In a competitive and rapidly-evolving industry, nding and retaining the calibre of people required to effectively run the group and its subsidiary companies is an ongoing challenge one that Altron has successfully met over the years through attractive and appropriate remuneration packages that are aligned with the interests of shareholders.

Membership
The remuneration committee has a majority of non-executive directors and is chaired by Jacob Modise (independent non-executive). Other members are Myron Berzack, Peter Wilmot and Altron chairman, Dr Bill Venter.

The chief executive has right of attendance at meetings unless deemed inappropriate and the chief nancial of cer attends meetings by invitation, but neither participates in discussions regarding their own remuneration.

Remuneration philosophy and policies
Altron's philosophy is to set appropriate remuneration levels to attract, motivate and retain the calibre of directors and executives needed to run the group and its subsidiaries successfully, while aligning their interests with those of shareholders over the short, medium and long term. The overall policy is to ensure that executive directors are fairly rewarded for their individual contribution to the group's operating and nancial performance, and that this reward is aligned with industry and market benchmarks.

For each executive director, group policy is to provide a remuneration package comprising a base salary, an ability to earn a cash bonus, long-term incentives through participation in share incentive schemes or similar instruments, pension contributions, medical aid bene ts and other bene ts in kind.

The objective is to establish a level of guaranteed pay that is competitive with the upper quartile level for similar companies. The variable element of short-term incentives is intended to provide superior total pay opportunities should corporate performance merit it as well as reward individual performance. Long-term incentives have been based on multiples of base pay and structured to align with shareholders' interests.

Composition and proceedings
The committee meets bi-annually, unless additional meetings are required. During the review period, the committee met twice.

Role
The committee operates under a board-approved mandate and terms of reference, updated in the prior period and aimed at:

• ensuring that Altron's chairman, executive directors and other senior executives are fairly rewarded for their individual contributions to group performance. Packages are structured to be competitive with the upper-quartile level of peer companies and market benchmarks
• ensuring that Altron's remuneration strategies and packages, including short-and long-term incentive plans, are based on performance and are appropriately competitive
• recommending fees for non-executive directors for service on the board or its committees. Once approved by the board, these are submitted to shareholders at the annual general meeting for ratification
• balancing the interests of shareholders with the financial and commercial viability of the group.
  

Altron's sub-holdings, Altech and BTG, have their own remuneration committees which review and recommend remuneration and related awards for executive directors and senior management, to their boards and within the parameters of group policies. The Altech and BTG CEO's remuneration, once approved by their respective boards, is submitted to the Altron remuneration committee for noting and confirmation.

Service contracts
Executive directors are subject to Altron's standard terms and conditions of employment where notice periods are between 30 and 60 days. In line with the stipulations of the Companies Act of 1973 (as amended), group policy prevents any director from being compensated for loss of office.

Advisors
The committee regularly consults with a range of external independent advisors on market information and remuneration trends as well as other advice necessary to fulfil its responsibilities. It also considers the views of the chief executive, Robert Venter, on the remuneration and performance of his colleagues on the Altron executive committee.

Executive directors' salaries
The remuneration committee reviewed and revised the salaries of executive directors at its meeting in February 2006. The salaries of executive directors were compared to a market information survey on companies of similar size and structure and adjusted to reflect levels in the median to upper-quartile levels of the survey.

Annual incentive plans
Executive directors and Altron executive committee members participate in an annual bonus plan that rewards the achievement of group and subsidiary nancial performance as well as strategic and personal performance objectives agreed with the chief executive. All objectives are approved beforehand by the remuneration committee. Under this plan, the chief executive may earn a bonus of up to 75% of his base salary. Other executive directors and executive committee members may earn 55% to 65% of their base salaries.

Group and subsidiary financial performance targets include:

• headline earnings per share growth
• return on capital employed
• return on operating assets
• cash generation.
  

These targets vary according to individual company needs. In all cases, 60% of the bonus is based on nancial objectives with the balance relating to strategic and personal performance, benchmarked against identi ed key performance indicators.

At its meeting in April 2005, the remuneration committee reviewed the performance of executives participating in the bonus plan against their agreed targets. Within these parameters, and subject to meeting the noted criteria, bonuses were approved. Performance measures are stringently monitored and penalties imposed in cases where targets are missed.

Share option schemes
Altron's share option scheme grants options to all senior employees within Altron and Powertech. Grants have historically been made annually and capped at 8.5 x base salary for the chief executive, and 6.5 x to 7.5 x base salary for Altron executive committee members. Options may be exercised after three years and vest in equal tranches in years 3, 4 and 5. All options granted expire within a six-year period. The share option scheme includes options granted under a previous scheme which is in run-off and has an expiry period of no later than 2012. Additional options, based on both corporate and individual performance, may be granted annually to ensure that the multiple-of-base salary parameter reflects increases in base salary.

As a result of recent changes in tax legislation and accounting requirements, shareholders approved certain amendments to the Altron Share Incentive Scheme at the company's annual general meeting on 15 July 2005. In terms of the amendments, rights to acquire shares may now include achieving set performance targets, including growth in headline earnings per share. These share acquisitions will occur in equal tranches over three years, starting from the third anniversary of the rights being granted. The quantum of shares that can be acquired may vary, depending on the extent to which performance targets are met.

Pensions
During the year, the companies made contributions for executive directors to the Altron Group Pension Fund. The rate of contribution is 12%, based on the cash salaries of these individuals. The value of contributions for each executive director appears in the summary of directors' emoluments on page 106.

Other benefits
Executive directors receive medical aid assistance, a company car or car allowance and a death-in-service benefit.

Non-executive directors' fees
The fees of non-executive directors are recommended by the remuneration committee, approved by the Altron board and ratified by shareholders at the annual general meeting. Fees for the 2005/6 financial year were reviewed and revised in April 2005, with the basic annual fee set at R80 000.

Annual fees for membership of various committees for the review period were:

The table below provides an analysis of the emoluments paid to directors for the nancial year ended 28 February 2006