remuneration committee

The remuneration committee operates in accordance with its terms of reference, which is reviewed on an annual basis.

The main responsibilities include:

• assisting the directors in fulfilling their responsibilities in establishing formal and transparent policies for people development and executive remuneration;
• determining specific remuneration packages for senior executives of the company, including but not limited to basic salary, performance based incentives, share incentives, severance packages, pensions and other benefits.

Membership comprises four non-executive directors, all of whom are independent. The Chairman of the board, Buddy Hawton, chairs the committee. The Chief executive officer attends meetings by invitation in order to advise on remuneration of senior executives.

Senior executives do not participate in any discussions or decisions related to their own remuneration. The senior executives are defined as the executive directors of Woolworths Holdings Limited and the executive directors of Woolworths (Proprietary) Limited, a major subsidiary.

The remuneration committee made use of the services of external consultants to advise them on executive remuneration and to provide advice on market data, remuneration trends, retention strategy and performance related pay.

The Chairman of the remuneration committee attends the annual general meeting.

The committee met a total of four times during the year. The details of individual attendance at meetings are set out below.

remuneration strategy

Woolworths remuneration philosophy is designed to attract, develop and retain the passionate, committed and talented retailers who are required to effectively implement the overall Woolworths strategy and create value for our shareholders.

The remuneration strategy for senior executives is based on principles of performance and alignment with shareholders’ interests. A significant portion of senior executives’ total potential remuneration is performance related in order to drive the right behaviour to optimise company performance. Stretch targets are set annually in the context of future prospects of the group and the prevailing economic environment in which it operates.

senior executive remuneration

The senior executive total remuneration package consists of the following:

guaranteed total package including benefits

The guaranteed total package including benefits or cost to company of the senior executives is subject to annual review by the remuneration committee. The targeted pay position for guaranteed total package is aimed between the median and upper quartile when benchmarked against major South African retail and non-retail companies, and is adjusted according to individual responsibility and performance.

short-term incentive scheme

The short-term incentive scheme aims to focus the senior executives on the achievement of the short-term strategic, financial and operational components of the one-year plan. The incentive is payable on achieving certain pre-defined stretch targets, in line with our strategy, using an overall target to trigger the incentive pool and modifiers to determine payout. The scheme is designed to reward performance when targets are met, with higher rewards for exceptional performance.

In the current year, the overall target was set at a pre-defined level of profit before taxation and exceptional items (PBTAE). The modifiers used were headline earnings per share, return on equity, cost effective availability, market share, performance management and achievement of black economic empowerment targets.

During the current year the targeted PBTAE was achieved and the majority of the modifiers were attained.

A revised short-term incentive plan has been implemented for the 2007 financial year.

long-term incentives – share scheme

The share scheme is designed to align the behaviour of senior executives with the achievement of sustainable long-term financial goals and the interests of shareholders. Shares are considered an essential element of senior executive remuneration and comprise a material part of their remuneration. Grants are reviewed on an annual basis against our comparator group to ensure alignment with the market.

The number of shares that are granted each year depends on company performance against the pre-defined stretch targets. Grants are allocated at varying multiples of annual guaranteed total package. Grants are not awarded if minimum targets are not met.

The share scheme includes the following performance criteria and respective weightings:

Performance criteria	Weighting
Total Shareholder Return (TSR)	25%
Financial measures (HEPS growth and ROE%)	50%
Value added measures	25%

The criteria and weightings are reviewed on an annual basis.

TSR is measured relative to the performance of a comparator group of other retailers against a combination of the General Retailers Index and the Food and Drug Retailers Index. Targets set for growth in headline earnings per share and return on equity are also externally benchmarked against the above comparator group. On an annual basis the remuneration committee reviews the appropriateness of the comparator group.

The share purchase scheme table below shows the share allocation awarded for performance achieved in the 2006 financial year. The Chief executive officer received a grant of shares equal to 140% of his annual guaranteed total package, while the other senior executives received a grant of shares equal to 100% their annual guaranteed total package.

A general meeting will be convened on 15 November 2006 immediately following the annual general meeting in order to table amendments to the Woolworths Holdings Share Trust for shareholder approval. The effect of the amendments will be to revise the terms of the executive share scheme.

Details relating to the share trust are set out in the directors’ report.

The non-executive directors do not participate in short or long-term incentive schemes.

executive directors’ service contracts

The executive directors have employment contracts which do not contain notice periods exceeding twelve months and do not provide for pre-determined termination compensation in excess of one years’ salary and benefits.

directors’ fees and emoluments

Fees for non-executive directors are recommended by the remuneration committee to the board prior to approval by our shareholders at the annual general meeting.

