Remuneration report

In the context of the accountability and transparency encouraged by King IV, this remuneration report is separated into three sections – a background statement, an overview of the remuneration policy and the remuneration implementation report which articulates the link between strategy, sustainable value creation, performance and remuneration.

Section 1: Background statement

The remuneration and nomination committee (the committee) is responsible for remuneration within the company. During the year it comprised three independent non-executive directors, Stewart Shaw-Taylor (chair), Lindie Engelbrecht and Gavin Tipper. The CEO, financial director and human resources executive attend meetings by invitation, but are excluded from any deliberations pertaining to their own remuneration.

The composition of the committee ensures that the remuneration of executives is set by independent non-executive directors who have no personal interest in the outcome, and who will give due regard to the interests of all stakeholders of the company.

The year under review was challenging for South African property companies. Net income has been negatively impacted and the company share price pulled back to lower levels by weak economic conditions. As would be expected, this had an impact on the remuneration of executive directors and senior executives, particularly as it pertains to annual cash incentives and the expected value of conditional unit plan shares. In these current circumstances, the committee believes that the remuneration policy, in its implementation, has been consistent with company performance and aligned to shareholder value.

Pursuant to its terms of reference, the committee strives through an effective remuneration policy to give the executive directors every encouragement to improve the company's performance and to ensure that they are fairly but responsibly rewarded for their individual contributions and performance. The remuneration policy has been reviewed to reflect the commitment to remunerating fairly, responsibly and transparently.

The committee is satisfied that the current remuneration policy has achieved the principles outlined in the policy. The remuneration philosophy and policy were reviewed during the year and comply with the recommended practices of King IV. A copy of the full remuneration policy is available on the website www.hyprop.co.za.

The committee considers the performance measures and targets for the short-term incentive plan to ensure that they are appropriate and support our strategy to create long-term value for all our stakeholders.

Section 2: Remuneration policy

Philosophy

As an internally managed REIT, the objective of the remuneration policy is to promote the delivery of Hyprop's strategic objectives, encourage individual performance and reward sustainable value creation. Our philosophy emphasises the role of employees in building long-term sustainable value through fair and balanced remuneration.

Hyprop's success depends on attracting and retaining talented, experienced and motivated individuals who can execute our business strategy to achieve our vision and mission. The company uses both short- and long-term incentives to achieve this and has been successful in so doing.

Key principles

• Ensure remuneration policies and practices are aligned with company strategy and values
• Enable the attraction and retention of talented, experienced and motivated individuals who can execute the business strategy
• Link salary structures and policies to performance objectives that support sustainable value creation over the short-, medium- and long-term
• Align long-term incentives with the strategic objectives of the company and the creation of long-term shareholder value
• Apply a fair and reasonable remuneration structure across the company by:
  • Ensuring that non-executive directors' fees are fair, transparent and responsible
  • Ensuring that the executive directors' and executive management's remuneration is fair and responsible in the context of overall company remuneration.
  • Considering the pay ratios between executives and other staff when determining annual salary increments
  • Rewarding employees fairly, reasonably and responsibly for their contribution to the operating and financial performance of the company
  • Identifying, investigating and addressing any remuneration disparities related to inter alia, race and gender.
  • Ensuring that guaranteed pay is based on equal pay for work of equal value
  • Ensuring that guaranteed pay for all employees is based on clear role descriptions, which are mapped and aligned with similar jobs. The Patterson job grading system is applied, with the six grades defining the employee's remuneration scale
  • Implementing a training plan, which is critical in addressing remuneration disparities. Various training courses are provided to create an empowered work environment.

The remuneration and nomination committee

The responsibilities of the committee are set out in a formal charter. Updates to the charter will consider the recommendations of King IV, or other relevant best practice, and will be approved as appropriate.

In executing its mandate relating to remuneration for non-executive directors, executive directors, executive management and other staff, the board (as advised by the committee) will:

• Annually review the remuneration structures to ensure that they are performance-based, and linked to realistic performance objectives that support sustainable long-term growth,
• Ensure that stakeholders can make an informed assessment of reward practices and governance processes, and
• Ensure that the remuneration practices are compliant with all applicable laws and regulatory codes.

