 2022 assumes that 25% of the awards will vest as the threshold for the ROIC performance condition has been met while the uEPS performance condition was not achieved. For the 2020 and 2021 awards, the fair value assumes 67% vesting of the awards, ie that the performance condition targets will only be 67% achieved. The actual value of any benefit received by the directors from these CSPs will be reported in future remuneration reports when the awards vest.

Modification to Conditional Share Plan during FY22

On 29 November 2021, Datatec paid a special dividend to shareholders. In order for the economic interest of participants in the CSP to be maintained a modification to the number of awards which were in their vesting period on the payment date of the special dividend is required. The modification involves a “factor” which is calculated as follows: X/(X-Y), where X is the share price at close the day prior to ex-div date and Y is the amount of the (cash) dividend. For the special dividend paid on 29 November 2021 the factor is 4262/(4262-512) = 1.137 and the table above shows the increase in the number of awards in accordance with this modification.

Deferred Bonus Plan awarded during FY22

Executive directors deferred part of their FY21 bonuses under the terms of the DBP in June 2021. In accordance with the policy, a co-investment equal to the amount of deferred bonus was provided by the Company and the total amount was applied to purchase Datatec shares in accordance with the policy.

Executive directors’ holdings in the DBP are shown in the table below:

			Amount of bonus deferred
DBP	Bonus  year	Grant  date	%	US$’000	Company    co- investment    US$’000	Total    invested    in shares    US$’000	Total    number    of shares    purchased	Fair value    of awards     on grant     US$’000	Fair value    of awards    at 28 Feb    22US$’000	Fair value    of awards    at28 Feb    21US$’000
JP Montanana	FY18	Jun-18	83.3	837	837	1 674	1 000 000	1 674	N/A	1 698
	FY19	Jun-19	50.0	812	812	1 624	702 407	1 624	1 707	1 192
	FY20	Jun-20	37.3	300	300	600	432 353	600	1 050	734
	FY21	Jun-21	37.9	1 039	1 039	2 078	987 024	2 078	2 398	–
	Forefeitable total at 28 February 2022						2 121 784	4 302	5 155	3 624
IP Dittrich	FY18	Jun-18	20.4	40	40	80	47 000	80	N/A	80
	FY19	Jun-19	25.0	96	96	191	82 636	191	201	140
	FY20	Jun-20	25.0	48	48	96	69 317	96	169	118
	FY21	Jun-21	33.3	225	225	450	213 778	450	519	–
	Forefeitable total at 28 February 2022						365 731	737	889	338
							2 487 515	5 039	6 044	3 962

The fair value of these awards at date of grant was the share price at which the DBP shares were purchased on the dates shown in the table. The fair value as at 28 February 2022 is R37.53 (FY21: R25.67) being the 30-day vwap on 28 February 2022.

During FY22, the DBP awards from June 2018 vested at the end of the three-year employment period. These awards are not included in the fair value total at 28 February 2022 because they no longer form part of the DBP.

The DBP shares above are included in the directors’ shareholdings as at 28 February 2022 disclosed later in this report. The fair value of the Company co-investment shares purchased in relation to the DBP is shown as LTI in total remuneration for the financial year in which the bonus (STI) was earned. The DBP grant in June 2021 was the final grant under the DBP which has been discontinued and replaced by the DBW scheme.

The value of dividends directors received on their DBP shares during the vesting period was:

Dividends	FY22 US$’000	FY21 US$’000
JP Montanana	464	–
IP Dittrich	62	–

Deferred Bonus Warrants to be awarded during FY23 based on the FY22 short-term incentives outcomes

Executive directors have deferred part of their FY22 bonuses under the terms of the DBW. In accordance with the policy, an equal co-investment from the Company will be applied to the deferred bonus amount in the form of a grant of SARs whose expected value based on an actuarial calculation is equal to the STI deferred.

		Amount of bonus deferred
DBW	FY23  Grant date  (expected)	%	US$’000	Datatec shares to be purchased US$’000	SARs to be granted US$’000	Fair value of awards on grant US$’000
JP Montanana	Jun-21	24.2	624	624	624	1 248
IP Dittrich	Jun-21	20.0	124	124	124	247

The table above shows the monetary amount of the FY22 STI deferral to be used to purchase Datatec shares and Company co-investment in a grant of SARs to be made in June 2022. The fair value of the awards on grant includes both the shares purchased by directors with part of their FY22 bonus and the Company co-investment in the form of a grant of SARs.