The 2006 fees for non-executive directors were approved at the 2005 annual general meeting. The proposed fees for 2007, which will be tabled for approval at the forthcoming annual general meeting, are set out below together with the fees approved for 2006;

	Proposed	Approved
	2007	2006
Services as directors Fees: Chairman of the board Director (SA) Director (UK)	R500 000 R102 000 £30 000	R450 000 R95 000 £29 400
Audit Committee Chairman Member	R112 000 R62 500	R100 000 R60 000
Risk Committee Chairman Member	R79 000 R39 500	R74 000 R37 000
Remuneration Committee Chairman Member	R90 000 R45 000	R84 000 R42 000
Transformation Committee Chairman Member	R79 000 R39 500	R74 000 R37 000
Nominations Committee Member	R10 500	R10 000
* Sustainability Committee Chairman Member	R13 000 R6 500	- -

* Established as a formal committee on 22 August 2006.

Emoluments paid to directors of Woolworths Holdings Limited in connection with the affairs of the company and its subsidiaries during the year ended 2006 and comparatives for 2005 are set out below:

			2006
					Retirement,			Interest
					medical	Per-		free loan
					and related	formance	Other	benefit	Total
Name		Notes	Fees	Remuneration	benefits	bonus	benefits (1)	(2)	remuneration
			R000’s	R000’s	R000’s	R000’s	R000’s	R000’s	R000’s
Executive directors
Simon Susman		3	145	2 995	605	3 426	22	1 013	8 206
Richard Inskip		4	-	1 866	199	1 410	102	781	4 358
Norman Thomson		3	145	1 543	187	1 181	31	799	3 886
			290	6 404	991	6 017	155	2 593	16 450
				Remu-		Nomi-	Trans-		Total non-
			Audit	neration	Risk	nation	formation		executive
			committee	committee	committee	committee	committee	Other	directors’
Name	Notes	Fees	member	member	member	member	member	fees	fees
		R000’s	R000’s	R000’s	R000’s	R000’s	R000’s	R000’s	R000’s
Non-executive directors
Buddy Hawton		450	-	84	-	10	37	12	593
Mair Barnes	5	338	-	42	-	10	-	-	390
Nigel Colne	5	338	60	42	37	10	-	1	488
Brian Frost	6	95	-	42	37	10	9	26	219
Mike Leeming		95	100	-	74	-	-	9	278
Chris Nissen	7	95	-	-	-	-	74	8	177
Sindi Zilwa		95	60	-	-	-	37	11	203
Nolitha Fakude (past director)	8	40	-	-	-	-	15	-	55
		1 546	220	210	148	40	172	67	2 403
Notes:
1  Other benefits includes discounts received on purchases made in our stores. 2 The interest free loan relates to the purchase of shares under the Woolworths Holdings Share Trust.The benefit for 2006 was calculated at 8% on the value of the outstanding loan. 3 Includes fees of A$30 000 payable by Country Road. 4 Other benefits include consultancy fees paid by Country Road. 5 Fees are paid in Sterling to British residents. 6 Includes payment of R18 000 in respect of the sustainability forum and Woolworths Trust. 7 Includes payment of R3 000 in respect of the sustainability forum. 8 Resigned on 25 November 2006.

		2005
				Retirement,			Interest
				medical and	Performance	Other	free loan	Total
Name	Notes	Fees	Remuneration	related benefits	bonus	benefits (1)	benefit (2)	remuneration
		R000’s	R000’s	R000’s	R000’s	R000’s	R000’s	R000’s
Executive directors
Simon Susman	3	139	2 767	567	0	18	562	4 053
Richard Inskip	4	-	1 695	180	0	98	503	2 476
Norman Thomson	3	139	1 433	183	0	28	432	2 215
		278	5 895	930	0	144	1 497	8 744
			Audit	Remuneration	Risk	Transformation		Total non-
			committee	committee	committee	committee	Other	executive
Name	Notes	Fees	member	member	member	member	fees	directors’ fees
		R000’s	R000’s	R000’s	R000’s	R000’s	R000’s	R000’s
Non-executive directors
Buddy Hawton		350	-	80	-	35	11	476
Mair Barnes	5	324	-	40	-	-	-	364
Nigel Colne	5	324	47	40	35	-	1	447
Nolitha Fakude (past director)		90	-	-	-	35	1	126
Brian Frost	6	90	-	40	35	-	18	183
Mike Leeming		90	73	-	70	-	7	240
Chris Nissen		90	-	-	-	70	5	165
Sindi Zilwa		90	40	-	-	35	9	174
		1 448	160	200	140	175	52	2 175
Notes:
1  Other benefits includes discounts received on purchases made in our stores. 2 The interest free loan relates to the purchase of shares under the Woolworths Holdings Share Trust. The benefit for 2005 was calculated at 8.5% on the value of the outstanding loan. 3 Includes fees of A$30 000 payable by Country Road. 4 Other benefits include consultancy fees paid by Country Road. 5 Fees are paid in Sterling to British residents. 6 Includes payment of R7 500 in respect of the sustainability forum and Woolworths Trust.

