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WHL
WOOLWORTHS HOLDINGS LIMITED
FY2019 Summarised Remuneration Report
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Reflecting on shareholder concerns,
we share how we have responded on the following:

1 Shareholder
Engagement Shareholder engagement
post 2018 Annual
General Meeting (AGM)
2 Remuneration
Policy Changes
implemented to the
Remuneration Policy
3 Disclosure
Implementation Additional disclosure
for FY2019
remuneration
4 Summary
Implementation Summary
implementation report
for FY2019
1
SHAREHOLDER
ENGAGEMENT
After the 2018 Annual General Meeting (AGM), the Remuneration Committee actively engaged with shareholders who were not satisfied with the implementation of the remuneration policies and practices for FY2018.

Shareholder voting on non-binding advisory remuneration resolutions

Remuneration Policy Implementation
2018

79.91%

60.26%

2017

96.92%

93.57%

Matters raised by shareholders have been categorised as follows:

Remuneration
policy
Disclosure
implementation
2
Remuneration
Policy
The Remuneration Policy outlines the framework against which fair and responsible remuneration practices are applied by the Group. It aims to be market-related and reflect best practice.

Malus and clawback

The current policy is silent on clawbacks.
The remuneration policy will now

include malus and

clawback provision

These will be included in the short- (STI) and long-term incentive (LTI)
schemes from 1 July 2019 to ensure good governance is in place.
FY2020 implementation
  • Trigger
    Event
    • Material reputational damage
    • Material misstatement in financial statements
    • Deliberate misinterpretation of financial targets
    • Prior to
      vesting or
      payment
      malus
      Malus
      Award
    • After
      Vesting or
      payment
      clawback
      CLAWBACK
      • Within
        TWO YEARS
        value of award
        recovered
      • After
        Two Years
        No recovery

minimum shareholding
requirements
Shareholders requested that minimum
shareholding requirements should be
implemented for Executive Directors.

The Committee is satisfied with the Executive Directors’ current shareholding.

Current shareholding ranges from:

100%
1200%

Given the impact of the current vesting trends of the share schemes,
discussions around this matter will continue.

93%
Threshold
100%
Target
WHL
92%
WSA
102%
DJ
40%
CRG
92%

STI Group gatekeeper

Group adjusted Profit Before Tax (aPBT) as a gatekeeper to the corporate STI schemes, is seen as a significant talent loss risk in operating entities where performance is good.

This Group gatekeeper encouraged thinking and execution, but has resulted in unintended consequences.

Group aPBT has now been removed as a gatekeeper, but the concept will be retained at an operating entity level.

FY2019 implementation

Other policy changes

The Committee has reduced the
corporate STI bonus pool for FY2020
to align with budgeted growth
expectations.
W
-50%
David Jones
-65%
Country Road Group
-50%
3
disclosure
implementation
The Group aims to adequately disclose the implementation of the Remuneration Policy in a manner in which enables shareholders to understand how business performance has resulted in the remuneration of Executive Directors.
Retrospective STI targets
Shareholders requested more detail regarding retrospective STI targets.
Financial performance target
Hidden
Hidden
Hidden
Hidden
Threshold
(R'000)
On target
(R'000)
Stretch target
(R'000)
Achieved
(R'000)
%
Achievement
Resulting
vesting
aEPBT
4 863
5 228
>5 228
4 858
92.9%
0%
aEPBT
4 063
4 369
>4 369
4 466
102.2%
102%
aEPBT
A$85.1
A$91.5
>A$91.5
A$36.9
40.3%
0%
aEPBT
A$109.6
A$117.9
>A$117.9
A$108.8
92.2%
0%
Additional detail on the retrospective STI
achievements are now disclosed.
Prospective LTI targets
To provide greater
transparency, additional
disclosure of prospective
LTI targets was requested.

