Remuneration report

BACKGROUND STATEMENT

Employee

Value Proposition and Remuneration philosophy

Performance management, recognition and reward form the cornerstone to enable our employees to experience success over the long term. It facilitates congruence between employee commitment to our organisation and other life commitments. We demonstrate fair and responsible pay and strive to demonstrate that the work of our employees is valued and appreciated.

The Company's remuneration philosophy ensures a comprehensive and transparent remuneration strategy that drives a high-performing culture by supporting the delivery of the business strategy aligned to shareholder value in a sustainable and ethical manner and optimising employee experience ('EX').

Our reward delivery model to enable employees:

The Remuneration and Nomination Committee ('RemCo') is responsible for ensuring the Company's remuneration arrangements are fair, responsible and aligned with the interest of its shareholders.

In determining remuneration that will effectively achieve the goals of the remuneration policy and our human resource and Group strategy, we consider a range of internal and external factors. These include macro-economic conditions, Company performance, business and HR strategy, organisational culture, diversity and inclusion, industry performance and input from our stakeholders, particularly the votes of our shareholders on the remuneration policy and implementation report at the AGM.

The Company's approach to reward is holistic, with the remuneration policy and remuneration framework providing standardised remuneration governance structure in the Company that serves as a foundation to our employment ethos underpinned by the Company's strategy. The different operating entities in the Company have performance measures and incentives for employees that are relevant for the entity and the Company, aligning individual key performance indicators ('KPIs') with the overall achievement of business strategy.

The EOH Board is committed to engaging with shareholders in the event that the remuneration policy or implementation report, or both, are voted against by 25% or more of the votes exercised.

RemCo is satisfied that the remuneration policy, as further detailed in this report, achieved its objectives during the year.

Ongoing engagement with shareholders

At the AGM on 20 January 2021, the Company did not receive the requisite favourable 75% vote for the remuneration policy. The results of the voting at the previous two AGMs were as follows:

	20 January 2021		5 December 2019
	For	Against	For	Against
Remuneration policy	70.65%	29.35%	34.64%	65.36%
Implementation report	84.55%	15.45%	34.64%	65.36%

During the 20 January 2021 AGM, shareholders voted as follows on the adoption of the EOH 2020 Share Plan and the authorisation to issue shares in terms of section 41(1) of the Companies Act in respect of the EOH 2020 Share Plan:

	20 January 2021
	For	Against
Ordinary resolution number 6: Adoption of the 2020 EOH Share Plan	73.57%	26.43%
Special resolution number 3: Authorise the issue of shares in respect of the EOH 2020 Share Plan	73.66%	26.34%

As a consequence of not obtaining the requisite 75% vote for the remuneration policy and the authorisation to issue shares for the EOH 2020 Share Plan, the Chairman of the RemCo, together with the Company Financial Director and HR Director, engaged with shareholders to ascertain the reasons for dissenting votes against the adoption of the EOH 2020 Share Plan. As an outcome of the engagements, it was confirmed that the proposed EOH 2020 Share Plan lacked sufficient transparency on the performance targets and criteria, potential share dilution on settlement and malus and clawback principles.

In the context of the shareholder feedback and the Board's commitment to review employee retention schemes, Khokhela Remuneration Advisors was appointed to assist with the detailed review of the EOH 2020 Share Plan in conjunction with the Remuneration and Nomination Committee. In addition, Deloitte made recommendations regarding the net settlement methodology to minimise the dilution of shareholders on settlement of awards made in terms of the 2021 Share Plan and provided an opinion on the tax and accounting implications. The revised 2021 Share Plan will be put to shareholders for consideration and approval at the upcoming AGM and will be implemented should the requisite shareholder approval be obtained.

Based on its review of the Company and its key personnel, the RemCo considers Khokhela Remuneration Advisors and Deloitte to be independent and objective.

The Company remains committed to engaging with shareholders to seek and incorporate feedback as appropriate to refine and enhance remuneration practices and programmes on an ongoing basis, consistent with our corporate objectives and strategy.

Business performance and the impact on short-term incentives

Despite the management focus on the reputation risk dissipating, the Company has been faced with tough economic conditions. The NEXTEC business has undergone significant restructuring as well as assets held for sale, including some of its businesses being liquidated or in the process of being wound down given either their capital-intensive nature (projects in solar, rail, water, etc) or simply not core to the Group offerings and NEXTEC future strategy. As a consequence of the highlighted above, NEXTEC did not pay any short-term incentives. A solid base has now been established off which to grow and focus and improved financial performance is anticipated.

Remuneration key matters considered

In 2021, the RemCo considered and approved the following remuneration matters:

• Strengthen governance principles in the remuneration policy with reference to fair and responsible remuneration.
• Internal benchmarking and high-level pay inequalities to be addressed.
• External benchmarking and competitiveness.
• Internal pay scales and implementation strategy.
• Enhanced employee value proposition.
• Remuneration policies:
  • malus and clawback;
  • circumstantial pay;
  • travel and subsistence; and
  • voice and data policy.
• FY2022 salary increase principles and mandate.
• FY2021 short-term incentive awards.
• 2021 Share Plan salient features.

