Strategic remuneration

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 while 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.

Value generation	FY23 and FY24: personal key performance indicators ("KPI") for the executive directors' STI: reduce structural discount	FY23 and FY24: The performance condition for the whole of the conditional share plan ("CSP") vesting is absolute TSR. Furthermore, executive share ownership requirements and the additional two-year holding period post vesting for deferred bonus plan ("DBP") and deferred bonus warrant ("DBW") ensure shareholder alignment over the long term. FY23 and FY24: DBW co-investment only benefits participant if share price increases.
uEPS	FY23 and FY24: target for 35% of STI is budget uEPS	–
EBITDA	FY23 and FY24: target for 30% of STI is budget Group adjusted EBITDA	–
Other quantitative measures addressing current short-term priorities	FY23 and FY24: metrics addressing Westcon International and Logicalis working capital (Logicalis divided into Logicalis International and Logicalis Latin America ("LATAM") for FY24).	–

The context in which the Remuneration Committee ("the committee") has set STI and LTI targets for FY24 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 decided to use this metric as the sole performance condition for the FY23 and FY24 CSP grants.

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 this metric links directly to the strategic goals.

The Remuneration Committee is satisfied that the remuneration policy has achieved its objectives in FY23 and proposes no changes to the policy for FY24. We believe the policy and implementation set out in the Annual Report achieve an equitable alignment of shareholder and management interests.

Please refer to the remuneration report in the Datatec 2023 Annual Report for more information.