Additional detail for LTI
targets are now disclosed.
Definitions:
CAGR: Compound Annual Growth Rate
EBITDA: Earnings before interest, taxes, depreciation and amortization
HEPS: Headline Earning Per Share
ROCE: Return on Capital Employed
WACC: Weighted Average Cost of Capital
Weighted CPI: Weighting of SA and Australia Consumer Price Indexes
20% 50% 30% CASH FLOW HEPS ROCE Threshold 30% vesting Performance condition On-target 100% vesting
Strategy and Executive Directors’ goals
Shareholders requested that we show more explicit linkage between
strategy and Executive Directors’ goals.
Greater disclosure on linkage between strategy and Executive Directors’
achievement against goals are now provided.
Strategic
Focus Areas
How we
Measure Success
Group CEO
Group
FD
Group COO
WSA
CEO
Customer
Relationships
Number of active customers
% revenue tracked on loyalty cards
Connected
Retail
Growth in online sales
% online sales
Net new space
Leading
Fashion
Retailer
Sales
Comparable sales growth
Cross profit margin
Return on sales %
Market share (12mma)
Big Food
Business
Sales
Comparable sales growth
Price movement
Gross profit margin
Return on sales %
Market share (12mma)
Drive
Synergies
Cost to sell %
Embed
GBJ
% targets achieved on
sustainability scorecard
Financial Performance
aEBIT
MeasureMent: Achieved
Partially Achieved
Missed
Included in IPM

Disclosure of salary gap

When considering the inclusion of a measure of salary gap between highest and lowest earners,
for example, the Gini coefficient, the Group’s fair and responsible remuneration principles
guide the Committee’s discussion on this matter.
Fair and responsible remuneration principles are:
  • Consideration given to minimum wage
    legislative requirements and living wage
  • Equal pay for work of equal value,
    addressing any income disparities
  • All permanent employees of the Group
    (excluding supply chain employees in
    Australia) participate in some form of a
    STI scheme
  • All permanent employees
    participate in equal measure on
    product discounts
  • Specific corporate initiatives are
    applied to enhance work
    experience and improve the
    employee value proposition (EVP)
    for employees
4
Summary
implementation
Disclosure of the impact of strategic and financial performance on the components of the executive directors' remuneration:
  • Guaranteed pay
  • Corporate STI scheme
  • LTI scheme
FY2019 Summarised implementation report
The Group had a challenging financial year with performance below expectations
Turnover
+5.9%
R79.7bn
Adjusted profit
before tax
R4.8bn
-0.2%
Headline earnings
per share
342.9cps
-1.0%
Return on capital
employed
14.0%
53:52 weeks

HOW DOES OUR PERFORMANCE
TRANSLATE INTO EXECUTIVE
DIRECTORS’ REMUNERATION?

Guaranteed pay

Salary increases for Executive
Directors are in line with
inflation and below other
management levels.

4.54%
5.32%
6.76%
10%
1.32%
3.15%
directors
Sa execs and mgmt
SA staff
SA supply chain
AUS execs and mgmt
AUS staff
Aus CPI
SA CPI

Corporate STI
scheme

Achieved aEPBT is above threshold and
corporate STI payments have been
awarded according to the entity’s
performance, which are as follows:
#
#
DJ
40%
WHL
92%
CRG
92%
93% Threshold 100%
WSA
102%
Ian Moir
WHL 0%
x 80% = 0%
Reeza Isaacs
WHL 0%
x 100% = 0%
Sam Ngumeni
WHL 0%
x 100% = 0%
Zyda Rylands
WHL 0%
WSA 100%
x 100% = 50%
#

LTI SCHEME

The performance conditions for the
LTI schemes were not achieved and
awards for the Group CEO and
Executive Directors were forfeited.

Performance
conditions
Achieved
Target
Vesting
HEPS
371.8cps
592.7cps
0%
ROCE
14.0%
17.8%
0%
TSR
-15%
8%
0%
20% 50% 30% TSR HEPS ROCE Target Achieved Vesting 371.8cps 592.7cps 0% 0% 17.8% 14% 0% 8% -15.0%

For more information contained in our
FY2019 Remuneration Report
Download the full report
Shareholders wishing to engage on the report can do so via email:

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