More information on the composition of the RemCo, attendance, other key areas of focus during the year, and focus areas for the year ahead are available in the Remuneration Committee report on Nomination and Remuneration Committee report.

The Remuneration and Nomination Committee is satisfied that the remuneration policy, as further detailed in this report, achieved its objectives during the year.

REMUNERATION POLICY

The remuneration policy aims to support the achievement of business strategy, shareholder requirements, optimising employee experience ('EX') by attracting, rewarding, and retaining the best possible talent for the business. The policy ensures fairness and internal equity through a standardised remuneration governance structure that is applied to all remuneration elements and incentive-related practices and decisions. It aligns individual performance to business objectives and drives a high-performing business culture while ensuring that the remuneration framework aligns with industry benchmarks. In addition, the policy promotes an ethical culture and responsible corporate citizenship within all of the Company's activities and drives financial and non-financial business imperatives in a sustainable manner.

Salaries are reviewed each year in the context of macro-economic factors, including consumer price index, market and trading conditions, skills shortages in specific areas, and salary surveys/benchmarks. Increases are considered based on market information, organisational performance, affordability, and changes in scope and roles. Increases are recommended by business unit leaders and approved by the Line of Business CEO, with line of sight provided to the Company CEO.

The Company CEO, CFO, and CRO are employed in executive employment contracts with a notice period of three months. All  directors sign restraints of trade agreements for a minimum period of 12 months following their resignations as directors. There are no obligations in the executive employment contracts that give rise to payments on termination of employment or office.

We measure performance against our strategic objectives by monitoring predefined KPAs on a bi-annual basis. Performance is weighted by occupational level for KPA.

KPA	Executive	Senior management	Middle management	Junior management/ skilled	Semi-skilled/ unskilled
Business	50%	40%	30%	20%	20%
People	25%	35%	35%	20%	0%
Individual	25%	25%	35%	60%	80%

A malus and clawback policy has been approved and implemented. This policy is designed to give the RemCo the ability to adjust or clawback any incentives paid as part of short or long-term incentives as a result of a breach of a material obligation such as a material misstatement of financials or a breach of the code of conduct that gives rise to reputational damage or legal action.

The full remuneration policy will be made available on our website at www.eoh.co.za, once the EOH 2021 Share Plan has been approved and the remuneration policy has been updated accordingly.

Total remuneration

Total remuneration comprises the sum of:

• guaranteed fixed remuneration;
• short-term incentives (STIs); and
• long-term incentives (LTIs).

Guaranteed package

The Company's cost-to-company approach provides employees with flexibility and choice regarding compulsory benefits. The cost-to-company structure includes:

* Ring-fenced schemes may have different arrangements

Cost-to-company is guaranteed and usually paid irrespective of  Group performance. The Company seeks to offer competitive remuneration relative to its peers, and internal pay scale medians are set at or close to the local market median as possible but consider affordability.

To ensure aligned and suitable remuneration competitiveness, a  review of salaries is conducted annually, taking into account an employee's performance, positioning in the salary scale and pay equity. Annual increase guidelines are presented to the RemCo for  review and signoff, and any resultant increase is effective from 1  August each year.

Pay positioning above the maximum of the internal scale may apply for those who hold scarce and critical skills. A market premium or allowance is paid for skills in absolute demand in the Company. As  business evolves and skills requirements or availability may change, critical jobs and scarce skills are reviewed annually.

In rare instances, below-median remuneration is provided for people who display high-performance but are new to their role and still need to grow fully into the role.

Total pay mix

A market-related pay mix is assigned to each job grade and split into guaranteed, STI and LTI elements. The ultimate aim of the pay mix is to find the best pay mix that will enable the recruitment and retention of talent while meeting the Company's economic performance objectives.

The STI and LTI percentage by job grade is inter alia dependent on the line of sight, influence, and accountability. LTIs are generally equity-settled but can be cash-settled with the approval of the RemCo, while STIs are generally cash-settled.

Set out below is the targeted pay mix for Executive Directors under threshold, target and stretch/maximum performance.

* Please note: LTI has reference to the expected % of Annual CTC on vesting as per the proposed 2021 Share Plan given an estimated share price and CTC.

Short-term incentives (STI plan)

The short-term incentive plan is designed to reward eligible employees for achievement against pre-determined KPAs during the year. It reinforces the alignment of individual KPIs with the overall achievement of the business strategy. Divisional executives, senior managers, and key employees may be selected by the EOH Board to be participants in the STI.