directors’ interests in shares

Details of directors’ interests in the shares of the company are disclosed in the directors’ report. Shares purchased and options granted to executive directors in terms of the Woolworths Holdings Share Trust, which are outstanding for the year ended June 2006 are set out below:  

share purchase scheme				June 2006
				Shares awarded during
		Shares at		or in respect of current			Shares sold		Shares at
		30 June 2005		year performance			during the year		30 June 2006
	Offer						Sale	Profit
Name	Date	Number	Price	Number	Price	Number	Price	(R'000)	Number	Price
Simon Susman	May 1999	600 000	3.22						600 000	3.22
	May 2000	255 958	2.70						255 958	2.70
	December 2000	1 154 900	2.77						1 154 900	2.77
	June 2001	6 597 610	3.03						6 597 610	3.03
	August 2002	879 397	3.98						879 397	3.98
	August 2003	780 039	5.16						780 039	5.16
	December 2004	440 755	10.59						440 755	10.59
	August 2005			412 697	11.31				412 697	11.31
	September 2006 3			378 947	13.30				378 947	13.30
Total		10 708 659		791 644				11 500 303
Richard Inskip	December 1998	113 667	2.60						113 667	2.60
	December 2000	585 290	2.77						585 290	2.77
	March 2001	500 000	2.82						500 000	2.82
	June 20011	350 000	3.03						350 000	3.03
	August 2002	376 884	3.98						376 884	3.98
	August 2003	314 922	5.16						314 922	5.16
	December 2004	274 788	10.59						274 788	10.59
	August 2005			165 782	11.31				165 782	11.31
	September 2006 3			155 263	13.30				155 263	13.30
Total		2 515 551		321 045					2 836 596
Norman Thomson2	December 1998	46 667	2.60						46 667	2.60
	May 1999	166 667	3.22						166 667	3.22
	December 2000	236 800	2.77						236 800	2.77
	March 2001	607 086	2.82						607 086	2.82
	June 20011	1 120 297	3.03						1 120 297	3.03
	August 2002	329 774	3.98						329 774	3.98
	August 2003	290 698	5.16						290 698	5.16
	December 2004	152 597	10.59						152 597	10.59
	August 2005			142 882	11.31				142 882	11.31
	September 2006 3			130 075	13.30				130 075	13.30
Total		2 950 586		272 957					3 223 543
Total		16 174 796		1 385 646					17 560 442
Notes: All offers vest over a 5 year period at 20% per annum except the 14 May 1999 offer which vests over 7 years. The vesting over the 7 year period is as follows: 20% vests after year 2, 10% vests after year 3, 4 and 5 respectively and 25% vests in years 6 and 7, respectively. The shares granted in August 2006 relate to grants for the achievement of performance criteria for the year ended 30 June 2006. 1 The 1 June 2001 offer of shares were converted from deferred delivery to normal shares in this year. 2 In addition to the shares held through the share purchase scheme, Norman Thomson holds 2 620 shares in his own name. These shares are included in the shares disclosed in the directors’ report. 3 These shares were issued in respect of performance for the year ended 30 June 2006. These shares are not included in the directors’ interests in shares in the directors’ report as they were issued after 22 August 2006. The loans used to purchase the shares must be repaid within ten years of the offer date.

Gains on sale of shares in previous year
	Offer				Sale	Profit
Name	Date	Number	Price	Number	Price	(R’000)
Simon Susman	December 1998	70 000	2.60	70 000	10.46	550
	May 2000	647 468	2.70	647 468	10.46	5 024
						5 574
Richard Inskip	December 1998	63 667	2.60	63 667	10.46	500
	December 2000	81 609	2.77	81 609	10.46	628
						1 128
Norman Thomson	December 1998	70 000	2.60	70 000	10.46	550
	December 2000	59 200	2.77	59 200	10.46	455
	March 2001	59 580	2.82	59 580	10.50	458
						1 463

As at 30 June 2006, the following proceeds and profit would have been earned on the disposal of the shares allocated, but not yet vested. This profit would have been forgone if the directors had resigned, and as such forms part of our retention strategy.

	Proceeds	Profit
	on disposal	on disposal
	(R’000)	(R’000)
Simon Susman	21 716	9 499
Richard Inskip	9 937	4 159
Norman Thomson	7 827	3 493

Share option scheme				June 2006
		Share options at		Share options granted		Share options exercised/			Share options
		30 June 2005		during the year		transferred during the year			at 30 June 2006
	Offer						Exercise	Profit
Name	Date	Number	Price	Number	Price	Number	price	(R000’s)	Number	Price
Richard Inskip	May 1999	300 000	3.22			29 624	15.61	367	270 376	3.22
	June 2001	270 376	3.03			270 376	15.61	3 401	-	-
Total		570 376				300 000		3 768	270 376
Notes: 1.  There is no IFRS expense recognisable in respect of these options, as all options were offered prior to October 2001. The 14 May 1999 offer vested over a 7 year period as follows: 20% vested after year 2, 10% vested after year 3, 4 and 5 respectively and 25% vested in years 6 and 7 respectively. The June 2001 offer vested over a 5 year period at 20% per annum.  The options must be exercised within 10 years of the offer date.

attendance at the remuneration committee meetings

	Aug	Nov	Feb	May
Director	2005	2005	2006	2006
Buddy Hawton C N
Mair Barnes N
Nigel Colne N
Brian Frost N

C	=	Chairman
N	=	independent non-executive director