Voting

The remuneration policy and remuneration implementation report are put to separate non-binding advisory votes by shareholders at the annual general meeting of the company. If 25% or more of the voting rights vote against either of the non-binding resolutions, the board will formally engage with dissenting shareholders to understand and address all legitimate and reasonable concerns. At the annual general meeting held on 1 December 2017, the non-binding advisory votes on the company's remuneration policy received a 85,79% vote in support of the policy and the remuneration implementation report received 90,28% vote in support thereof.

Remuneration structure

Hyprop's remuneration structure is set out in the table below:

Element			Policy			Structure			Participation
Base salary			Provide a market-related level of base pay with due regard to the responsibilities of the position. Benchmarked against industry norms and adjusted based on an employee’s experience, qualifications, the nature of work and the level of responsibility.			Review annually with increases effective from 1 January.			Junior, middle and senior management, executives and executive directors.
Short-term incentive			Short-term incentives, paid in cash, align with the group’s annual performance strategy to support employee retention. Performance reviews are weighted against key performance deliverables (KPDs).			KPDs measured against targets on property and company level for the year. Cash bonus paid in December.			Junior, middle and senior management, executives and executive directors.
Long-term incentive scheme			Attract, motivate and retain executive directors, executives, senior managers and employees with specific core, critical and/or strategic skills.			Conditional unit plan. Two components: 70% performance-based, 30% retention-based.			Executive directors, executives, senior managers and employees with specific core, critical and/or strategic skills.

Base salary

The fixed (guaranteed) component of remuneration includes a base salary, a pension contribution and benefits that are normally set at median remuneration levels when compared to the industry and national salary market.

Salary benchmarking

Remuneration benchmarking is considered annually. Basic salaries are benchmarked against median industry and national salary norms and adjusted based on an employee's experience, qualifications, responsibilities, nature of work and performance. Independent remuneration consultancies are used to provide the remuneration committee with market data to assist in remuneration decisions, where appropriate. Where surveys indicate that a job grouping is significantly out of line with the comparative benchmark, a remuneration adjustment may be considered.

Remuneration may exceed benchmarked levels where required, to attract and retain specialised skills or for employment equity purposes.

Salary increases and reviews

The remuneration and nomination committee reviews salaries on an annual basis taking cognisance of the approach set out above, as well as the need to eliminate any unfair discrimination. The following factors are considered during this process:

• Performance of the company,
• Projected inflation,
• Affordability, and
• Performance of the individual.

A pro-rated increase is paid to employees who have not been in the employment of the company for the full financial year to which the annual increase relates.

Employee benefits

To define Hyprop as a preferred employer, we offer a range of employee benefits that exceed legislated minimum standards and include:

• Membership of a defined contribution pension fund with death, disability and funeral benefits,
• Four months partially paid maternity leave (paid at 50% of cost to company),
• Annual leave rising to 20 days after five years' consecutive service with the group, and
• Six days' paid study leave for approved qualifications.

Short-term incentive (STI)

Short-term incentives are linked to performance objectives that support business goals. Two components are considered when determining an employee's STI, namely key performance deliverables and targets, evaluated biannually, and individual performance reviews, conducted annually. The employee's level of responsibility and job grade determines the weightings allocated to each area of assessment.

Performance management

Key performance deliverables (KPDs) and targets

KPD targets are set annually at company and portfolio level and performance is formally measured against the targets. These KPD targets are approved by the remuneration committee to ensure that employee performance is aligned with the company's strategy. Progress on the KPDs is communicated to management teams at mid-year with final evaluations at the end of the financial year.

Performance against company targets carries a 90% weighting, while individual reviews carry a 10% weighting at executive and senior management level. Executive directors are measured against company targets.

Individual performance reviews

Individual performance reviews are completed annually on the company's employee self-service system after performance discussions with the relevant line manager. These reviews assist the manager and employee to build on strengths and to identify areas for improvement.

All employees are subjected to the same appraisal process and rating criteria. This encourages equality and imposes standard measures of performance across the company. Criteria include:

• Professional conduct
• Business processes
• Customer service
• Business operations
• Employee management
• Implementation of company strategy.