KPA targets for the STI Plan are as follows, subject to the Governance, Risk and Compliance modifier:

EBIT achievement	Debtors' days and cash conversion	Transformation of business (bonus impact measurement)
Divisional and Line of Business earnings before interest and tax (EBIT) incentives are calculated from 80% of target to target on a linear basis. Above target, incentives are calculated on a pro rata basis and capped at 150%. The cap applied remains at the sole discretion of the Company, and where necessary, Group executive management's discretion will be applied. Below 80% of the target, no bonus is payable.	At least 80% of the budgeted EBIT number must be achieved before payment against debtors' days and cash conversion is made. Debtors' days incentives include work in progress and revenue accruals. Incentives are calculated from target days + 10 days to 50% of target days on a pro rata basis. At the targeted debtors' days + 10 days, no incentive is paid, while improving debtors' days to 50% of the target achieves a 200% incentive. Cash conversion incentives are calculated from 100% on a linear basis to the cap at 150%. The cash conversion is calculated by dividing the cash generated from operations by EBITDA. A cash conversion tracker will be made available in a Qlik App (business information reporting tool) to determine achievement at the relevant level during the year.	The transformation score of the relevant line of business/cluster is treated as a bonus impact measurement for the financial year. The score is calculated based on the percentage of black (African, Coloured and Indian) employees of the total line of business/cluster headcount. Should the agreed transformation target not be met, a 10% deduction is applied to the overall incentive payable. No additional incentive payment in lieu of overachievement of the agreed targets will be payable. Consideration will be given to any impact on business due to potential selective rightsizing, sales of businesses, inter-company staff transfers, etc, which could have a direct impact on the targets as communicated. These instances will be reviewed on an individual basis, and Group executive discretion will be  applied.

Executive Directors

Based on outcomes required by Board, the following FY2021 key performance areas were agreed upon for the Executive Directors:

Key performance areas (KPA)		Chief Financial Officer	Chief Risk Officer	Chief Executive Officer	Chief Financial Officer	Chief Risk Officer	Chief Executive Officer
						KPA weighting (%)		Note
Financial performance	Refinance the debt and stabilise the capital structure by 31 July 2021 in prevention of over-indebtedness				40	20	40
	Meet the normalised EBITDA and PAT targets as budgeted for 2021
Business sustainability	Significant progress in consolidating and simplifying divisions in the Group
	Finalise the disposal plan in line with the capital structure requirements and market  conditions
	Significant progress on implementation of the new ERP system
	The order to cash and procure to pay processes have been mapped and have agreement and sign off by business				20	20	20
	Complete the cash pooling arrangements
	Unqualified audit opinion
	Significant progress on getting tax filings and AFS up to date
Social goals	Improve race and gender profile expressed in levels of seniority and remuneration  status
	Improve race and gender profile based on an approved transformation plan
	Complete an approved transformation plan for the business
	Progress demonstrated on implementation of HRaaS				20	30	20	1
	Show improved performance 10% year-on-year against FY2020 baseline EVP results
	Succession planning in place across the organisation
	Learning and Development EVP plan approved and implementation on track
	CSI plan approved and implementation on track
Governance and risk	90% completion on training and declarations
	Improvement shown on critical risk items identified
	Accurate and timeous close out on audit findings				20	30	20	2
	Accurate and timeous close out on Risk Committee actions
	Accurate and timeous close out on Social and Ethics Committee actions
Total					100	100	100

Notes
1	Chief Executive Officer: Split 10% EOH and 10% finance team
	Chief Risk Officer: Split 15% EOH and 15% CRO team
2	Chief Executive Officer: Split 10% EOH and 10% finance team
	Chief Risk Officer: Split 15% EOH and 15% CRO team

Targets are set at threshold (80%), on-target (100%) and stretched (120%) and will be applicable on each KPA and will be tallied per KPA to give the average achievement.

Governance, Risk and Compliance modifier

In line with good governance and corporate processes, employees must meet the following requirements, or no incentive is payable:

1. Full compliance to all Company policies ensured within the employee's business area, including bid processes, disclosures, and signoff requirements. A final determination is made by the Company CEO and CRO regarding policy non-compliance based on the degree of negligence/wilful blindness by the employee, taking into account any appropriate remediation taken by the employee to intervene or stop negligence or non-policy compliance by the relevant employee or other employees, where applicable.

2. All GRC compulsory training completed on time in the relevant LMS Portal, including those of direct employees (where applicable).

3. All attestations completed and updated on the GRC portal, including those of direct employees (where applicable).

STI quantum (potential)

Employees in the STI Plan qualify for a percentage of their annual cost-to-company depending on the weighted KPI scoring in accordance with the performance metrics and the remuneration framework.

Payments in respect of an on-target incentive that have passed the GRC modifier are subject to overall EOH business performance and RemCo approval. In addition, the employee:

• must be in the employ of the Company at the time that the incentive falls due for payment;
• must not be subject to any disciplinary action, misconduct, or forensic investigation;
• must not be subject to any enquiry relating to poor work performance; and
• must not have had their employment terminated or be in the process of serving their notice period.