Directors’ interests in subsidiary share schemes – awarded during FY19

The executive directors received one-off awards under the Westcon International EAP in FY19 by virtue of their leadership roles as CEO and CFO of Westcon International (in addition to their Datatec roles). The Westcon International EAP is explained in part 2 of this remuneration report. The Datatec executives who participate in the Westcon International EAP have an adjustment made to the threshold of 10% carried interest (CAGR) annually added to the equity base of $125 million and their ultimate pay-out from the plan, if any, is capped as described in the policy section above.

Westcon EAP	Grant date  (FY19)	Number of awards	Fair value of awards on grant US$’000	Grant fair value as % of base pay US$’000	Fair value of awards at 28 Feb 22 US$’000	Fair value of awards at 28 Feb 21 US$’000
JP Montanana	14-Mar-18	30 000	–	–	2 605	1 625
IP Dittrich	14-Mar-18	15 000	–	–	1 302	812

In addition to the above, Datatec granted Mr Montanana a conditional award equivalent to 10 000 Westcon International EAP units on 14 March 2018. This award is conditional on a sale of Westcon International for $300 million or more. If that condition is met Mr Montanana will receive a cash payment from Datatec equivalent to the value of 10 000 units of the Westcon International EAP. The award will have the same adjustment made to the threshold, 10% carried interest (CAGR) annually added to the equity base of US$125 million, as the other Westcon International EAP awards provided to Datatec executives. This award had a fair value of US$868 000 as at 28 February 2022 (FY21: $750 000).

The fair value of the Westcon International EAP awards on grant was deemed to be nil because the value of Westcon International based on book value was below the equity base threshold of US$125 million. The fair value of the Westcon International EAP awards as at 28 February 2022 was determined by an actuarial calculation.

Previous Datatec Group share schemes

The previous Datatec Group share schemes, the SARS, long-term incentive plan (“LTIP”) and old DBP, operated from 2005 until 2017 and thereafter they were superseded by the CSP and new DBP. Existing grants under the previous share schemes remained active for the three-year performance periods and details of the operation of the previous share schemes have been provided in past remuneration reports. The only remaining vested SARs award at 28 February 2021 was the SARs granted in May 2015 (during FY16) which had vested during FY19 and the CEO is the only director holding this award as follows:

	Number of awards – movement in FY22				Fair value of awards
SARS	Grant date  (FY19)	At 28 Feb 21 US$’000	Modification US$’000	At 28 Feb 22 US$’000	At 28 Feb 22 US$’000	At 28 Feb 21 US$’000
JP Montanana	14-May-15	629 000	85 879	714 879	280	–

The number of SARs held by each participant was modified in the same way as the CSP modification described above and the SARs strike price was reduced by the same modification factor. The fair value of the SARs as at 28 February 2022 is calculated as the amount the 30-day vwap on 28 February 2022, R37.53 exceeds the strike price of the SARs which is R31.49 after modification. At 28 February 21 the fair value was nil as the strike price exceeded the share price at that time.

Dilution attributable to Datatec Group share incentive plans

In practice, the Company has not issued new shares in settlement of share schemes in the recent past and has no intention to do so in the near future. Instead, shares for settlement of share schemes are purchased in the market.

If new shares were to be issued to settle expected vesting of outstanding CSP awards, the dilution arising would be 1.63% (FY21: 1.23%). Similarly, the settlement of outstanding SARS using a new issue of shares would cause a dilution of 0.02% (FY21: nil).

The DBP does not give rise to any dilution effect because forfeitable shares are granted to participants at the start of the holding period and settled using shares purchased in the market. However, the forfeitable shares are treated as treasury shares until vesting. The DBW will not give rise to any dilution effect because forfeitable shares are granted to participants at the start of the holding period using shares purchased in the market and the SARs co-investment, when ultimately exercised, will also use shares purchased in the market at the time.

None of the divisional share-based remuneration plans has any dilution effect as they are not settled with Datatec shares.

Shareholding guidelines

Both executive directors are compliant with the shareholding guidelines set out in the policy section at the date of this report.