A significant portion of senior management's reward is variable, based on achieving group performance targets, as well as individual contributions to the growth and development of their business, applicable division and the company.

Performance is measured on a five-point scale that offers a high degree of structure for appraisals.

Performance review process

• Employees are rewarded based on the outcome of KPDs and performance reviews,
• STIs and salary increases are approved by the remuneration committee before payment,
• Exceptional performance is rewarded with higher incentives, after considering recommendations from general managers, regional executives and executive directors,
• The maximum potential STI for senior management is six months' salary and is subject to the remuneration committee's discretion and approval,
• Exceptional performance by senior management is considered and where justified may be rewarded at the remuneration committee's discretion. The reward may comprise up to an additional six months' salary,
• STIs are payable in December each year, and
• STIs for executive directors are aligned with strategic objectives and are at the remuneration committee's discretion.

Long-term incentives (LTI)

LTI reward decisions that support dividend and capital growth and are aligned to the company's strategic objectives and the creation of long-term shareholder value.

Conditional unit plan (CUP)

The CUP as an LTI was approved by shareholders in 2013 and the scheme applies until 2023. The purpose of the CUP is to further align employee performance with stakeholder interests and to retain skilled and talented employees. Annual allocations of performance and retention shares are made in a 70:30 ratio. Vesting of the performance shares is subject to performance conditions stipulated in the rules of the CUP and approved by the remuneration committee at the time of allocation.

Conditions for the performance component of the CUP:

			Vesting percentage(1)
Threshold			50% of awarded performance shares vest at threshold. No performance shares will vest for performance below threshold
On target			100% of awarded performance shares vest for performance on target
Stretch			150% of awarded performance shares vest for performance at stretch levels

(1)	Linear vesting will apply for performance between "threshold" and "on target" or between "on target" and "stretch" performance. For example, where performance is exactly halfway between threshold and on target, the portion of performance shares that will vest will reflect a similar ratio, i.e. 75%

Performance condition			Detail			Weighting			Threshold			On target			Stretch
Growth in distribution per share relative to peer group(1)			Measured as simple growth in distribution per share over the performance period			40%			95%			102,5%			110%
Share price performance relative to peer group(1)			Measured as growth in share price over performance period (difference between share price at the end and start of performance period)			40%			95%			105%			120%
Strategic component			Determined by the remuneration and nomination committee			20%			Determined by the remuneration and nomination committee

(1)	Peer group comprises the five largest South African REIT companies, by market capitalisation, listed on the JSE

Under the CUP, shares are offered to executives, senior managers, operational and financial managers and employees with specific core, critical or strategic skills. Allocations are approved by the remuneration committee.

Performance shares vest three years after initial allocation, provided that the relevant performance conditions have been met.

Retention shares vest five years after initial allocation, subject to continuous employment over the vesting period. Participants are only able to receive dividends after the shares have vested.

Executive directors

Executive directors are permanent employees and their employment agreements include a notice period, but no restraints of trade. They are offered competitive remuneration packages, which are reviewed by the remuneration committee annually.

Minimum employment terms and conditions for executive directors are governed by South African legislation. If an executive director's services are terminated, the remuneration committee oversees any settlement, assisted by labour law advisers where appropriate.

Non-executive directors

Non-executive directors are remunerated competitively. There are no contractual arrangements applicable to compensate for loss of office.

The remuneration and nomination committee benchmarks fees every second year against a peer group of JSE-listed companies with CPI adjustments in the in-between years. Recommendations are made to the board, which proposes fees for approval by shareholders at the AGM.

Remuneration for non-executive directors comprises a base fee only. Non-executive directors do not receive STIs, nor do they participate in any LTI schemes, except if they have previously held executive office and are entitled to unvested benefits from that period.

The chairperson of the board and the chairpersons of the subcommittees are paid higher fees than the members of the board and subcommittees. Different fee levels are paid for the different subcommittees to reflect the complexity, risk and amount of preparation required. Committee fees paid to members are based on an annual fee.

Section 3: Implementation of the remuneration policy during the 2018 financial year

Retaining and attracting talent

An engaging work environment and competitive remuneration translates into committed employees and high retention rates, especially at senior level. While low employee turnover ensures continuity, and aligns group performance with our long-term strategic objectives, we understand the value of original insight and aim for an appropriate balance between internal and external appointments.