Long-term incentive plan (LTI)

The LTI aims to align divisional executives and management with the interests of the Company, to attract, retain, motivate and reward excellent performance by employees who are able to influence the performance of members of the EOH Group or divisions on the basis that aligns their interests with those of EOH shareholders and the business's strategy. The LTIP is available to divisional executives, senior managers and key employees selected by the EOH Board to be participants in the LTIP.

Current retention schemes FY2021

The Company currently has three share schemes, the EOH Holding Company Share Participation Scheme (EOH Share Trust), the Mthombo Trust and the Share Ownership Plan 2018 (2018 SOP).

The EOH Share Trust

The scheme is governed by a trust deed approved by shareholders and is a registered Schedule 14 Share Trust approved by the JSE  Limited. The primary objective of the share trust is to retain highly skilled and talented individuals and share options are only issued to high-performing individuals based on their contribution to  the Company.

Under the EOH Share Trust terms, up to 18 million shares are reserved for share options, which are equity-settled. The option strike price is the share price on the trading day immediately preceding the date on which share options are offered, less a 40%  discount. The share options vest in four equal annual tranches, with the first tranche of 25% vesting two years after the initial grant date. The next 25% vest after three years, 25% after four years, and the final 25% after year five. Vested share options will lapse 10 years after the grant date. Should an employee leave EOH, their unvested share options are forfeited.

The last award made by the EOH Share Trust was in October 2018 and is expected to complete vesting in 2023. The EOH Share Trust will not form part of the future remuneration structure and will be terminated once the last award vests.

The Mthombo Trust

The scheme is governed by a trust deed approved by shareholders and is a registered Schedule 14 Share Trust approved by the JSE  Limited. It is a B-BBEE scheme introduced to promote black economic transformation, with the only participants being qualifying EOH employees. The option strike price is the share price on the trading day immediately preceding the date when share options are offered less than a 40% discount.

The share options vest in three tranches, with the first tranche of 33.3% vesting three years after the initial grant date, 33.3% after four years, and the final 33.4% after year five. Vested share options will lapse eight years after the grant date if not exercised. Should an employee leave EOH, their unvested share options are forfeited.

The last active awards are expected to conclude vesting in  FY2022. The Mthombo Trust is not likely to form part of the future remuneration structure.

The 2018 Share Ownership Plan (2018 SOP)

During FY2018, the Company reviewed the two existing share option schemes, considering the context of local and global practice, shareholder feedback, and the pressing need to attract, retain, and engage critical talent. The outcome of this process was the 2018 SOP, which replaced the EOH Share Trust scheme as the Company's primary long-term incentive plan. The key objectives of this change were to ensure the attraction and retention of key individuals in the Company, to enable a sustainable succession planning strategy and to foster better alignment between executives, staff and shareholders.

The 2018 SOP provides employees with the opportunity of receiving shares in the Company through the award of conditional rights to shares, which vest over a period determined by the RemCo, usually with the first tranche of 25% vesting two years after the initial grant date, 25% after three years, 25% after four years and 25% after year five. These awards are subject to continued employment and the achievement of Company performance conditions, where applicable. All awards to Executive Directors and prescribed officers made in terms of the 2018 SOP are subject to appropriate Company performance conditions as determined by the RemCo and disclosed annually in the remuneration report.

Shares to settle 2018 SOP awards will be purchased in the market with no new shares to be issued for settlement; the scheme has no dilutionary impact on shareholders. The RemCo has the authority to direct that an award be cash-settled by making payment of the value of the vested shares. Compared to the previous share option plan, the 2018 SOP awards are less volatile and dilutive and more aligned with the creation of shareholder value (share price growth and dividends).

The 2018 SOP was used as follows:

Awards of conditional shares were made to employees with unvested options under the EOH Share Trust and the Mthombo Trust to address immediate retention risks caused by the fall in the Company's share price by offering to replace employees' unvested options on a fair value exchange basis. Top-up awards were also granted to selected employees on a once-off basis. The 2018 SOP was also used to make annual awards to employees in line with market benchmarks.

During FY2020, shares were allocated under the scheme to employees whose salaries were reduced by 25% for three months to manage the Company's liquidity and sustainability due to COVID-19.

The proposed EOH 2021 Share Plan (Share Plan)

Following the review of the Company's existing incentive schemes and the previously proposed EOH 2020 Share Plan, a new conditional performance share plan has been designed, which will be adopted subject to shareholder approval at the AGM on 2 December 2021.

EOH's remuneration policy governs awards to eligible employees and remuneration framework taking into consideration, inter alia, an employee's status, role, current remuneration, and the desired pay mix at vesting for on-target performance. The malus and clawback policy gives the Remuneration and Nomination Committee the ability the ability to adjust or clawback any incentives paid as part of STI or LTI as a result of a breach of a material obligation.