Single figure remuneration of executive directors

The following tables show the composition of a single figure of remuneration for the executive directors:

		CEO		CFO
Component		FY22 US$’000	FY21 US$’000	FY22 US$’000	FY21 US$’000
LTI	CSP	372	1 096	131	344
	DBW	–	–	–	–
	DBP	–	1 039	–	225
Total LTI		372	2 135	131	569
STI	Cash	1 953	1 700	494	450
	Deferred	624	1 039	124	225
Total STI		2 577	2 739	618	675
Pension		214	214	84	84
Benefits		59	55	49	46
Base salary		1 200	1 140	530	503
Guaranteed package		1 473	1 409	663	633
		4 422	6 283	1 412	1 877

CSP

The remuneration from the CSP shown for FY22 is the fair value of 25% of the award expected to vest because the ROIC for FY22 is equal to the threshold for the performance condition for half of the June 2019 CSP grant. The uEPS performance condition for the other half of the 2019 CSP grant will not be met. The CSP remuneration shown for FY21 arises from the vesting of half of the June 2018 CSP in June 2021 following achievement of the uEPS target. Fair value is calculated using the 30-day vwap of Datatec shares as at 28 February in each year.

DBW and DBP

The value of the SARs granted by the Company in respect of FY22 bonus deferred by the directors is not included in the single figure remuneration for FY22. The intrinsic value of these SARs will be reported in the single figure remuneration table for the financial year preceding their vesting. This contrasts with the presentation of the co-investment shares granted under the terms of the DBP in FY21 which are included in the single figure remuneration at their year-end value. The different treatment of the co-investment corresponds to the different nature of the co-investment financial instruments (SARs vs. shares).

STI

The STI shown above is split between the element deferred into the DBW (FY22) or DBP (FY21) and the element paid in cash after publication of the Group results.

Non-executive executive directors’ remuneration

During FY22, non-executive directors received the following fees:

Role	FY22 fee US$
Chair of the Board (total fee inclusive of all committee work)	211 640
Senior non-executive director	78 000
Non-executive director	66 860
Chair of the Audit, Risk and Compliance Committee	33 420
Member of the Audit, Risk and Compliance Committee	16 710
Chair of the Social and Ethics Committee	11 140
Member of the Social and Ethics Committee	5 570
Chair of the Remuneration Committee	16 710
Member of the Remuneration Committee	8 360
Member of the Nominations Committee	5 570
Chair of Datatec Technology and Education Foundation	12 600

These fees were approved by shareholders at the AGM on 29 July 2021. The fees increased by 5% in FY22 having been unchanged for the previous three years. No increase is proposed for FY23 (the year ending 28 February 2023) so the fees shown above will be resubmitted to the 2022 AGM for shareholder approval.

Non-executive directors are reimbursed for travel costs necessary for attending Board meetings and do not receive any employment benefits.

Summary of directors’ remuneration

The remuneration of directors serving on the Board in FY22 and FY21 is shown in the following tables:

				FY22
	Guaranteed package
US$’000	Basic salary	Pension	Other benefits	Fees	STI	LTI	Total
Executive directors
JP Montanana	1 200	214	59	–	2 577	372	4 422
IP Dittrich	530	84	49	–	618	131	1 412
Total executive directors	1 730	298	108	–	3 195	503	5 834
Non-executive directors
SJ Davidson	–	–	–	212	–	–	212
M Makanjee	–	–	–	111	–	–	111
JF McCartney	–	–	–	72	–	–	72
CRK Medlock	–	–	–	84	–	–	84
MJN Njeke	–	–	–	114	–	–	114
E Singh-Bushell	–	–	–	109	–	–	109
Total non-executive directors	–	–	–	702	–	–	702
Total directors’ emoluments	1 730	298	108	702	3 195	503	6 536

 

				FY21
	Guaranteed package
US$’000	Basic salary	Pension	Other benefits	Fees	STI	LTI	Total
Executive directors
JP Montanana	1 140	214	55	–	2 739	2 135	6 283
IP Dittrich	503	84	46	–	675	569	1 877
Total executive directors	1 643	298	101	–	3 414	2 704	8 160
Non-executive directors
SJ Davidson	–	–	–	202	–	–	202
M Makanjee	–	–	–	102	–	–	102
JF McCartney	–	–	–	75	–	–	75
CRK Medlock	–	–	–	80	–	–	80
MJN Njeke	–	–	–	103	–	–	103
E Singh-Bushell	–	–	–	101	–	–	101
Total non-executive directors	–	–	–	663	–	–	663
Total directors’ emoluments	1 643	298	101	663	3 414	2 704	8 823

Note: the non-executive directors’ fees shown above exclude VAT.