Employee turnover continued to be low and our average tenure of employees is higher than that of most peer companies.

Staff retention

			June 2018						June 2017
			% retained			Average service years			% retained			Average service years
Total employee complement			93			9			92			8
Top management			100			11			100			10
Senior management*			83			9			96			8
Employee turnover			7						8

*	Two new appointments (leasing executive for the Johannesburg region and general manager at Woodlands), two internal appointments (regional executive and general manager at Clearwater Mall)

Base salaries

2018 salary increases

The remuneration and nomination committee considered the projected inflation rate, performance of the company and the affordability of the increased salary cost to determine the base salary increase for the year. As an added measure, the increase norm of 6% was compared to the salary increases allocated by peer companies. The increases applied were in line with the norm applied in the industry. To address the earnings gap, the remuneration and nomination committee, as per the previous three years, approved a minimum 7% salary increase for lower earning employees.

Base salaries increase applied

			June 2018						June 2017
			Actual     payroll     increase			Salary increase applied %			Actual        payroll        increase			Salary increase applied %
Base salaries paid to employees earning above the Basic Conditions of Employment Act (BCEA) threshold (%)			2,0**			6			11,5***			6,4
Base salaries paid to employees earning below the Basic Conditions of Employment Act (BCEA) threshold (%)			8,8			7			0,7****			7,5
Total base salaries increased (%)			3,6						11,7
Base salary paid to lowest paid employees (R)			105 044			7			98 172			17

**	Actual payroll cost decreased due to timing on new appointments and reductions during the year
***	Actual payroll included two new executive appointments compared to previous year
****	Affected by the transfer of the Willowbridge management team to new owners in previous year

Salary benchmarking

The company's policy is to pay employees a base compensation that is close to the median of comparable companies. In addition, the variable compensation elements are set to enable the overall compensation to move towards the upper quartile for outstanding performance.

Benchmark reviews were conducted externally and include market analyses by industry specialists. Bespoke benchmarks include an industry peer group and comparable companies in various industries selected according to where we compete for talent.

The peer group used for the analysis included property management companies and South African REITs.

Adjustments were considered and approved for jobs that were significantly out of line with the survey report.

Base salaries adjusted

	June 2017 Number of employees		June 2017 Number of employees
Executive directors	nil		nil
Executive and senior management	5		3
Employees	30		55
Total	35		58

The company uses the Patterson system to grade positions in the company. All position grades were reviewed during the year. Similar positions are aligned within a salary band taking into consideration an employee's experience, qualifications, the nature of work and the level of responsibility. This practice aligns with the company's commitment to fair remuneration and equal pay for work of equal value.

Base salaries paid

			June 2018						June 2017
Performance condition			R000			% increase			R000			% increase
Total base salaries paid			108 656			3,6			104 864			11,7
Base salaries paid to executive directors			7 319			6,1			6 900			6,4
Base salaries paid to executives and senior management			37 468			(1,5%)*			38 038			18,5**

*	Base salaries paid to executives and senior management decreased due to the reduction of one regional executive position, timing on new appointments and salaries negotiated during the year
**	Base salaries paid to executives and senior management in 2017 included two new positions

Base salary increases were effected 1 January 2018.

Employee benefits

Our employee surveys confirmed that our employee benefits contribute to the loyalty and commitment of our employees. Please refer to employee engagement: human capital report.

Pension fund (defined contribution)

211 employees are members of the company's pension fund and R12 million was contributed towards the pension fund during the year. Membership of the fund includes death, disability and funeral insurance.

			Benefit
Life insurance			Four times annual pensionable salary Education protector to third year tertiary education
Disability insurance			75% of monthly pensionable salary
Funeral insurance			R23 000

Maternity leave

R74 000 was paid to four employees who received four months' partial paid maternity leave during the year.

Short-term incentives (STIs)

Short-term incentives are determined based on the employee's individual performance and business units' score against the KPDs.

KPDs are measured to ensure we are achieving our strategic priorities and delivering value for our stakeholders.