In summary, the salient features of the proposed Share Plan are set out below:

Salient feature	Description
Eligibility	At RemCo's discretion, any executive, senior manager, manager and/or key employee of any employer company, including any Executive Director holding salaried employment or office, may be elected to participate in the Share Plan.
Target setting	* Performance share vesting matrix: Below threshold – 0% Threshold – 25% On-target – 100% Stretch – capped at 200% * Percentages for vesting are based on the desired (market) pay mix at vesting. Quantum awarded is a % of the cost-to-company which will result in the desired pay mix at vesting for on-target performance
Performance criteria	The performance criteria to govern the vesting will be determined annually for each award. The RemCo, in consultation with the Board, will set appropriate performance conditions and performance periods, as relevant, for each performance award, taking into account the business environment at the time of making the award. The following performance criteria for FY2022 will apply: Return on Invested Capital ('RoIC') (25% weighted): The weighted average cost of capital ('WACC') WACC + 0% for threshold for threshold, WACC + 4% for target and WACC + 6% for stretch. Targeted real growth in Headline Earnings per Share ('HEPS') (25% weighted): CPI + 7.4% threshold, CPI + 8.4% target and CPI + 10.4% for stretch. Earnings before interest, taxes, depreciation and amortisation ('EBITDA') cash conversion ratio, adjusted for legacy payments (25% weighted): 70% threshold; 80% for target and 90% for stretch. Skills development (10% weighted): 16 points threshold; 18 points target and 20 points stretch. Transformation (15% weighted): 15 points threshold, 16 points target and 17 points stretch. As an overarching performance condition aligned to good governance, all compulsory Group risk and compliance training and attestation should be completed.
Performance period	Not earlier than three years from the award date.
Targeted pay mix on vesting	As a % of annual guaranteed remuneration on vesting: Chief Executive Officer: 17.5% (Threshold); 70% (On-target); and 140% (Stretch). Chief Financial and Chief Risk Officer: 15% (Threshold); 60% (On-target); and 120% (Stretch). Other exco members: 12.5% (Threshold); 50% (On-target); and 100% (Stretch).
Dividends rights	Awards have rights to dividend equivalents on vesting and is an amount equal to the normal dividends that the Company would have paid in respect of each share during the period from the award date to the vesting date multiplied by the number of vested shares. RemCo, has the prerogative to determine the manner of settlement of the dividend equivalents, ie whether to settle in cash equal to the number of  shares.
Settlement	Net settlement method

The settlement of vested shares is envisaged to be net settled in equity, although the Share Plan does allow for either equity or cash settlement at the RemCo's discretion. Equity settlement can be via allotment and issue of new shares, the allocation of treasury shares, or the acquisition of shares in the open market on behalf of participants. RemCo's selection of the settlement method together with the net settlement method will aim to minimise equity dilution when settling the Share Plan as far as possible.

The maximum number of shares in aggregate to be acquired by participants over the duration of the Share Plan is not to exceed 8.8 million shares, currently representing approximately 5% of EOH's issued share capital, and for any one participant, not to exceed 1.7 million shares, currently representing approximately 1% of the issued share capital.

Termination of employment

Treatment of benefits under the proposed scheme in the event of termination of employment depends on whether the termination is a 'no-fault' or 'fault' termination, as shown in the table below.

Definition	No-fault termination	Fault termination
	No-fault termination is the termination of employment of a  participant by reason of: death; injury, disability or ill health, in each case as certified by a qualified medical practitioner nominated by the relevant employer company; dismissal based on operational requirements as contemplated in the Labour Relations Act 66 of 1995; and disinvestment of the employer company or retirement on or after the retirement date. In addition, the Company may, in its sole and absolute discretion, determine at the relevant time a specific reason/s that constitute/s 'no-fault determination'.	Fault termination of employment by reason  of: misconduct; poor performance; and other dismissible offence; or resignation by the participant.
Benefits in terms of the conditional performance shares	Performance shares will be prorated for the time period until the termination date and be further adjusted by a performance factor, which RemCo in its discretion apply relating to EOH's performance as at the termination date.	All conditional performance shares will be forfeited.

Malus and clawback

To further align the interest of shareholders, a formal malus and clawback policy was approved and adopted in July 2021 and applied to all incentives in the Company. The right to invoke clawback is applicable for a period of two years after the payment of  any STI or settlement of any LTI awards.

The RemCo, in its discretion, shall be entitled to recoup settled and/or paid incentives (clawback) in full or part of and reduce or cancel any unpaid, unvested and unsettled incentives (malus) when trigger event(s) occur. A trigger event is an incident or action of an employee that impacted negatively on or caused reputational damage to the Company, such as:

• there has been misbehaviour or material error by a participating employee or where the actions or conduct of an employee, in the reasonable opinion of the RemCo, have resulted in reputational damage to the Company;
• the Company suffers a material downturn in financial performance or a material failure of risk management;
• awards have been based on misleading statements and/or material misstatements of the Company's financial results, or information arises which would have caused benefits to lapse or would have resulted in the RemCo exercising its discretion differently had the information been known at the time;
• the Company has suffered a material financial loss as a result of actions or circumstances attributable directly to an employee or which could have been avoidable by the reasonable actions of an  employee;
• an act or omission of a participant, which in the reasonable opinion of the RemCo amounts to serious misconduct;
• an event or behaviour involving, or attributable to, a participant (and, for the avoidance of doubt, any previous participant who has received an award in the past and has received any shares or cash as a result of such past award which has led or may reasonably lead to censure under laws, regulations or rules of any stock exchange or other applicable regulatory authority applicable to any Group entity; and/or
• RemCo, at its discretion, deems it necessary to apply malus and clawback

Non-executive Director remuneration

Non-executive Directors sign engagement letters with the Company, which set out their duties and remuneration terms. The term of office of Non-executive Directors is governed by the MoI, which provides that one-third of directors retire by rotation.

The remuneration of Non-executive Directors is based on proposals from RemCo, which are submitted to the Board for approval. The committee annually reviews Non-executive Director remuneration and makes recommendations to the Board for approval which is subsequently tabled at the AGM for approval.

The fees of the Non-executive Directors are considered annually and determined in light of market best practices and with reference to the commitment and responsibilities associated with the role. Each non-executive Board member receives a fixed annual retainer and fixed fee per meeting. An additional hourly fee is paid for unscheduled meetings if the meeting lasts less than three hours, or a full meeting fee if the meeting lasts longer than three hours (excluding the chairperson and the lead independent Non-executive Director). The Non-executive Directors' remuneration is paid quarterly in arrears.

Expenses, such as travel and accommodation in relation to normal Board activities, as well as any relevant training, are reimbursed.

There are no post-retirement benefits for Non-executive Directors.

IMPLEMENTATION REPORT

The implementation report details the outcome of implementing the approved remuneration policy and framework during the year under review. The remuneration policy and framework were implemented across the Company at all levels, rewarding excellent performance to ensure the retention of key talent and high performers while appropriately addressing poor performance.

Remuneration disclosure of the Chief Executive Officer ('CEO'), Chief Financial Officer ('CFO'), Chief Risk Officer ('CRO') and Non-executive Directors' remuneration:

Executive Directors

2021 guaranteed pay

The independent benchmark data obtained from 21st Century in October 2020 for the Chief Executive Officer's guaranteed remuneration, STI and LTI were considered.

The  benchmark was based on the following organisation parameters:

• the type of organisation (industry and structure);
• financial parameters;
• number of employees;
• number of core businesses; and
• the number of locations and geographical areas operated in.

Further benchmark data obtained from the Willis Towers Watson Executive Compensation Multi-Nationals Customer Executive survey and the High-Tech Willis Towers Watson industry-specific survey was also considered.

It should be noted that the CEO has received no value from the LTI schemes in FY2020 and, from a retention perspective, an increase in guaranteed pay in FY2021 was inevitable. The Executive Directors were brought in to salvage a business in serious distress. At the time of the appointment of Stephen van Coller (CEO), there was no sign of the corruption and extent of the actual issues at the time.

In light of the benchmark analysis done, the retention risk with the FY2021 STI potential reduction between 35% – 49%, the Board and RemCo approved the following salary increases on fixed remuneration for the Executive directors:

Executive Director	2020	2021
Stephen van Coller (CEO)	R8 000 000	R10 000 000
Megan Pydigadu (CFO)	R4 500 000	R6 750 000
Fatima Newman (CRO)	R4 100 000	R6 150 000

2021 STI performance and pay

In accordance with the malus/clawback clause set out in the remuneration policy, any incentive will be subject to the executive guaranteeing and undertaking that they have not been involved personally, whether directly or indirectly, nor involved EOH in any incident or action that might impact negatively or cause reputational damage to the Group. All incentives are subject to the provisions as set out on the malus and clawback policy.

Taking into account the market benchmarks values and increase on guaranteed remuneration, the following on-target STI potential was awarded and approved by the Board and RemCo:

Executive Director	2020	2021
Stephen van Coller (CEO)	R7 000 000*	R4 539 000
Megan Pydigadu (CFO)	R4 000 000	R2 049 000
Fatima Newman (CRO)	R4 000 000	R2 030 000

*	The R7 000 000 STI award was divided into R4 000 000 cash incentive and a R3 000 000 performance-linked STI. Stephen van Coller achieved the set performance targets to qualify for 100% of the R3 000 000 performance STI award but opted not to take the award

Targets are set at threshold (80%), on-target (100%) and stretched (120%) and will be applicable on each KPA and tallied per KPA to give the average achievement.