The KPDs comprise financial, operational and strategic measures. KPDs for the 2018 financial year were approved by the remuneration committee in May 2017 and actuals were measured against targets and communicated to management in December 2017 and June 2018, respectively.

KPD score against targets and outcomes

 

June 2018

KPD score

June 2019

Key performance indicator

Weight- ing

Target

Stretch target

Total weighted

Score against target

Performance achieved

Weight- ing

Target

Financial – distribution growth

33%

8% distribution growth year on year

9% and above

38,0%

115%

8,8% distribution growth year on year

33%

5% to 7% distribution growth

Financial – budget management

27%

On budget

Exceed budget by 3%

31,1%

115%

Exceeded budget by 0,6%

25%

On budget

Leasing – vacancy movement, rentals, escalations and administration

17%

Vacancy increase – 0% increase year on year. Rentals achieved – on budget

Vacancies – reduced by 5% or more. Rentals achieved – 7,5% more than budget

16,2%

94%

Reduced vacancies year on year by 25,7% (13 968m2 (2017: 17 559m2))

17%

Vacancy increase – 0% movement year on year. Rentals achieved – on budget

Rental escalation on new and renewed leases – 7,5%

Rental escalation on new and renewed leases – 10% or more

Rentals achieved on budget Rental escalations achieved 7,7%

Rental escalation on new leases – 7%

Lease administration – 2% outstanding documentation

Administration – 0% outstanding documentation

12% of lease documentation in the process of being finalised

Lease administration – 2% outstanding documentation

Tenant arrears – deposits and total arrears outstanding

6,5%

Total outstanding – 2% outstanding as a % raised of rent roll raised

Total outstanding – 0% outstanding as a % raised of rent roll raised

6,1%

92,5%

0,6% total arrears outstanding as a % raised on rent roll

7%

Total outstanding – 2% outstanding as a % raised of rent roll raised

Deposits – 1,5% outstanding as a % of deposits raised

Deposits – 0% outstanding as a % of deposits raised

8,7% deposits outstanding as a % of deposit raised

Deposits – 1,5% outstanding as a % of deposits raised

Operations risk and environmental – building masterfile, waste recycling and energy saving

4%

Masterfile – 96% complete

Masterfile – 100% complete

5,2%

125%

Building master files 100% complet

6%

Masterfile – 96% complete. Waste recycling – 80% waste recycled. Energy saving – 3% kWh saving year on year

2%

Waste recycling – 75% waste recycled

Waste recycling – 85% or more waste recycled

2,5%

130%

83% waste recycling rate achieved

Energy saving – 3% KWh saving year on year

Energy saving – 5% or more kWh saving year on year

5,5% kWh saving achieved on various projects

Employment equity

5%

70% of all appointments are black

80% of all appointments are black

5,8%

115%

77,6% of all new and internal appointments were black as defined in our EE report

5%

75% of all new appointments are black

BBBEE

3%

72% of all procurement are from companies with a BBBEE level of 1 to 4

80% of all procurement are from companies with a BBBEE level of 1 to 4

3,9%

130%

87% of all procurement was rated from between a level 1 and 4 BBBEE level

5%

75% of all procurement are from companies with a BBBEE level of 1 to 4

Trading performance – turnover and trading density

3%

4% turnover increase year on year, Footcount consistent with previous year

6% turnover increase year on year, 3% footcount increase year on year

2,3%

85%

0,5% trading density growth year on year.

3%

4% turnover increase year on year, footcount consistent with previous year

77,5%

1,6% decline in footcount year on year

Total

100%

110,9%

100%

Individual performance reviews

Individual performance reviews were conducted during October 2017. As per previous years, the rating process was done through the company's employee self-service system (ESS) after meetings were held between the employees and line managers. Discussions are structured to cover work goals achieved, training needs and job performance, and to set personal job goals for the next 12 months.

The performance of any employees that requires improvement is addressed during the next year through consultation, to align with company vision and values, and if required, training to assist with meeting job expectations.