The graph below shows the extent to which the Executive Directors met the performance measures for FY2021:

Stephen van Coller (CEO)

Key performance area (KPA)	KPA weighting (%)	Award opportunity (R'000)	% achievement (rounded)	STI award (R'000)
Financial performance	40	2 000	80	1 600
Business sustainability	20	1 000	91	914
Social goals	20	1 000	103	1 025
Governance and risk	20	1 000	100	1 000
Total	100	5 000		4 539

Megan Pydigadu (CFO)

Key performance area (KPA)	KPA weighting (%)	Award opportunity (R'000)	% achievement (rounded)	STI award (R'000)
Financial performance	40	900	80	720
Business sustainability	20	450	91	411
Social goals	20	450	104	468
Governance and risk	20	450	100	450
Total	100	2 250		2 049

Fatima Newman (CRO)

Key performance area (KPA)	KPA weighting (%)	Award opportunity (R'000)	% achievement (rounded)	STI award (R'000)
Financial performance	20	410	80	328
Business sustainability	20	410	110	451
Social goals	30	615	103	636
Governance and risk	30	615	100	615
Total	100	2 050		2 030

2021 LTI performance and pay

Stephen van Coller (CEO)

On joining EOH as CEO in 3 September 2018, Stephen van Coller was awarded 1 000 000 share options through The EOH Share Trust at a strike price of R19. At the time the employment contract was concluded, Stephen van Coller was faced with a business in distress as a result of unresolved corruption issues, which led to the EOH share price dropping significantly. It is estimated that the realisable value of the 1 000 000 share options over the next two years will have a zero value.

During FY2020, 452 830 conditional performance shares were awarded on 19 December 2019 at a price of R13.25 per share. These shares vest in four equal tranches equally on 1 August  2021, 2022, 2023 and 2024, respectively, based on continued employment and share price performance on each vesting date.

During FY2021, no awards were made as the award was subject to the approval of the EOH 2020 Share Plan. Unfortunately, the requisite 75% vote for the remuneration report and the authorisation to issue shares for the EOH 2020 Share Plan was not obtained. If the EOH 2020 Share Plan were approved, performance shares with a face value of R6 600 000 would have been awarded.

Megan Pydigadu (CFO)

Megan Pydigadu was awarded 62 021 share options on joining EOH as CFO in FY2019, which were granted on 15 January 2019. These shares will vest in four equal tranches on 15 January 2021, 2022, 2023, and 2024 respectively, and consequently, 15 501 shares vested in FY2021.

During FY2021, no share award was made as the award was subject to the approval of the EOH 2020 Share Plan. If the EOH 2020 Share Plan were approved, performance shares with a face value of R3 000 000 would have been awarded.

Fatima Newman (CRO)

During FY2021, no share award was made as the award was subject to the approval of the EOH 2020 Share Plan. If the EOH 2020 Share Plan were approved, performance shares with a face value of R3 000 000 would have been awarded.

Unvested awards and cash flow

				Number of options/shares
Executive Directors	Scheme	Award date	Opening balance on 1 August 2020	Granted during FY2021	Vested during FY2021	Vesting after FY2021	Forfeited during FY2021	Exercised during FY2021	Closing balance on 31 July 2021	Fair value on 31 July 2021
Stephen van Coller	Share Trust*	13 November 2018	1 000 000		250 000	750 000			1 000 000	–
	Share Ownership Plan**	19 December 2019	452 830			452 830			452 830	R2 943 395
Subtotal			1 452 830		250 000	1 202 830			1 452 830	R2 943 395
Megan Pydigadu	Share Ownership Plan**	15 January 2019	62 021		15 505	46 516		15 505	46 516	R302 352
Subtotal			62 021		15 505	46 516			46 516	R302 352
Total			1 514 851	–	265 505	1 249 346	–		1 499 346	R3 245 747

*	The EOH Share Trust
**	The 2018 Share Ownership Plan (2018 SOP)

No payments were made on termination of employment or office during the year.

Tables of FY2021 single total figure of remuneration

			Stephen van Coller (appointed 1 September 2018)
	Awarded for 2021					Single figure remuneration for 2021
	R'000	2020	2021			R'000	2020	2021
1	Fixed remuneration	8 000 000	10 000 000		1	Fixed remuneration	8 000 000	10 000 000
2	Covid-19 salary adjustments	(500 000)			2	Covid-19 salary adjustments	(500 000)	–
	TERS payment		6 638			TERS payment		6 638
	Short-term incentives (STI)	7 000 000	5 000 000			Short-term incentives (STI)	4 000 000	4 539 000
	STI (non-performance-related)	4 000 000				STI (non-performance-related)	4 000 000
3	STI (performance-related)*	3 000 000	5 000 000		3	STI (performance-related)*		4 539 000
4	LTI awarded	6 000 000			5	LTI vested	–
	Other salary expenses allowed	62 240				Other salary expenses allowed	62 240
	Total reward	20 562 240	15 006 638			Total reward	11 562 240	14 545 638

*	R3 000 000 performance-related STI in FY2020 was earned and approved by the Board but was declined by the Group CEO
1	Cost-to-company, which includes a guaranteed fixed salary and benefits
2	Pay cut
3	STI payable FY2021, which is derived from the performance for the year ended 31 July 2021, subject to Board approval
4	On 13 November 2018, 1 000 000 share options were awarded at a strike price of R19.00
	On 19 December 2019, 452 830 shares were awarded at a price of R13.25 per share
5	On 13 November 2020, 250 000 share options were exercisable. As the strike price was R19.00 per option, the realisable value was zero
	On 1 August 2021, 113 208 shares are scheduled to vest and will be disclosed in the FY2022 remuneration report

		Megan Pydigadu (appointed 15 January 2019)
	Awarded for 2021					Single figure remuneration for 2021
	R'000	2020	2021			R'000	2020	2021
1	Fixed remuneration	4 500 000	6 750 000		1	Fixed remuneration	4 500 000	6 750 000
2	Covid-19 salary adjustments	(281 250)	–		2	Covid-19 salary adjustments	(281 250)	–
	TERS payment	–	6 638			TERS payment	–	6 638
	Short-term incentives (STI)	4 000 000	2 250 000			Short-term incentives (STI)	4 000 000	2 049 000
	STI (non-performance-related)	2 000 000				STI (non-performance-related)	2 000 000	–
3	STI (performance-related)	2 000 000	2 250 000		3	STI (performance-related)	2 000 000	2 049 000
	LTI awarded	–	–		4	LTI vested	–	144 197
	Other salary expenses allowed	52 645	–			Other salary expenses allowed	52 645	–
	Total reward	8 271 395	9 006 638			Total reward	8 271 395	8 949 835

1	Cost-to-company, which includes a guaranteed fixed salary and benefits
2	Pay cut
3	STI payable FY2021, which is derived from the performance for the year ended 31 July 2021, subject to Board approval
4	On 15 January 2021, 15 505 shares vested at a share price of R8.30

		Fatima Newman (appointed 31 July 2019)
	Awarded for 2021					Single figure remuneration for 2021
	R'000	2020	2021			R'000	2020	2021
1	Fixed remuneration	4 100 000	6 150 000		1	Fixed remuneration	4 100 000	6 150 000
2	Covid-19 salary adjustments	(256 250)	–		2	Covid-19 salary adjustments	(256 250)	–
	TERS payment	–	6 638			TERS payment	–	6 638
	Short-term incentives (STI)	4 000 000	2 050 000			Short-term incentives (STI)	4 000 000	2 030 000
	STI (non-performance-related)	2 000 000	–			STI (non-performance-related)	2 000 000
3	STI (performance-related)	2 000 000	2 050 000		3	STI (performance-related)	2 000 000	2 030 000
	LTI awarded	–	–			LTI vested	–	–
	Other salary expenses allowed	6 762	–			Other salary expenses allowed	6 762	–
	Total reward	7 850 512	8 206 638			Total reward	7 850 512	8 186 638

1	Cost-to-company, which includes a guaranteed fixed salary and benefits
2	Pay cut
3	STI payable FY2021, which is derived from the performance for the year ended 31 July 2021, subject to Board approval

Non-executive Director fees

Non-executive Director fees are reviewed by the RemCo and the Board and proposed to shareholders for approval at the AGM. Fees paid to Non-executive Directors during 2021 are shown in the table below, and the proposed fees for FY2022 are set out in the notice of the AGM.

	Directors' fees FY2021 (R'000)	Directors' fees FY2020 (R'000)
Sipho Ngidi (appointed 20 February 2020)	883	522
Xolani Mkhwanazi (deceased 4 January 2020)	–	333
Jesmane Boggenpoel	850	1 360
Ismail Mamoojee (resigned 20 January 2021)	403	1 389
Moretlo Molefi (resigned 20 January 2021)	186	1 019
Anushka Bogdanov (resigned 28 July 2020)	–	1 004
Andrew Mthembu (Chairman)	1 200	1 265
Mike Bosman	1 220	1 594
Andrew Marshall (appointed 21 May 2020)	758	139
Jabu Moleketi (appointed 1 September 2020)	543	–
Nosipho Molope (appointed 1 January 2021)	499	–
Bharti Harie (appointed 1 January 2021)	504	–

Note: Extraordinary Board and/or committee meetings were held during FY2021 which impacted the above Directors' fees.

Compliance with policy

The remuneration disclosure presented in this report is based on remuneration decisions that have been made in compliance with the shareholder approved remuneration policy. There have been no known deviations from the policy in the current financial year.

Remuneration for FY2022

In determining the Executive Directors' remuneration for FY2022, benchmarks that consider the level and complexity of the role, job grade, and organisational parameters such as the size, type, and structure of EOH will be considered.

For the FY2022 year, the STI performance measures and weightings will not significantly differ from FY2021.

Key performance area (KPA)	KPA weighting
Financial performance	40%
Business sustainability	20%
Social goals	20%
Governance and risk	20%
Total	100%

It is envisaged that LTI allocations will be made under the 2021 Share Plan that is still subject to shareholder approval at the upcoming AGM. Following approval of the 2021 Share Plan, any LTI allocations will be linked to long-term performance measures, weightings, and achievement levels determined by the RemCo and approved by the Board.

As the Executive Directors' share allocation was due on 1 August 2021, the award of shares will not be backdated prior to the 2021 Share Plan approval.