			% of employees reviewed
	Performance review score %		June 2018		June 2017
Performance requires improvement	66 to 95		8		5
Performance consistently meets expectations	100 to 110		51		52
Performance exceeds expectations	111 to 127		38		35
Exceptional performance delivery	128 to 140		4		8
			100		100

The remuneration and nomination committee considered the outcome of the performance management process and June 2017 KPD score (114,0%) before STIs were approved. STIs paid for the year aligned with the remuneration policy that rewards on performance.

STIs were impacted by the challenging South African environment that we operate in and the performance review scores, in which we have seen our net income growth impacted, the company share price pulled back to lower levels and that employee exceptional performances were harder to achieve.

2018 short-term incentives paid

			June 2018						June 2017
			R000			% increase/     (decrease)			R000			% increase
Total STI paid			27,565			(1,7%)			28,040			10%
STI paid to executive directors			5,257			(12,3%)**			5,993			(1%)
STI paid to executives and senior management			12,957			5,2%			12,317			21%*

*	Includes two new positions
**	Impacted by net income growth and market conditions

Long-term incentive

Refer to financial note.

Award issue

An award issue was approved by the remuneration committee and made to 25 employees in July 2017.

Date of issue		Number of employees participated		% of total staff complement
01/01/2014	Performance shares vested	27		13
01/07/2014	Performance shares vested	26		13
01/07/2015		26		13
01/07/2016		26		12
01/01/2017(1)		1		0,01
01/07/2017		25		11

(1)	Special allocation approved due to new appointment

Shares vested

The 1 July 2014 award vested in October 2017.

The performance shares awarded are subject to performance conditions relating to distribution and share price growth compared to the five largest South African REITs. The comparative companies for the vested shares included Growthpoint, Redefine, Resilient, Fortress and Vukile.

Hyprop's distribution grew by 47%, over the three-year period from award date and was measured against the 48% weighted market cap average growth of the comparative peer group. The distribution growth performance condition was met between threshold and on target.

Hyprop's share price grew by 46%, over the three-year period from award date and was measured against the 43% weighted market cap average growth of the comparative peer group. The share price growth performance condition was met between on target and stretch.

The remuneration and nomination committee did not factor in a strategic component for the vesting and approved the 89,4% performance conditions met in October 2017.

Performance conditions met for shares awarded 1 July 2014

Key performance indicator

Threshold

On target

Stretch

Weighting

Calculated score %

% of the award that vested

Weighted total %

Growth in distribution per share relative to the peer group

Hyprop's growth in distribution per share relative to peer group: 95%

Hyprop's growth in distribution per share relative to peer group: 102,5%

Hyprop's growth in distribution per share relative to peer group: 110%

50

98,8

75

37,7

Share price performance to the peer group

Hyprop's share price performance relative to peer group: 95%

Hyprop's share price performance relative to peer group: 105%

Hyprop's share price performance relative to peer group: 120%

50

106,0

103

51,7

89,4

Number of performance shares awarded, vested and forfeited

Award date		Number of employees participating		Number of performance shares issued		Performance conditions met %		Number of performance shares vested		Number of   performance   shares   forfeited*		Number of performance shares due to vest
01/01/2014		27		107 561		100		100 413		7 148
01/07/2014		26		110 422		89,4		93 363		17 059
01/07/2015		26		78 282				729				77 553
01/07/2016		26		80 979				102				80 877
01/01/2017		1		5 982								5 982
01/07/2017		25		84 840								84 840

* Resignations and performance conditions not met

Value of vested LTI

	June 2018 R000		% decrease		June 2017 R000
Total value of LTI vested	10 284		(17,0)		12 397
LTI paid to executive directors	3 184		(17,5)		3 859
LTI paid to executives and senior management	7 100		(16,8)		8 538

Total compensation ratios

The outcome on the total compensation for executive directors and management, by applying the remuneration policy, confirms that the remuneration ratio STIs and LTIs ensure a balance between the short-and longer-term business objectives of the company.

Total compensation paid to executive directors

	June 2018 R000		2018/2017 movement %		June 2017 R000
LR Cohen
Basic salary	2 362				2 221
Pension fund contributions	410				386
Performance bonus paid in December	1 759				2 060
Conditional unit plan	1 115				1 371
Other benefits	28				26
Company contribution UIF and SDL	55				59
Total cost to company	5 729		(6)		6 122
PG Prinsloo
Basic salary	4 153				3 906
Pension fund contributions	196				184
Performance bonus paid in December	3 498				3 933
Conditional unit plan	2 069				2 488
Other benefits	16				13
Company contribution UIF and SDL	99				105
Total cost to company	10 031		(6)		10 629
Total	15 760		(6)		16 752

Disclosure of the CUP for executive directors

	Shares issued		Date issued		Vesting date		Vested shares		Performance condition met %		Vesting price		Forfeit		Unvested shares
P Prinsloo
Performance shares	20 153		01/01/2014		01/01/2017		20 153		100		123.46
Retention shares	8 637		01/01/2014		01/01/2019										8 637
Performance shares	21 845		01/07/2014		01/07/2017		19 529		89,4		105.99		2 316
Retention shares	9 362		01/07/2014		01/07/2019										9 362
Performance shares	15 794		01/07/2015		01/07/2018										15 794
Retention shares	6 769		01/07/2015		01/07/2020										6 769
Performance shares	16 147		01/07/2016		01/07/2019										16 147
Retention shares	6 920		01/07/2016		01/07/2021										6 920
Performance shares	17 091		01/07/2017		01/07/2020										17 091
Retention shares	7 325		01/07/2017		01/07/2022										7 325
Total	130 043						39 682						2 316		88 045
LR Cohen
Performance shares	11 105		01/01/2014		01/01/2017		11 105		100		123.46
Performance shares	11 769		01/07/2014		01/07/2017		10 522		89,4		105.99		1 248
Total	22 874						21 627						1 248

Non-executive directors' remuneration

	June 2018 R000		June 2017 R000
Independent non-executive	2 961		2 652
Ethan Dube(1) (paid to Vunani Capital Proprietary Limited)			143
Lindie Engelbrecht	543		541
Gavin Tipper	688		636
Mike Lewin	392		364
Thabo Mokgatlha	462		432
Stewart Shaw-Taylor	551		489
Nonyameko Mandindi(2)	325		47
Non-executive	686		658
Kevin Ellerine	343		329
Louis Norval	343		329

(1)	Resigned from the board on 1 December 2016
(2)	Joined the board on 8 May 2017

Non-executive directors' earnings benchmarking

During the year the remuneration and nomination committee obtained independent advice from PricewaterhouseCoopers (PwC) on remuneration benchmarks for non-executive directors. The information used in the benchmarking exercise was obtained from publicly disclosed information for the identified comparator groups.

Three comparative groups were provided by the external consultants based on market capitalisation and industry:

1.	A size-based comparator group consisting of the 12 companies listed on the JSE that ranked closest to Hyprop based on market capitalisation.
2.	An industry-based comparator group consisting of 10 REIT companies listed on the Johannesburg Stock Exchange (JSE) that ranked closest to Hyprop based on market capitalisation.
3.	An industry-based comparator group consisting of five REIT companies listed on the JSE that ranked closest to Hyprop on market capitalisation.

The industry group consisting of five REIT companies was used as the primary comparator group as it was determined, based on external advice, as being most relevant to Hyprop, with the other two groups being used to sense check the results. In a limited number of cases and where appropriate, outlier numbers were eliminated from the comparator group figures (there were two cases where the fees paid by another REIT were substantially higher than those relevant to Hyprop).

Structural fee adjustments are proposed for the following non-executive director responsibilities in order to align them to the relevant benchmarks:

• The chairman
• The chair of the audit committee
• The chair of the remuneration and nomination committee
• The members of the remuneration and nomination committee
• The chair of the social and ethics committee
• The chair of the investment committee
• The members of the investment committee.

In all of the above cases, the current level of fees was substantially below the average and median benchmark tolerance bands. The proposed adjustments will result in the fees remaining below the average or median benchmarks but falling within the tolerance bands. For the balance of non-executive director responsibilities the proposed fee adjustments are referenced to CPI.

The members of the investment committee have historically been paid solely on the basis of meetings attended. It is proposed that the fee basis is changed to an annual fee in line with the other committees but is set at a conservative level relative to the external benchmarks.

Non-executive directors' fees are benchmarked externally every second year with CPI adjustments in alternate years.